NEITI: NNPC Contribution to Federation Account Declined By 56% in Two Years

*FIRS recorded 10% drop 

*NUPRC, federal revenue body, national oil company, others remitted N14.38tn

Emmanuel Addeh in Abuja

The Nigeria Extractive Industries Transparency Initiative (NEITI) yesterday, revealed that the contribution by the Nigerian National Petroleum Company (NNPC) declined significantly by 56 per cent, along with the Federal Inland Revenue Service (FIRS), whose contribution also dropped by 10 per cent, between January 1, 2020 and December 31, 2021.
The decrease in the revenue remittances by both the NNPC and FIRS was attributed to the decrease in revenue generated from crude oil exports in 2021.
The information was contained in the latest Fiscal Allocation and Statutory Disbursement (FASD) report published by NEITI which covered the period 2020 and 2021.

The federal government revenue generating agencies remitted a total of about N14.38 trillion as revenue from the extractive sector to the Federation Account between January 1, 2020 and December 31, 2021.
It listed the revenue generating agencies to include the Nigerian NNPCvv, the Nigerian Upstream Regulatory Commission (NUPRC), the Federal Inland Revenue Service (FIRS), the Ministry of Mines and Steel Development (MMSD), and the Nigeria Customs Service (NCS).

A breakdown of the remittances showed that mineral revenue accounted for N6.40 trillion, about 44.5 per cent of total remittances for the period, while other non-mineral revenue, excluding Value Added Tax (VAT) contributed N4.80 trillion, about 33.37 per cent of total remittances.
The Executive Secretary of NEITI, Dr Ogbonnaya Orji, while presenting the highlights of the report, said it looked at independent assessment of financial transactions in the areas of revenue receipts and payments and how the processes weighed on the scale of transparency and accountability in the oil and gas sector during the period under review.

Other areas that NEITI focused on in this report, it said, were projects executed, deployment to capital projects and recurrent expenditure and how they aligned with the core responsibilities of the agencies, the government and citizens expectations.
The audit covered four  federal revenue generating and 11 beneficiary agencies that are involved in the management of extractive industries funds. It also covered nine selected states: Akwa-Ibom; Bayelsa; Delta; Gombe; Imo; Kano; Nasarawa; Ondo and Rivers states.

The report, which is the fourth in the audit cycle, revealed that overall remittances to the Federation Account for the period increased by about 14 per cent.
The Auditor General of the Federation Mr. Shaakaa Chira, represented by the Director of Audits Mr. Sundung  James stated that the FASD report was useful to the office of the Auditor General and  also in fulfilment of the agency’s mandate as enshrined in the constitution of Nigeria.

He stated that the report would further assist his office when performing the audit of the federation revenue, its collection, remittance, and disbursement process. Also it will aid periodic checks of deductions and transfers made before remittances and the FAAC Allocations”  Eldad affirmed.
Out of a total Mineral Revenue of N6.40 trillion, the report said the defunct Department of Petroleum Resources (DPR) now NUPRC accounted for the highest contribution of about N2.71 trillion, or 18.83 per cent of the total remittances.

This, it said was followed by the FIRS with N2.13 trillion, or 14.81 per cent, and the NNPC with N1.55 trillion, or 10.8 per cent, while the least contribution was from the solid mineral with N13.33 billion, or 0.09 per cent.
Similarly, non-mineral revenue of about N4.80 trillion, or 33.37 per cent of total remittances, increased by N3.86 billion from 2020 to 2021, with the highest contribution of N2.69 trillion, or 18.71 per cent coming from the Company Income Tax (CIT), followed with N2.025 trillion, or 14.08 per cent from the NCS and N85.25 billion, or 0.59 per cent from other tax sources.

While the revenue from CIT in 2021 declined by 5.25 per cent from 2020, the report said the revenue realised by the NCS in 2021 increased by 40.55 per cent, while other taxes significantly recovered from a deficit in 2020 to a positive balance in 2021.
However, the report said the remittances from royalty and other fee payments from the DPR and MMSD (solid minerals) increased significantly by 84 per cent and 43 per cent respectively for the corresponding years.

Receipts from VAT, which increased significantly for the two years period, resulted in the remittance of about N3.18 trillion or 22.1 per cent of total remittances to the Federation Account, while the revenue generated by the NCS increased by 41 per cent during the period under review.
According to NEITI, the federal government, states and local government shared N5.42 trillion mineral revenue.

“In terms of disbursements to the three tiers of government, the report showed that while a total of about N5.42 trillion was distributed to the Federal, State and Local Governments for the period, a total of N859.66 billion was deducted as 13 per cent derivation and shared among the nine oil producing states after the deduction of excess Petroleum Profit Tax (PPT) and royalty,” it said.

The nine oil-producing states, it said, include Abia, Akwa-Ibom, Anambra, Bayelsa, Delta, Edo, Imo, Ondo, and Rivers.
A breakdown of the disbursements showed that while the federal government received about N2.80 trillion, the 36 state governments got N1.45 trillion, and the 774 Local Government Areas received a total of N1.17 trillion.

The report noted 2021 as the year with the highest revenue distribution across board, with 2 per cent increase between 2020 and 2021.
On a state-by-state basis, the report showed that the gross statutory revenue and VAT to the states from 2020 and 2021 was about N4.65 trillion, with Delta, Rivers, Akwa Ibom, and Lagos receiving the highest allocations for the period, while Gombe, Ogun, Ekiti, Plateau, Cross River, and Osun were states with the lowest allocations.

In terms of disbursements to States in the six geopolitical zones, the report said the South-South Zone allocation of N1.37 trillion, or 29.53 per cent of the total revenue, was the highest, as a result of the 13 per cent derivation revenue payment.
“The allocations for the other zones, the report said, were: North-West N830.078 billion, or 17.85 per cent; South-West, N677.69 billion or 14.57 per cent; North-Central, N669.226 billion, or 14.39 per cent, and North-East N591.199 billion, or 12.71 per cent, while South-East had the lowest allocation of N509.59 billion, or 10.96 per cent of the total allocation.

Lagos State received the highest allocation of N243.58 billion in the South-West zone for the period under review, followed by Oyo (N117.93 billion), and Ondo (N95.98 billion), while Osun received the least allocation of N64.19 billion.

The Federal Capital Territory (FCT) got about N112.77 billion as the highest allocation in North-Central Zone, with Borno receiving N122.49 billion, as the highest allocation in the North-East Zone, while Imo State got the highest allocation of N113.45 billion in the South-East zone for the period under review.
In terms of additional revenue from other sources such as exchange gain, excess crude, other non-mineral, solid mineral, and NNPC refunds, the report said a total of N972.705 billion was distributed among the three tiers of government.