A Reduction in FAAC Payout in November 2021

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Thursday November 25, 2021 / 09:50 AM / by FBNQuest Research / Header Image Credit:  FBNQuest Research

                                                                                                                                                                                   

The gross monthly distribution by the Federation Account Allocation Committee (FAAC) distributed to the three tiers of government amounted to NGN672bn (c.USD1.62bn) in November (from October revenue). This represents a decrease of NGN68bn over the previous month's payout. The decline, according to local media reports, was due to considerable decreases in collections from companies income tax, petroleum profit tax (PPT), and oil and gas royalties. VAT receipt also recorded a slight decrease, while the take from excise duty increased marginally. The federal government received NGN284bn, c.NGN17bn lower than its share in October. The gross distribution to state governments declined by -16% m/m to NGN231bn, including NGN21bn which represents the 13% derivation for oil-producing states. The local governments' share was down NGN8bn to NGN156bn.

 

The headline figure is made up of NGN364bn in gross statutory distribution, NGN155bn from the VAT pool, and fx adjustments totalling NGN3bn. There were also 'augmentations' of NGN100bn and NGN50bn from non-oil mineral revenue. As in May and June, there has been no official explanation on the reason for these augmentations.

 

According to the committee, the balance in the Excess Crude Account (ECA) remained unchanged at c.USD61m.

 

Of the total distribution, NGN44bn was spent on a combination of costs, transfers and unspecified refunds.

 

The controversy over the proposed deduction of USD418m from states' accounts is still ongoing. Earlier in the month, a Federal court restrained the federal government from making any deduction until all issues relating to it were fully determined. A deduction of such size (c.NGN173.5bn) would put more pressure on already overwhelmed states' finances.

 

In its FAAC report for October '21, the NNPC disclosed that a total of NGN163.7bn in value shortfall (fuel subsidy claims) was to be deducted from this month's FAAC remittance. The end to fuel subsidies appears close. In the light of the Petroleum Industry Act (PIA), the finance minister disclosed that the FGN plans to discontinue petrol subsidies from H2 '22. While this would translate to better allocations for all three tiers of government, generating more revenue, especially at state level, is a more sustainable option considering the volatility of oil prices.

 

Revenue allocations (gross) by the FAAC (NGN bn)      

PPT and RoyaltiesProshare Nigeria Pvt. Ltd.

Sources: Office of the accountant-general of the federation (OAGF); local media; CBN; FBNQuest Capital Research

 

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Related to FAAC

  1. FAAC Disburses N640.31bn in February 2021 - NBS
  2. FAAC Disburses N619.34bn in January 2021 - NBS
  3. FAAC Disburses N2.49trn to FG and N2.30trn to States in Year 2020 - NBS
  4. FAAC Disburses N601.11bn in December 2020 - NBS
  5. FAAC Disburses N604.00bn in November 2020 - NBS
  6. FAAC Disburses N639.90bn in October 2020 - NBS
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  8. FAAC Disburses N676.41bn in August 2020 - NBS
  9. FAAC Disburses N696.18bn in July 2020 - NBS
  10. FAAC Disburses N547.31bn in June 2020 - NBS
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  12. FAAC Disburses N780.93bn in April 2020 - NBS
  13. FAAC Disburses N581.57bn in March 2020 - NBS
  14. FAAC Disburses N647.35bn in February 2020 - NBS
  15. FAAC Disburses N716.30bn in January 2020 - NBS
  16. FAAC Disburses N2.93trn to FG in 2019 - NBS
  17. FAAC Disburses N650.83bn in December 2019 - NBS

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