By Bassey Udo
The Federal Inland Revenue Service (FIRS) accounted for ₦13.48 trillion, or 48.12 percent of the total N28.02 trillion generated as revenue by four revenue agencies between 2017 and 2019, the latest Fiscal Allocation and Statutory Disbursement (FASD) report published by the Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed.
The other three agencies include the Nigerian National Petroleum Corporation (NNPC) – the Nigerian National Petroleum Company Limited, which generated ₦8.82 trillion, or 31.48 percent; the Department of Petroleum Resources (DPR) – now the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) N3.53 trillion, or 12.60 percent, and the Ministry of Mines and Steel Development (MMSD) about N12.498 billion, or 4.46 percent.
NEITI’s FASD audit examined total extractive industry revenue remitted into the Federation Account, tracked allocation and disbursement from the account to statutory recipients as well as utilization and application of the funds by the beneficiaries for the period under review.
Scope of the FASD
The audit covered four federal revenue generating and 11 beneficiary agencies involved in the management of extractive industries funds as well as nine selected states, namely Akwa Ibom, Bayelsa, Delta, Gombe, Imo, Kano, Nasarawa, Ondo and Rivers.
The beneficiary agencies included Niger Delta Development Commission (NDDC); Tertiary Education Trust Fund (TETFund); Petroleum Trust Development Fund (PTDF); Petroleum Equalization Funds (PEF); Ecological Fund (EF) and Stabilization Fund (SFs).
Others were Nigerian Sovereign Investment Authority (NSIA); Development of Natural Resources Fund (DNRF); Excess Crude Account (ECA); Nigeria Content Development and Monitoring Board (NCDMB) and Petroleum Products Pricing Regulatory Agency (PPPRA).
Details of the report showed that of the total revenue by the FIRS within the period under review, Petroleum Profit Tax (PPT) accounted for N5.80 trillion, or 43.09 percent, while Value-Added Tax (VAT) and other taxes accounted for 32 percent and 24 percent respectively, and the Services recorded the highest revenue collection of N5.02 trillion in 2018.
With the NNPC, the breakdown shows that ₦4.55 trillion, or 51.59 percent, was realised from domestic crude sales, while receipts from oil export accounted for ₦4.27 trillion, or 48.41 percent.
Out of the total figure, the report said about ₦5.33 trillion, or 60.43 percent, was deducted at source for Joint Venture cash call and others, leaving the net amount of N3.49 trillion, or 39.57 percent, was transferred to Federation Account
“The Deductions at source by NNPC negate the principle of Federation Account”, NEITI’s report stated.
During the period, the report said the DPR (now NUPRC) generated ₦3.53 trillion for the three years under review, with royalty payments accounting for N3.40 trillion (96.41 percent).
The agency, however, transferred ₦3.53 trillion to the Federation Account. The audit established that the surplus of ₦6.72 billion was as a result of unremitted receipts from prior year.
For the Ministry of Mines and Steel Development (MMSD), out of about ₦12.498 billion generated within the period, the Mining Inspectorate Department (MID) contributed about N6.43 billion, while the Mining Cadastral Office (MCO) accounted for N6.06 billion.
FAAC remittances
Out of the total revenue generated by the four agencies, during the period, about N22.68 trillion was remitted to the Federation account, while the balance of N5.34 trillion, or 19.06 percent, went for cost of collection for the revenue agencies and the Joint-venture cash calls deductions by the NNPC.
Details showed minerals and non-minerals revenues contributed about N12.84 trillion, or 56.61 percent and N6.57 trillion, or 28.97 percent respectively, while Value-Added Tax (VAT) accounted for N3.27 trillion, or 14.42 percent.
On the NDDC, the NEITI reported that about ₦755.96 billion was generated by the Commission within the period, with about N551.08 billion, or 73 percent, realised from oil and gas companies, while the balance of ₦203.90 billion, or 27 percent, came from the Federal government’s contribution to the Commission.
The total expenditure by the Commission during the period was N882.3 billion, with N778.29 billion, or 88.20 percent spent on development projects, while operational cost accounted for N104.07 billion, or 11.80 percent of the total.
