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Governors may push for 42% of federal allocation in new sharing formula

It has been revealed that state governors in Nigeria may request 40% of the total federal allocation, as the federal government is reportedly set to inaugurate the allocation review committee in the coming week.

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President Buhari signing 2019 Budget, List of President Buhari's Cabinet members, Ministries Departments and Agencies of Nigeria, Governors federal allocation

State governors in Nigeria may request for 42% share of the total federal allocation, as the Federal Government finalises plans to inaugurate the Revenue Allocation Review Committee in the coming week.

According to a source, there are strong indications that state governors will revert to and adopt the recommendation of an earlier report submitted by a sub-committee previously set up in 2011, to demand 42% of the federal allocation as against the 26.72% they currently get.

The details: Ahead of the review of the revenue sharing formula, which is expected to start next week, governors are preparing to also ask the Federal Government to slash its share from the current 52.68% to 37%, while requesting that the share of local governments be increased from the current 20.60% to 23% in the new formula.

The source further disclosed that, “A committee was set up by the Nigerian Governors’ Forum and that proposal on the revenue sharing formula is the position of the Forum. The sub-committee met as far back as 2011 and it was made up of six governors, headed by the then Governor of Lagos State, Mr Babatunde Fashola.

“The other members of the sub-committee were Murtala Nyako of Adamawa State; Sullivan Chime of Enugu State; Babangida Aliyu of Niger State; Rotimi Amaechi of Rivers State and Aliyu Wamakko of Sokoto State.

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“From the report they submitted to the Forum, they recommended that the Federal Government should now get 35%; states should get 42% and local government should get 23%. That was the recommendation and that is what we have continued to push for.”

The back story: Earlier on Tuesday, the Chairman, Revenue Mobilisation Allocation and Fiscal Commission, Mr Elias Mbam, revealed that the commission would set up a committee in the coming week to review the revenue sharing formula for federal, states and local governments due to the current economic realities.

[READ MORE: FG to review revenue sharing formula]

  • The RMAFC chairman revealed that the purpose of the review is to expand and increase the scope of revenue collection in the country and allow states and local governments to have a bigger share of the “national cake.”
  • The current revenue allocation formula, which was designed during the administration of former President Olusegun Obasanjo, recommended that the Federal Government gets 52.68%, while the states and local governments will receive 26.72% and 20.60% of the total amount respectively.
  • Similarly, the 13% federally collected revenue from oil and gas is given to the oil-producing states as derivation revenue to compensate for ecological disasters arising from oil production.

The Governors’ concern: Meanwhile, governors are reportedly concerned about the minimum wage implementation, insisting that for the new N30,000 minimum wage to see the light of the day, the allocation must accommodate the states’ financial short-coming.

The governors noted that managing states today is becoming very expensive and the responsibility is on state governments to inject funds to help the agencies function. The source reportedly disclosed the following that,

“The cost of securing the states has simply become more expensive and the burden is now heavy on the states. The population has also increased over time and these people are in the respective states.

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“During the negotiation for this minimum wage, the governors again presented their position. They were initially reluctant to agree to the N30,000 but eventually gave in but stated, that if it (minimum wage) must be implemented with ease, there must be an adjustment in the revenue sharing formula. The report was again sent to the Federal Government but nothing was done about it.”

In the meantime, members of the Nigerian Governors’ Forum (NGF) are ready to share their perspectives with the Federal Government on how to have a new revenue formula with the revenue commission.

Over time, the allocation formula has generated controversies and remained a key factor in the clamour for restructuring in the country.

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[READ ALSO: FAAC disburses N617 billion as South-South scoops highest allocation]

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Business

NIPOST in disagreement with FIRS, says its stamp duty collection account is legal

This disclosure was made through a series of tweet posts by NIPOST.

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The Nigerian Postal Service (NIPOST) has reacted to claims by the Federal Inland Revenue Service (FIRS) that it is operating an illegal Stamp Duty Account.

In its denial of the submission by FIRS, NIPOST described the claims as false and made to misinform and mislead members of the public.

