. Minerals rake in ₦6.40trn, non-mineral ₦4.80trn
The Nigeria Extractive Industries Transparency Initiative (NEITI), today, said the Federal government revenue generating agencies remitted about ₦14.38 trillion from the extractive sector to the Federation Account (FA) between January 1, 2020 and December 31, 2021.
The revenue generating agencies include the Nigerian National Petroleum Company Limited (NNPCL), 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 revenue from minerals accounted for ₦6.40 trillion (44.5% of total) for the period, while non-minerals (excluding VAT) contributed ₦4.80 trillion (33.37%), according to a statement by NEITI’s Deputy Director/Head Communications & Stakeholders Management, Obiageli Onuorah.
These information and data are contained in the latest Fiscal Allocation and Statutory Disbursement (FASD) report published by the Nigeria Extractive Industries Transparency Initiative (NEITI) which covered the period 2020-2021.
Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji, while presenting the highlights of the report, was quoted as saying that the information and data contained in the NEITI latest FASD report reviewed processes that characterized all transactions within the sector.
The FASD report 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 included projects executed, deployment to capital projects and recurrent expenditure and how these aligned with the core responsibilities of the agencies, the government and citizens expectations.
NEITI’s FASD Report examined total extractive industries revenue remitted to the Federation Account, tracked allocation and disbursement from the account to statutory recipients as well as utilization and application of the funds by beneficiaries between the years 2020 to 2021.
The audit covered four federal revenue generating and 11 beneficiary agencies that are involved in the management of extractive industries funds, across nine selected states: Akwa-Ibom; Bayelsa; Delta; Gombe; Imo; Kano; Nasarawa; Ondo and Rivers states.
The beneficiary agencies include: Tertiary Education Trust Fund (TETFund); Petroleum Technology Development Fund (PTDF); Niger Delta Development Commission (NDDC); Nigerian Content Development and Monitoring Board (NCDMB); Nigeria Midstream and Downstream Petroleum Resources Agency (NMDPRA) – PEF Nigeria Midstream and Downstream Petroleum Resources Agency (NMDPRA) – PPPRA.
Others are: Nigeria Sovereign Investment Authority (NSIA); Development of Natural Resources Fund (DNRF); Stabilisation Fund; Ecological Fund; Excess Crude Account (ECA)
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%.
The Auditor-General of the Federation Mr. Shaakaa Chira, represented by the Director of Audits, Mr. Sundung James, described the FASD report as useful to the office of the Auditor-General, and also a fulfillment of the Agency’s mandate as enshrined in the Constitution of Nigeria.
He said the report will 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.
FASD report 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.
In his goodwill, the NMDPRA Chief Executive Officer, Mr Faruk Ahmed, represented by the Director, Operations, Mr. Oseni Adewale, said the role being played by NEITI over the years include transparency in public and private sector businesses and even beyond the extractive industries.
NEITI’s demand for accountability from stakeholders has increased the sense of responsibility among agencies and government institutions towards enhancing revenue and maximum value for Nigerian people.
“Today marks an epoch making event, being that the vital information, data and crucial facts to be unveiled will provide opportunity for hind-sight so that we can have a better foresight on our national revenue profile, disbursement and utilization with implications for consolidation, improvement or possible review,” Mr. Oseni explained.
The Executive Director, African Centre for Leadership, Strategy and Development (Centre LSD), and the global representative of the Publish What You Pay (PWYP) Mr. Monday Osasah, who gave a goodwill message on behalf of the civil society organisations, said NEITI has simplified the work of the civil society.
He charged the CSOs to use the information provided by NEITI as a tool for advocacy.
The report was compiled by an Independent Administrator, Messrs Amedu Onekpe & Co., on behalf of the National Stakeholder Working Group (NSWG), otherwise called NEITI Board, in accordance with the NEITI Act, 2007, and the EITI Standard.
The Federal Government received about ₦2.80 trillion, the 36 state governments got ₦1.45 trillion, and the 774 Local Government Areas received a total of ₦1.17 trillion.
Other findings of the FASD report are as follows:
Out of a total Mineral Revenue of N6.40 trillion, the DPR now NUPRC was the highest contribution of about N2.71 trillion or 18.83% of the total remittances, followed by FIRS with N2.13trillion (14.81%), and NNPC with N1.55 trillion (10.8%), while the least contribution was from Solid Minerals with N13.33 billion (0.09%).
