Federation Account records N465.92bn shortfall in two months
[su_dropcap]T[/su_dropcap]he gross revenue into the Federation Account experienced a shortfall of N465.93bn within the first two months of this year, a report obtained from the Federation Accounts Allocation Committee on Friday showed.
The committee headed by the Minister of Finance, Mrs. Kemi Adeosun, has commissioners of finance from the 36 states of the federation and representatives of all revenue generating agencies of government as members.
There are two major categories of revenue accruing to the Federation Account. They are mineral revenue and non-mineral revenue.
Based on the assumptions underlying the 2016 budget, the Federal Government is targeting a total of N513.69bn as monthly revenue, made up of N323.47bn (mineral revenue) and N190.22bn (non-mineral revenue).
These revenues are expected to be shared among the three tiers of government based on the current revenue allocation formula where the Federal Government gets 52.68 per cent; state governments, 26.72 per cent; while the local government councils are allocated 20.60 per cent.
In addition, the nine oil producing states are expected to get additional income based on the derivation principles, which is 13 per cent of mineral revenue.
However, findings revealed that in recent times, the revenue accruing to the Federation Account had been experiencing a steady decline.
Some of the factors reportedly affecting the revenue are the drop in global oil prices; production shutdown; and declaration of force majeure in some oil terminals owing to pipeline vandalism.
Others, according to financial analysts, are the decline in income tax and import duty receipts, owing to the fact that many companies have up to March 31 to file their tax returns.
For instance, the sum of N290.96bn was generated in January. This represents a shortfall of N222.73bn when compared to the budgeted revenue of N513.69bn.
A breakdown of the N290.96bn revenue generated in January revealed that the sum of N173.67bn came from mineral revenue while the balance of N117.28bn was earned from non-mineral revenue.
In the month of February, the actual revenue generated was N270.49bn as against the budgeted amount of N513.69bn.
A further analysis of the actual revenue of N270.49bn for February showed that the sum of N176.38bn was generated from mineral sources while N94.1bn was earned from non-mineral revenue source.
The Accountant General of the Federation, Mr. Ahmed Idris, had in a communiqué signed after the committee’s meeting last week said that despite the fact the oil production increased slightly, explosions at Escravos terminal, force Majeure declared at Brass terminal had negative impact on gross revenue.
The communiqué read in part, “The gross statutory revenue of N270.49bn received for the month (February) was lower than the N290.96bn received in the previous month (January) by N20.46bn.
“Oil production increased slightly between December 2015 and January 2016 despite explosions at Escravos terminal, force majeure declared at Brass terminal, shut-in and shutdown of pipelines at other terminals for repairs and maintenance.
“There was revenue loss of $45.90m as a result of drop in average price of crude from $39.04 in December 2015 to $29.02 in January.
“Also, a substantial drop in income was recorded from oil and gas royalty, companies, income tax and import duty.”
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