- Â Cautions as budgets of Câ€™River, others surpass projected revenue
- Crude oil retreats as investors take profit on Iran rally
Ejiofor Alike in Lagos and Chineme Okafor in Abuja with agency report
The Federation Account Allocation Committee (FAAC) disbursed N1.938 trillion in the first quarter of 2018 to the three tiers of government, a report from the Nigeria Extractive Industries Transparency Initiative (NEITI) has shown.
NEITI, in its quarterly report on Federation Account allocations released Thursday in Abuja, said the amount shared represented an increase of 37.3 per cent over the N1.411 trillion shared during the same period in 2017, and 71.1 per cent above N1.132 trillion shared in the same quarter of 2016.
A breakdown of the allocations indicated the federal government received N812.8 billion, the 36 states and the Federal Capital Territory (FCT) got N683.4 billion, while N393.3billion went to the 774 local governments in the country.
On a monthly basis, N655.2 billion was disbursed by FAAC in January, N635.6 billion in February, and N647.4 billion in March this year to the three tiers of government.
The report stated that even with rising revenue disbursements to the three tiers of governments, the disbursements in the first quarter of 2018 were still 25.6 per cent lower than the N2.6 trillion disbursed during the same period in 2013 before the crash in global oil prices.
The report also projected brighter prospects for higher revenue disbursements for the rest of the year due to rising oil prices, supported by the increase in oil production.
NEITI, however, called for caution celebrating increased disbursements in the first quarter of 2018, stating that the oil market remained volatile.
â€œThe year started on a bright note as all tiers of government received higher revenues than the corresponding quarters in the past two years. This was largely on account of sustained increase in domestic oil production and global oil prices,â€ said the report.
On the allocations received by each state, the report showed that Akwa Ibom got the highest of N50.44 billion, while Osun State received the lowest net share of N4.99 billion, indicating a variance of 920 per cent between the highest and the lowest.
The NEITI report explained that the disparities in FAAC disbursements suggested the differences in revenue capacities of different states and the implication for expenditure decisions by the affected states.
Accordingly, NEITI noted with concern the relationship between projected revenues of states and their proposed budgets for fiscal year 2018.
â€œThe budgets of all states completely outstrips their projected total revenues,â€ noting, however, that the gap between projected total revenues and budgets were small in some states like Kano, Enugu, Delta and Bayelsa.
In these states, the report noted that projected revenue was at least 60 per cent of the budgets.
But in 18 states, projected revenue was less than 40 per cent of budgets.
â€œExamples are in the 2018 budgets of Adamawa, Akwa Ibom, Anambra, Bauchi, Benue, Borno, Cross River and Ebonyi States. Other states are Imo, Katsina, Kebbi, Kwara, Ogun, Osun, Oyo, Plateau, Sokoto and Zamfara,â€ said the report, which went on to identify the situation in Cross River State as chronic.
It observed that Cross River State, which a few months ago boasted of passing a N1.3 trillion spending plan for 2018, projected total revenue of 4 per cent of its proposed budget.
â€œThese conditions will ultimately result in a situation where the states will either not be able to execute their budgets or have to increase borrowing,â€ NEITI warned.
It explained that the quarterly review was designed to provide timely information and data to support citizensâ€™ engagement, advocacy, as well as promote constructive debate, information sharing and enlightenment in tracking the utilisation of funds for purposes of development.
NEITI also said its interest in FAAC disbursements and the statutory recipients was in view of the fact that more than 50 per cent of the funds are derived from the extractive industry which it has a mandate to monitor its revenue and process flows.
In a related development, crude oil fell Thursday, giving up earlier gains as investors took profit on a rally triggered by potential disruption to oil flows from major exporter Iran in the face of United Statesâ€™ sanctions.
The U.S. said on Tuesday that it plans to impose new sanctions against Iran after abandoning an agreement reached in late 2015 that curbed Tehranâ€™s nuclear activities in exchange for the removal of U.S. and European sanctions.
Brent crude futures fell 29 cents to $76.92 a barrel after rising earlier in the day to $78, their highest since November 2014.
U.S. West Texas Intermediate crude futures were down 18 cents at $70.96.
Reuters reported that the price of oil was still on track for its fourth consecutive quarterly gain, the longest such stretch for more than 10 years.
Analysts had little hope that opposition to the U.S. action would prevent sanctions from going ahead.
Even without disruption to Iranâ€™s crude flows, the balance between supply and demand in the oil market has been tightening steadily, especially in Asia, with top exporter Saudi Arabia and No.1 producer Russia having led efforts since 2017 to cap output to prop up prices.
Saudi Arabia is ready to offset any supply shortage but it will not act alone to fill the gap, an OPEC source familiar with the kingdomâ€™s oil thinking said on Wednesday.
One factor that could partially mitigate any shortfall from Iran is the soaring U.S. oil output.
The EIA on Tuesday raised its forecast for U.S. output in its monthly report to 12 million bpd late next year. The agency has raised its forecast every month since last August.
This would make the U.S. the worldâ€™s largest producer, ahead of both Russia and Saudi Arabia.
Trump pulled America out of the Iran nuclear deal on Tuesday, re-imposing sanctions on the regime and delivering on an election campaign promise.
Iran has been accused of failing to be honest about its nuclear ambitions while supporting terrorist groups and acting in an increasingly hostile way across the Middle East.
Britain, France and Germany condemned the move in a joint statement and promised to stay within the nuclear agreement, claiming that it was the only way to prevent a Middle Eastern nuclear arms race.
However, the White House announcement was welcomed by Israel – which released new intelligence on Iranâ€™s nuclear programme last week – and several Arab nations.