The report revealed that contributions by the NNPC declined significantly by 56%, and the FIRS by 10% due to the decrease in revenue generated from crude oil exports in 2021.
However, non-mineral revenue of about N4.80 trillion (33.37%) increased by N3.86 billion from 2020 to 2021, with the highest contribution of N2.69 trillion (18.71%) from Company Income Tax (CIT); Nigeria Customs Service (NCS), N2.025 trillion (14.08%); and other tax sources N85.25 billion (0.59%).
While contribution from CIT in 2021 declined by 5.25% from 2020, the NCS’ increased by 40.55%, and other taxes significantly recovered from a deficit in 2020 to a positive balance in 2021.
However, remittances from royalty and other fee payments from the DPR and MMSD (Solid Minerals) increased significantly by 84% and 43% respectively for the corresponding years.
Receipts from VAT, which increased significantly for the two years period, resulted in the remittance of about ₦3.18 trillion (22.1%), the NCS contribution improved by 41% during the period under review.
Distribution of revenue
The report revealed that the Federal Government, States and Local Government shared about ₦5.42 trillion of minerals revenue.
In terms of disbursements, while about ₦5.42 trillion was shared among the three tiers of government, about ₦859.66 billion was deducted as 13% derivation and shared among the nine oil producing states after the deduction of Excess Petroleum Profit Tax (PPT) and Royalty.
The nine oil-producing states include Abia, Akwa-Ibom, Anambra, Bayelsa, Delta, Edo, Imo, Ondo, and Rivers.
A further breakdown showed that while the Federal Government received about ₦2.80 trillion, the 36 state governments got ₦1.45 trillion, and the 774 Local Government Areas received a total of ₦1.17 trillion.
The report noted 2021 as the year with the highest revenue distribution across board, with a 2% increase between 2020 and 2021.
On a state-by-state basis, 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 got the lowest allocations.
In terms of disbursements to States in the six geopolitical zones, the South-South (SS) Zone allocation of N1.37 trillion (29.53%) was the highest, as a result of the 13% derivation.
For the other zones, the North-West received N830.078 billion 17.85%; South-West, N677.69 billion 14.57%; North-Central, N669.226 billion, 14.39%, and North-East N591.199 billion, 12.71%, while South-East got the lowest with N509.59 billion, 10.96% of the total allocation.
Further breakdown showed that in the South-South, Delta State received the highest of ₦372.07 billion, followed by Rivers (₦298.68 Billion), and Akwa Ibom (₦281.78 Billion), while Cross River got the least allocation (₦66.83 billion) during the year under review.
In the North-West Zone, Kano State got the largest chunk of ₦163.41 billion, followed by Kaduna (₦130.02 billion), and Katsina State (₦123.09 billion), while Zamfara got the least allocation of ₦84.81billion for the period.
Lagos State received the highest allocation of ₦243.58 billion in the South-West Zone, followed by Oyo (₦117.93 billion), and Ondo (₦95.98 Billion), while Osun received the least of ₦64.19 billion.
The Federal Capital Territory (FCT) got about ₦112.77 billion as the highest allocation in North-Central Zone, with Borno receiving ₦122.49 billion, as the highest allocation in the North-East Zone, while Imo State got the highest allocation of ₦113.45 billion in the South-East Zone for the period under review.
Nigerians especially the civil society and the media to use the information contained in the report for advocacy and accountability purposes to ensure prudent use and management of Nigeria’s extractive revenues and bring about sustainable development.
Other revenues sources
In terms of additional revenue from other sources such as exchange gain, excess crude, other non-mineral, solid minerals, and NNPC refunds, the report said a total of N972.705 billion was distributed among the three tiers of government.
A breakdown of the details revealed that while a total of N234.32 billion was shared as Exchange gain, the Federal Government collected ₦109.89 billion; States ₦55.73 billion, and ₦42.97 billion, while ₦25.72 billion was shared as 13% derivation revenue for the period.
Out of a total of ₦81.097 billion revenue shared as Domestic Excess Naira, the Federal Government got ₦37.168billion; States ₦18.85billion, and Local Governments ₦14.53billion, while ₦10.54billion was shared as 13% derivation revenue for the period.