Delta state ranked highest in terms of development project undertaken by the Commission to member states, with total expenditure of ₦40.46 billion, or 26 percent of the actual expenditure within the period, while Edo received the lowest development projects of about 5 percent.
Expenditure
In terms of expenditure, out of the N22.68 trillion remitted to the Federation account, ₦19.01trillion mineral revenue was disbursed to the three tiers of government.
On disbursements to the three tiers of government, ths report showed the Federal Government received about N8.85 trillion ocer the period, while N5.80 trillion and N4.36 trillion were received by the 36 States and Local Governments respectively.
A comparison of allocation per geo-political zones revealed that south-south states received the highest allocation during the period under review, about ₦5.17 trillion, or 26.54 percent, while south-east got the lowest allocation of ₦2.12 trillion, or 10.91 percent.
A state by state analysis of revenue allocations within the period under review showed that Delta state received the highest allocation of ₦1.24 trillion, while Federal Capital Territory received the lowest allocation of ₦110 billion.
On the nine selected states covered by the audit, the report revealed that their combined revenues inflows within the three years period was about N5.104 trillion.
Details showed that statutory allocation accounted for N3.55 trillion, while internally generated revenue (IGR) and loans accounted for N1.33 trillion and N227 billion respectively.
Further breakdown showed that Delta state received the highest revenue of N1.083 trillion, while Nasarawa state received the lowest revenue of N214 billion.
The recurrent expenditure from the nine states was about N2.89 trillion, while capital expenditure and loan repayments were N2.059 trillion and N250 billion respectively.
In terms of allocation to states, the report said Delta received the highest allocation from FAAC during the three years under review, with a total of N712.6 billion, with Akwa Ibom coming second with over N677.76 billion, while Nasarawa received the least inflows at N156.64 billion.
Bayelsa state was the most dependent on FAAC allocations, posting an average of 90 percent FAAC disbursement to the total revenue profile for the three years period. Ondo state posted the least dependence on FAAC allocations. Ondo state did not borrow in 2017 and 2018, against over N17.8 billion borrowed in 2019.
Similarly, the report disclosed that Kano state stands out as the only state in the country that did not collect loans within the period under review, while Rives state collected the highest loan of N79.124 billion within the period.
The report noted that the nine selected states covered were over-reliant on revenues from the federation account by over 71 percent, with 81 percent of allocations to the states used for recurrent expenditure.
In terms of internally generated revenue analysis, the report showed that Rivers state generated the highest revenue of over N344.38 billion within the three years period, while Imo state recorded the lowest amount of IGR of N35.006 billion within the period.
Despite the low IGR by the states as highlighted in the 2017-2019 FASD report, NEITI said the states showed remarkable improvement when compared to their performance during the 2012-2016 FASD audit exercise, a positive sign that the states are gradually paying attention to their IGR potentials.
In terms of the gap between actual development projects expenditure as per audited financial statements and project monitoring list provided by the Commission, the report found about ₦522.60 billion.
“While one projected was reported in NDDC’s financial statement, the project monitoring list reported expenditure of N157 billion on physical projects among the nine member states”
Besides, about 40 oil and gas companies defaulted in their payment obligation to the Commission, which did not receive any monies from the Ecological Fund as stipulated by the law throughout the three years under review.
The report observed that this negatively affected the revenue inflow into the Commission within the period.
On the Tertiary Education Trust Fund (TETFund), the report said about N644.19 billion was realised within the period under review, with actual funds available for disbursement by TETFund for the period at ₦624.32 billion.
Also, about ₦102.14 billion, or 46.55 percent, was disbursed to the universities, while ₦46.12 billion, or 21.35 percent, ₦49.97 billion, or 21.97 percent and ₦27.09 billion, or 10.12 percent were disbursed to Polytechnics, Colleges of Education and other tertiary institutions programs respectively.
Describing the process of accessing the fund as cumbersome, the report called on TETFund to simplify the process to enable more universities access the funds.
Petroleum Technology Development Fund (PTDF) revenue for the period under review was put at ₦155.34 billion, with 95 percent realized from signature bonus paid by oil and gas companies, which is the main revenue source to the agency.
The report revealed that out of ₦86.34 billion utilised by the agency within the period under review, about ₦59.84 billion was spent on core operating expenses, while ₦26.35 billion and ₦143 million was for personnel / administrative expenses and capital respectively.
