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Q3: FG, states, LGs get FAAC’s N2tn, highest in 2020

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The federation accounts allocation committee (FAAC) has disbursed a total of N2.054 trillion to the three tiers of government in the third quarter of 2020.

This is contained in the quarterly review report released by the Nigeria Extractive Industries Transparency Initiative (NEITI) on Tuesday.

A breakdown showed that the Federal Government received N812.22 billion; N676.5 billion to state governments; and N429.16 billion to local governments.

This is the first FAAC allocation in 2020 to hit the N2 trillion mark.

It is also 5.6 per cent and 6.2 per cent higher than the disbursements made in the first and second quarter respectively.

In the first quarter of the year, a total disbursement of N1.945 trillion was made while N1.934 trillion was shared in Q2 2020.

The report noted that the increased allocation is as a result of exchange rate adjustment by the Central Bank of Nigeria.

“The total amount disbursed in the third quarter of 2020 was the first time that total disbursements exceeded N2 trillion in 2020,” the report read.

“Important to note here is that the Central Bank of Nigeria adjusted the official exchange rate from N360/$1 to N380/$1 in early August. Since the revenue from FAAC is disbursed in naira, this necessarily means that more funds will be disbursed in months after the adjustment.”

The CBN has had to devalue the naira twice in 2020; first from N306/$ to N360/$ and from N360/$ to N380/$.

This development sustains a trend that third-quarter disbursements are always higher than disbursements in either the first or second quarter of the year.

With the exception of 2018, FAAC disbursements between 2015 and 2019 were highest in the third quarter

This is attributed to “increased demand for oil during the summer season, and the attendant surge in oil prices”.

Despite the increase in allocations within the year, the Q3 2020 disbursement is lower when compared to Q3 2018 and 2019.

The N2.054 trillion disbursed in Q3 2020 was 9.6 percent lower than the N2.273 trillion disbursed in the third quarter of 2019 and 9.8 percent lower than the N2.278 trillion disbursed in the third quarter of 2018.

NEITI explained that the dip in disbursements “was largely on account of the impact of COVID-19 and its associated effects on demand for oil, oil prices, economic activities and other sources of revenues”.

On total net FAAC disbursement, Osun received the lowest net disbursement (N9.39 billion), while Delta received the highest disbursement (N43.08 billion).

For deductions, Yobe had the lowest deduction of N81.98 million, while Lagos had the highest deduction of N17.35 billion.

The deductions of Lagos state were higher than the combined total deductions of 20 states: Yobe, Sokoto, Borno, Jigawa, Kebbi, Katsina, Anambra, Enugu, Ebonyi, Adamawa, Kano, Nasarawa, Kwara, Taraba, Niger, Edo, Abia, Kogi, Kaduna, and Rivers which totalled N15.72 billion.

The report also projected that actual oil revenue will outperform projected oil revenue for the fourth quarter although all tiers of government may struggle to meet their revenue projections.

Business

Nigeria’s oil revenue not enough to cover petrol import costs – Finance minister

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Nigeria’s revenue being generated from its low oil production cannot cover the cost of imported petrol, Minister of Finance, Budget and National Planning, Zainab Ahmed, has said.

She stated this on Thursday in an interview with Reuters on the sideline of the World Economic Forum (WEF) in Davos.

She said the Federal Government hopes that oil production will average 1.6 million barrels per day (bpd) this year.

In the first quarter of 2022, Nigeria’s oil production averaged 1.5 million bpd.

The minister said, “We are not seeing the revenues that we had planned for. When the production is low it means we’re … barely able to cover the volumes that are required for the (petrol) that we need to import.”

This year, the FG had budgeted 1.8 million bpd of production, but frequent crude theft and attacks on pipelines continue to affect the nation’s wealth.

In April, it asked the national assembly to drop the projected production volume to 1.60 million barrels per day.

Despite higher oil prices due to the Russia-Ukraine war, under-recovery costs, also known as petrol subsidy, continue to erode gains.

Nigeria has spent about N1 trillion on petrol import shortfall in the last four months and will spend up to N4 trillion this year. This has also dwindled the federation revenue — just as the Nigerian National Petroleum Company (NNPC) Limited has been unable to remit any amount to the government purse this year.

On the recent hike of the monetary policy rate by the Central Bank of Nigeria (CBN), the minister said the move was necessary due to policy adjustments by the US Federal Reserve and central banks in Europe.

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Aviation

No plane crashed in Lagos – FAAN, NEMA

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Two government agencies, the Federal Airports Authority of Nigeria and National Emergency Management Agency, have dismissed reports of a fresh plane crash in the Ikeja area of Lagos.

An internet user who saw a plane being towed away had sent the picture to the social media, concluding that it was the wreckage of a fresh plane crash in Lagos.

The aircraft, which had missing wings, was spotted on Ikeja-Agege road, causing gridlock along the route on Tuesday as the news went viral on the social media.

But FAAN in a terse statement posted on its social media handles, said Nigerians should disregard the news.

It stated, “The Federal Airports Authority of Nigeria would like to inform the general public to disregard the news making the rounds on social media about an alleged crash at Ikeja Airport.

“The aircraft was sold by the owner to a buyer, who was taking it to its final destination.”

Also, Ibrahim Farinloye, the zonal coordinator, South-West, NEMA, said after due consultations with all critical stakeholders and tracking of all incoming and outgoing flights in Lagos, there was no plane.

An aviation analyst, Daniel Dikio, had also tweeted his observation of the viral video.

“It is an Airbus A319, hasn’t flown domestically in years. I can see traces of a green logo; it likely belonged to First Nation Airways in its time.

“The wings are separated cleanly; this wouldn’t happen in a crash. The separation is a sign of dismantling.

“There is no damage to the fuselage, almost impossible given the purported circumstances”, Dikio noted.

 

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Business

FG targets 1.4mbpd domestic refining before 2027

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Minister of State for Petroleum Resources, Chief Timipre Sylva

The Federal Government has disclosed plans to actualise 1.4 million barrels per day, mbpd, domestic refining of crude oil in the next five years.

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