This disclosure was made through a series of tweet posts by NIPOST through their official Twitter handle on Saturday, August 9, 2020.

NIPOST in its statement disclosed that the account was opened by the Central Bank of Nigeria (CBN) under the Treasury Single Account (TSA) in consultation with the office of Accountant General of the Federation, in the name of NIPOST Stamp Duties Collection Account when CBN gave instruction to Deposit Banks (DMB) to commence the deduction of N50 stamp duties from bank customers accounts.

The statement from NIPOST reads, ‘’The Nigerian Postal Service (NIPOST) attention has been drawn to a publication by the Federal Inland Revenue Service (FIRS) that NIPOST operated an illegal stamp duty account. According to the publication, the Director of Communication and Liaison of FIRS made the statement in a series of tweets.’’

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‘’We hereby state categorically that the statement is false and was made to misinform and mislead members of the public.’’

‘’The account the Director of Communication FIRS made reference to as illegal was opened by the Central Bank of Nigeria under the Treasury Single Account (TSA) in consultation with the office of Accountant General of the Federation, in the name of NIPOST Stamp Duties Collection Account when CBN gave instruction to Deposit Money Banks (DMB) to commence the deduction of #50 stamp duties from bank customers accounts.’’

‘’The account belongs to the Federation and NIPOST does not have access to whatsoever monies lodged into the account, as such the question of illegality and misappropriation does not arise.’’

Going further, NIPOST restated that under the extant laws of Nigeria, the NIPOST Act 2004 provides and vests solely in NIPOST the power to print adhesives postage stamps, which is the instrument for denoting documents and other transaction instruments in compliance with the provisions of the Stamp Duties Act.

NIPOST said that it is seeking the proper implementation of the Finance Act. and was therefore surprised when FIRS took to the tweeter to call out the Chairman, NIPOST Board, Barrister Maimuna Yaya Abubakar, who just brought the attention of the Service and public that the agency would be emasculated if the Act is not properly implemented.

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The statement recalled that when there was a meeting between FIRS and NIPOST in July 2013 in the office of the Executive Chairman of FIRS, it resolved that NIPOST is statutory duty-bound to provide the stamps to be used by FIRS at both federal and state levels.

It can be recalled that there was been an ongoing dispute between FIRS and NIPOST over who should be the collecting agency for stamp duties.

The Chairperson of the Board of NIPOST, Hajiya Maimuna Abubakar, had during an interview claimed that both the FIRS and the National Assembly took over NIPOST’s ideas about stamp duty to the exclusion of the postal service.

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In its reaction, FIRS, while denying such claims said that FIRS is the only agency of federal government charged with the responsibility of assessing, collecting and accounting for all types of taxes including stamp duties.

It states that NIPOST is a government agency established by Decree 41 of 1992 with the function to develop, promote and provide adequate and efficiently coordinated postal services at reasonable rates.

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Commodities

Five oil majors reduce value of their assets by $50 billion in Q2

Energy demand at one point was down by more than 30% globally.

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Five oil majors reduce value of their assets by $50 billion in Q2

Five oil majors (including Exxon Mobil and British Petroleum) reduced the value of their assets by $50 billion in Q2, 2020. They also reduced their production rates as the COVID-19 pandemic caused a downward trend in energy demand.

What this means: The cut in asset valuations and reduction in crude oil production by these oil majors showed the depth of damage the COVID-19 pandemic caused on the global energy sector in Q2, 2020.

Energy demand at one point was down by more than 30% globally and still remains below pre-pandemic levels.

READ MORE: Respite for Nigeria as Exxon Mobil and Shell lose $1.8 billion arbitration award  

Some of these conpanies’ executives said they took these austerity measures because they expect demand to continue to be on the downward trend in the meantime. This is in view of the fact that people around the world are traveling less, even as many global industries are not in full capacity. The pandemic has already killed more than 700,000 people.

