The Nigerian National Petroleum Corporation (NNPC) remitted a sum of N10.54 billion to the Federation Account Allocation Committee (FAAC) in November 2021 from the proceeds of the sales of crude oil and gas in the previous month.
This is according to the NNPC presentation to the Federation Account Allocation Committee (FAAC) for the month of December 2021.
The net revenue remitted to the federal account reduced yet again, this time by 29.1% compared to N14.85 billion recorded in the previous month. The amount has continuously declined in the past three month, hitting a record low in the review period.
In terms of year-to-date remittances, the agency has remitted a sum of N522.2 billion to the federal account, indicating a shortfall of N1.78 trillion so far in the year. It is worth noting that no remittances were made in the month of April after the NNPC spent N111.97 billion on petrol subsidy consumption for the previous month.
The Chief Financial Officer of NNPC, Umar Isa in a letter explained that the amount spent on subsidy in March would be net-off from oil and gas in April due in May leaving no balance for FAAC.
Highlight
- NNPC recorded an overall crude oil lifting of 7.71Mbbls (Export & Domestic Crude) in the month of October 2021, representing a 32.9% reduction compared to 11.49Mbbls recorded in September 2021.
- Nigeria’s production levels appreciated marginally in the month of October to 1.45 million bpd from an average of 1.417 million bpd recorded in the previous month.
- Crude Oil export revenue received in November 2021 amounted to $4.18 million compared to the previous month where nothing was received.
- Domestic Gas and other receipts in the month was estimated at N16.63 billion.
- Feedstock valued at $51.85 million was sold to NLNG during the period out of which nothing was received in the review month.
The sum of $132.77 million being miscellaneous receipts, Gas and Ullage fees and Interest income was received in November 2021.
The sum of N172.78 billion was the gross domestic crude oil and gas revenue for the month of November 2021. The recoveries were: Strategic Holding Cost and Pipeline repairs amounting to N174.52 billion, Product losses worth N2.07 billion. The value short fall for the month is N182.12 billion, however, the sum of N131.4 billion was recovered while N50.72 billion was deferred for recovery in the subsequent month to enhance federation remittance.
Continuous shortfall smells trouble for states
The continuous decline in the remittances from NNPC to the federation account means that the states will have lesser amount to share amongst themselves. Note that the NNPC and other revenue-generating agencies remit to the federal purse monthly, which is then shared between the federal, state, and local governments of the federation.
Unfortunately, most of the states in the country are very much dependent on the statutory allocations from the federal purse, as their internally generated revenue is still too low to fund their administrative demands. The situation is also exacerbated by the recent decline in value added taxes (VAT) generated from the states in Q3 2021.
According to the National Bureau of Statistics (NBS), a total of N500.49 billion was generated as value added taxes in the third quarter of 2021, representing a N11.8 billion differential compared to N512.25 billion recorded in the previous quarter.
Why this matters
Crude oil earnings still form an integral part of Nigeria’s revenue purse, however, the amount spent by the nation to offset subsidy on petrol has eroded the revenue that would have been shared amongst the states and the federal government. Notably, a sum of N131.4 billion was spent on petrol subsidy in the month under review.