The report noted that the PTDF extended funding to 125 approved institutions, 43 locals and 82 foreign institutions.
While there was low expenditure compared with the revenue released during the years under review, the report observed that only 56 percent of the revenue was utilised.
On the Nigeria Content Development and Monitoring Board (NCDMB), the report said that out of the total revenue receipts of about ₦126.73 billion for the period under review, payments from the one percent Nigerian Content Development (NCD) levies by oil and gas companies accounted for N116.95 billion, or 92 percent of the revenue, with 48.07 percent of the revenue used for operating expenses, while 51 percent used for capital expenditure.
On Nigerian Sovereign Investment Authority (NSIA), the report disclosed that financial flows for the three year period summed up at ₦1.33 trillion.
Details showed that about ₦76.28 billion was contributed by the government to the funds in 2017, while about $250 million approved by National Economic Council (NEC) in 2019 was remitted in August 2020.
The report also revealed that NSIA’s investment fund witnessed phenomenal increase of 71 percent within the three years under review to about ₦946.36 billion, with the return on capital employed for the Stabilization Fund (SF), Future Generations Fund (FGF) and Nigeria Infrastructural Fund (NIF) at 8.68 percent, 7.21 percent and 5.40 percent respectively.
The Petroleum Product Pricing Regulatory Authority (PPPRA), the report said the agency received a total of N27.68 billion as Federal government subvention for the three years period, with the regime of subsidy payment on petroleum product discontinued within the period under review.
The report said the Ecological Fund (EF) stood at about ₦170.15 billion during the period under review, with statutory allocation accounting for the 93.43 percent of the total revenues.
In terms of disbursements to the country’s regions, the report said the North-central region received the highest number of projects with about ₦36.08 billion, while South-south received the lowest projects, with about N10.93 billion.
The report also revealed that the National Emergency Management Agency (NEMA) received ₦34.04 billion from the Fund, while total receipts that accrued to the Stabilization Fund (SF) during the period under review was ₦85.10 billion,with Statutory Allocation contributing 93.44 percent, while other receipts accounted for 6.56 percent.
The reports noted that a significant proportion of the fund during the period under review went into budget augmentation, which was disbursed mainly to the states. About 25 percent of the transfers to NSIA was to fulfil the Fund’s statutory requirement to be set aside for investment purpose.
The report further noted that about N17.4 billion was transferred from the Fund in 2019 to African Union (AU) as Nigeria’s share of contribution to the body. This transfer accounted for 19.74 percent of the total disbursement from the Fund during the period under review.
The report also noted that expenses related to Federation Account Allocation Committee (FAAC) meetings and professional fees accounted for 8 percent of the total fund outflows.
On the Development of Natural Resources Fund (DNRF), the report revealed that the Fund’s total receipts within the period under review was about N284.92 billion,with 93.77 percent coming from statutory allocation, while total disbursement from the Fund was N312.01 billion.
Disbursements to the Federal Ministry of Water Resources and capital projects accounted for 44 percent and 16 percent respectively.
About N34.08 billion, representing 11 percent of the total disbursement of the Fund, was transferred to NEMA in 2019, although not all receipts to the Fund were utilized for the purpose for which it was established.
For instance, about N10.37 billion and N1.15 billion were paid from the DNRF to African Union (AU) and National Security Adviser for security in 2017 respectively.
Recommendations
The report made observations and recommendations for greater synergy among government agencies and called for prudent management of mineral revenues among the three tiers of government.
Apart from advocacy for stringent measures to prevent funds from being utilized for purposes outside of their mandate, the report called on the federal government to ensure that monthly transfers to the NSIA were done as and when due to ensure adequate savings for the country.
Also, it urged States to continue to innovate to improve their IGR potentials to guarantee future self-sufficiency and improve on their capital vote/expenditure to help close the infrastructural gaps in order to trigger private sector investments that would positively impact on the state’s macro-economic objectives.
NEITI said the publication of FASD report was in fulfillment of Nigeria’s obligation to the global Extractive Industries Transparency Initiative (EITI) and in compliance with the provisions of the NEITI Act 2007.