From a total excess oil revenue of about ₦105.257 billion, the report showed that the Federal Government received ₦55.36 billion; States ₦28.079 billion, and Local Governments ₦21.648 billion, while ₦167.94 million was shared as 13% derivation revenue for the period.
The Federal Government received about ₦126.67 billion out of the total ₦240.45 billion shared as non-oil Excess Revenue for the period, while the States got ₦64.25 billion, and Local Governments ₦49.53 billion.
Out of a total of ₦16.83 billion realized as Solid Minerals revenue, the Federal Government received ₦7.712 billion; State Governments ₦3.911 billion, ₦3.016 billion went to the Local Governments, while ₦2.1 billion was shared as 13% Derivation revenue.
In terms of FOREX Equalization revenue shared, the Federal Government got ₦21.083 billion out of a total of ₦46.00 billion, with the State Governments getting ₦10.69 billion, Local Governments ₦8,244 billion, while ₦5.98 billion was shared as 13% Derivation revenue.
From a total of ₦244 billion shared from FGN Intervention revenue, the report said the Federal Government received ₦118.68 billion, State Governments ₦60.19 billion, Local Governments ₦46.41 billion, while ₦18.72 billion was shared as 13% Derivation revenue.
In terms of Excess Bank Charges, out of a total of ₦4.75 billion shared, the Federal Government took ₦2.50 billion, State Governments ₦1.27 billion, and Local Governments ₦978.85 million.
Revenue from Ministry of Mines and Steel Development
An analysis of revenue by State shows that seven out of the 36 states of the federation including the Federal Capital Territory (FCT) contributed 57.90% (₦7,741 billion) of the total revenue generated for the period under review.
The contributing states, including Ogun, Kogi, FCT, Lagos, Ebonyi, Edo, and Cross River State, each provided about 5% of the total revenue.
Ogun and Kogi State led in contributions, accounting for 12.76% and 12.29% of the total revenue respectively, the only states that surpassed the 10% threshold. These significant contributions are attributed to the presence of major operators like Dangote, BUA, Lafarge, and Julius Berger in these states.
Enugu State often referred to as the ‘Coal city’ and known for its large coal deposit (one of Nigeria’s strategic minerals) contributed less than 1% to the total revenue.
NEITI in the report recommended as follows:
· To enhance financial transparency; the government should implement measures to ensure that NNPC stops the recovery of expenses before remittance to FAAC. This will enhance financial transparency and accountability in NNPC’s operations with the federation.
· While the cessation of the subsidy regime has helped to block revenue leakages and improve government revenue, alternative mechanisms for supporting vulnerable citizens and mitigating price fluctuations should be explored.
· To address the significant cost to the federation, the government should commission an independent consultant to conduct a comprehensive review and audit of the NNPCL’s deductions. This will enhance accountability and identify areas for potential improvement or cost-saving measures.
· On the need to review remittance mechanisms, the report recommended that NNPC’s returns from the sales of domestic crude allocated for refineries should be revised to be made in foreign currency instead of in naira. This adjustment will optimize the value of returns and better align them with international trade practices.
· Remittance to the federation account is a function of revenue hence, the NUPRC should ensure that there is a robust system in place for blocking revenue leakages.
· We highly recommend full utilization of the e-recording and e-archiving options for easy access to data.
· Government should develop and implement strategies that will help drive investments (both local and foreign) to the mining sector and improve revenue generation. Efforts should be placed on developing high prospect minerals that can result in significant revenue generation and economic development. In addition, there should be a collaboration between all tiers of government to fight illegal mining operations that result in huge revenue losses.
· The MMSD should engage with key stakeholders to develop a fiscal regime for the mining sector that ensures revenue transparency and help track revenues from all mining operations, including taxes.
NEITI explained that the publication of the FASD report is 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.
NEITI encouraged Nigerians especially the civil society and the media to use the information contained in the report for advocacy and accountability purposes to ensure prudent use and management of Nigeria’s extractive revenues and bring about sustainable development.
More details on the findings and recommendations are contained in the FASD report. The report can be accessed and downloaded on the NEITI website www.neiti.gov.ng.