Despite zero allocation from the Nigerian National Petroleum Corporation Limited (NNPCL) since the beginning of the year, the Federation Account Allocation Commission (FAAC) has maintained a surplus revenue position, contrary to the expectations of observers. Findings by New Telegraph revealed that for the eight-month period spanning January to August 2022, the Commission doled out about N5.6 trillion as allocations to the Federal Government, states and the 774 local government councils.
The amount was close to the N5.647 trillion shared within the same period in 2021 when the NNPC was the highest contributor to the revenue. At the last FAAC meeting, NNPCL presented zero account to the meeting. The organisation reportedly explained that it deducted N525.71 billion for provisioning of fuel subsidy shortfall. NNPCL spent N2.565 trillion on petrol subsidy payments since the beginning of the year. However, there is a move by government to phase out subsidy begining from June next year. In the current MTEF/FSP document for 2023-2025 budget, the government tied future subsidy funding to two scenarios. On the subsidy, it was stated that the government had projected fiscal outcomes in the medium term under two scenarios based on the underlying budget parameters/ assumptions.
Under the first scenario, according to Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, when she presented 2023-2025 MTEF/ FSP, “the subsidy on PMS is estimated at N6.72 trillion for the full year 2023. “It will remain and be fully provided for by the NNPC on behalf of the federation.” The second scenario, she said, was that “petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2021, in which case only N3.36 trillion will be provided for. “Both scenarios have implications for net accretion to the Federation Account and projected deficit levels.”
The eight-month revenue was derived from Valued Added Tax (VAT), import and excise duties, Companies Income Tax, Petroleum Profit Tax, and oil and gas royalties with zero oil revenue contribution from the Nigeria National Petroleum Limited (NNPCL).