Fed Govt withholds $418m deductions from states’ allocations

Fed Govt withholds $418m deductions from states’ allocations

State governments heaved a sigh of relief yesterday as the Federal Government held back from deducting their April allocations to pay consultants for the Paris Club refund.

The deduction was stopped because the state governments objected to it because they have appealed an earlier court ruling, which paved the way for the Federal Government to begin the deduction.

A Federal High Court had dismissed a suit by the state governments trying to stop the Federal Government from deducting from their monthly FAAC allocation to offset $418 million owed consultants for Paris Club refund.

A commissioner for Finance, who attended the virtual meeting, told The Nation: “State governments have appealed the earlier court ruling which favours the Federal Government. Based on that we objected the deduction.”

The commissioner confirmed that “the Federal Government was making plans to deduct the money in tranches starting this month until the whole $418million is liquidated”.

Another source at the April, 2022 Federation Account Allocation Committee (FAAC) meeting in Abuja also told The Nation that “there were no deductions this month”. When asked if the issue was discussed at the meeting, the source said “for now nothing (agreement) was reached in that regard”.

At the end of the meeting, a total sum of N725.571 billion March 2022 Federation Account Revenue was shared to the Federal Government, states and local government councils.

According to a communiqué issued at the end of a virtual meeting of the Federation Account Allocation Committee (FAAC) for April 2022, the N725.571 billion total distributable revenue comprised distributable statutory revenue of N521.169 billion and distributable Value Added Tax (VAT) revenue of N204.402 billion.

In March 2022, the total deductions for cost of collection was N44.411 billion and the total deductions for statutory transfers, refunds and savings was N382. 826 billion.

The balance in the Excess Crude Account (ECA) is $35.372 million.

The communiqué confirmed that from the total distributable revenue of N725.571billion; the Federal Government received N277.104 billion, the state governments received N227.201 billion and the Local Government Councils received N167.910 billion.

A total of N53.356 billion was shared to the relevant states as 13 per cent derivation revenue.

The sum of N933.304 billion was received as gross statutory revenue for the month, which was higher than the N429.681 billion received in the previous month by N503.623 billion.

The sum of  N35.631 billion  cost of collection and N376.504 billion being amount for transfers, refunds and savings were deducted from the N933.304 billion gross statutory revenue, resulting in the distributable statutory revenue of N521.169 billion.

From the  N521.169 billion distributable statutory revenue, the Federal Government received N246.444 billion, the State Governments received N125.000 billion and the Local Government Councils received N96.369 billion. The sum of N53.356 billion was shared to the relevant states as 13 per cent derivation revenue.    In March 2022, the gross revenue available from the Value Added Tax (VAT) was N219.504 billion. This was higher than the N177.873 billion available in February 2022 by N41.631 billion.

The sum of N6.322 billion allocation to North East Development Commission (NEDC) and N8.780 billion cost of collection were deducted from the N219.504 billion gross Value Added Tax (VAT) revenue, resulting in the distributable Value Added Tax (VAT) revenue of N204.402 billion.

From the N204.402 billion distributable Value Added Tax (VAT) revenue, the Federal Government received N30.660 billion, the State Governments received N102.201 billion and the Local Government Councils received N71.541 billion.

According to the Communiqué, in the month of March 2022,  Petroleum Profit Tax (PPT), Oil and Gas Royalties,  Import and Excise Duties,  Companies Income Tax (CIT) and Value Added Tax (VAT) all recorded tremendous increases.