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Of those five oil majors, only Exxon Mobil (XOM.N) did not book sizeable impairments, Reuters reported. However, an ongoing re-evaluation of Exxon Mobil plans could lead to a reasonable amount of its assets being impaired, and signal the removal of 20% or 4.4 billion barrels of its oil and gas reserves.

READ ALSO: Oil prices drop to 21-year low as demand and storage crises persist

Oil major BP (BP.L) took a $17 billion hot. It said its plans in the coming years would be a focus on renewables and fewer fossils.

About two weeks ago, Nairametrics reported how Exxon Mobil and Chevron posted their worst losses in modern history, as the COVID-19 pandemic and a glut in crude oil reduced the demand for energy products in the second quarter of 2020.

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Hospitality & Travel

US gives reasons it warned citizens against travelling to Nigeria, lists 12 high risk states

The US government has issued a level 3 Travel Health Notice for Nigeria due to COVID-19.

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US gives reasons it warned citizens against travelling to Nigeria, lists 12 high risk states, Donald Trump, What does Iran’s war with America mean for Africa?, US to stop issuing visa for Birth Tourism, Trump Travel Ban List: Why Nigeria should be excluded  , US spends over $5b in health assistance to Nigeria in 20 years, gives $32.8m for covid-19, Oil Is Back

The United State Government has advised its citizens against travelling to Nigeria due to the Coronavirus pandemic, terrorism, civil unrest, kidnapping, widespread inter-communal violence, and others.

This warning is contained in a travel advisory statement that was obtained from the United State Department of State website.

The statement also disclosed that the Centre for Disease Control and Prevention (CDC) had issued a level 3 Travel Health Notice for Nigeria due to the Coronavirus pandemic. Also, some parts of the country have increased risk.

“Reconsider travel to Nigeria due to Covid-19. Reconsider travel to Nigeria due to crime, terrorism, civil unrest, kidnapping and maritime crime. Some areas have increased risk.’

READ MORE: Chevron considers divesting from Nigeria, to focus on U.S Shale Oil

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‘’Do not travel to; Borno and Yobe States and Northern Adamawa State due to terrorism; Adamawa, Bauchi, Borno, Gombe, Kaduna, Kano and Yobe States due to kidnapping; Coastal areas of Akwa Ibom, Bayelsa, Cross Rivers, Delta and Rivers States (with the exception of Port Harcourt) due to crime, civil unrest, kidnapping and maritime crime,’’ the statement said.

It stated that violent crimes such as armed robbery, assault, carjacking, kidnapping, and rape, have become common throughout the country. As such, US citizens were advised to exercise extreme caution throughout the country due to the threat of indiscriminate violence.

“Terrorists continue plotting and carrying out attacks in Nigeria, especially in the Northeast. Terrorists may attack with little or no warning, targeting shopping centres, malls, markets, hotels, places of worship, restaurants, bars, schools, government installations, transportation hubs, and other places where crowds gather.

READ ALSO: Forex turnover at NAFEX hit $1.6 billion since June 2020

“Sporadic violence occurs between communities of farmers and herders in rural areas.’

The US government acknowledged the fact that it has limited ability to provide emergency services to US citizens in many parts of Nigeria due to the security conditions.

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Going further it stated, “Do not travel to Borno and Yobe States and Nothern Adamawa. Terrorist groups based in the Northeast target churches, schools, mosques, government installations, educational institutions and entertainment venues. Approximately two million Nigerians have been displaced as a result of the violence in Northeast Nigeria.

“Do not travel to Adamawa, Bauchi, Borno, Gombe, Kaduna, Kano and Yobe States. The security situation in Northwest and Northeast Nigeria is fluid and unpredictable, particularly in the states listed above due to widespread inter-communal violence and kidnapping.

“Do not travel to the coastal areas of Akwa Ibom, Bayelsa, Cross Rivers, Delta and Rivers States (with the exception of Port Harcourt). Crime is rampant throughout Southern Nigeria, and there is a heightened risk of kidnapping and maritime crime, along with violent civil unrest and attacks against expatriate oil workers and facilities.’’

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