Government announces new excess account

By Bassey Udo

With the excess crude revenue account fast depleting, owing to the high spate of withdrawals to augment the monthly revenue allocations to the three tiers of government, the Federal Government has created another account for the accumulation of excess revenue.

Ibrahim Dankwambo, Accountant General of the Federation (AGF), said the account would host all monthly revenue earnings in excess of about N365 billion which is the ceiling for allocations to be shared by the Federation Accounts Allocation Committee (FAAC) to the Federal and the 36 state governments as well as the Federal Capital Territory (FCT), Abuja.

“A ceiling of N365 billion was set this year as the limit of the amount that could be shared among the three tiers of government every month. Any revenue in excess of this ceiling is transferred into the Excess Revenue Account. Any time there is a shortfall in revenue accrual, government would have to resort to the account before going to any other accounts,” Mr. Dankwambo explained while giving update on the state of the Excess Crude Accounts (ECA).

According to the accountant general, the dollar denominated Excess Crude Account currently holds a balance of about $3.2billion, while the Naira denominated account has N29billion, with the new excess revenue account having N41 billion as its balance.

On why the balances have declined from about $4.6 billion and N89 billion for the first two accounts, Mr. Dankwambo said while a substantial portion of the N336 billion paid last month as augmentation for arrears (about N70 billion) was drawn from the domestic excess crude account, the balance came from the dollar account.

Besides, he said obligations that arose from the operations of either the NNPC or the independent marketers, including payments for imported petroleum products and subsidies verified by the Petroleum Products Pricing Regulatory Agency (PPPRA), were also settled from the domestic crude account.

On statutory revenue allocation for the month of May, the AGF said a total of about N340 billion was allocated for sharing among the three tiers, a decrease of about N22.361 billion, or 6.17 percent, compared with last month’s.

Decrease Due To Production Loss

The decrease was attributed to the maintenance work during the period at the East Area, Qua Iboe, Bonga and Brass Oil terminals operated by ExxonMobil Nigeria Limited, resulting in production loss, as well as fresh attacks on the Trans Forcados and Eboch-Brass oil trunk pipelines.

About N22 billion was approved to be drawn from the domestic excess crude account for the payment of augmentation, bringing the total distributable revenue for the month to N403.414 billion (including the value added tax (VAT) amount of about N40.543 billion, which is lower than the N47.764 billion for last month.

This shows a decrease of N346.469 billion, or 46.21 percent compared with the allocation for last month.

Remi Babalola, minister of State for Finance, said at the end of the meeting that the month’s allocation was still based on the $67 per barrel contained in the 2010 budget, saying discussions have since commenced with the National Assembly for a review of the relevant areas of the 2010 Appropriation Act to reflect the recent proposal to re-jig the assumptions in the budget.

Mr. Babalola explained that government’s decision was a policy action to restore sustainable confidence as well as address existing economic imbalances against the expectations of the various tiers of government.

“A proposed downward review of the revenue profile based on realistic assumptions is in the works,” he said, adding that he was optimistic that next month’s allocation would be based on a newly approved revenue profile.