The total monthly payout by the Federation Account Allocation Committee (FAAC) for distribution to the three tiers of government amounted to N699bn (US$2.28bn) in October (from September revenues). This was a decrease of N43bn from the previous month’s distribution. The commentary from the federal finance ministry noted that the average monthly oil price had dropped from US$77.1/b to US$75.7/b. Additionally, there were pipeline shutdowns, resulting in the shut-in of some production. However, crude oil export sales managed to pick up marginally on August.
- VAT receipts declined in September to N79bn from N110bn. We note that receipts from petroleum profits tax and companies’ income tax also decreased.
- This latest payout included N184bn for the states from all sources combined. Oil producing-states collectively received an additional N53bn as 13% derivation revenue. To provide some colour, we see from CBN data for 2017 that the state governments spent N221bn and N87bn per month pro rata in aggregate on recurrent and capital items.
- During the meeting, the new federal finance minister, Zainab Ahmed, reiterated the need for governments at all levels to maintain transparency and instil a savings culture.
Sources: Office of the accountant-general of the Federation (OAGF); local media; FBNQuest Capital Research
- The committee has withdrawn its report on the excess crude account (ECA) for reworking and will present it at the next meeting. The balance of the ECA at the previous meeting was US$2.47bn.
- We have taken the latest payout details from thin local media reports. The data for earlier months in the chart is drawn from the OAGF.