Oil to blame for the lower FAAC payout

Oil & Gas
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Monday, September 28, 2015 09:04AM / FBN Capital Research   

The local media report a decline in the total monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government, to N443bn (US$2.23bn) out of August revenues from N512bn out of July’s inflows.  

The permanent secretary to the federal finance ministry explained the decline in terms of reduced crude exports and shut-ins for maintenance purposes.

While the allocations in the past three months reflect some plugging of “leakages”, they still fall short of the projections in the approved 2015 budget.  

Crude production was set at 2.27 mpbd whereas output in the first eight months has averaged 2.11 mpbd.    

The state governments have been particularly badly affected. The FGN’s response to their rising salary and pension arrears has been threefold: the distribution of Nigeria LNG dues from the federation account in July (N92bn for the states), the restructuring of selected states’ borrowings from banks into FGN long bonds and the creation of a new CBN intervention fund.

The data in the local media are not strictly comparable with those in the chart, which are drawn from the office of the accountant general of the federation (OAGF).

The trend is comparable, however. The local media cite distributable revenues, and the OAGF the gross revenue allocation.

The permanent secretary quoted a balance of US$2.26bn in the excess crude account, which was unchanged from the previous FAAC meeting. 

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