Combined FAAC allocations for 2017, 2018 inadequate to fund 2019 budgets of 35 states – NEITI

The combined net disbursements from the Federation Allocation Account Committee (FAAC) to the 36 states and the Federal Capital Territory, Abuja, in 2017 and 2018, can hardly fund the 2019 budgets of 35 states, the latest report by the Nigerian Extractive Industries Transparency Initiative (NEITI) has shown.

Also, NEITI said total FAAC disbursement to the states and Abuja between January and March this year dropped significantly as a result of declining global oil prices, slightly affecting government earnings.

The latest report by the NEITI said total disbursements by FAAC to the states in the first quarter of this year stood at about N1.929 trillion.

The transparency agency said in the latest edition of its Quarterly Review publication that the figure showed a 0.45 per cent decline from the N1.938 trillion disbursed for the same period in 2018.

The publication said the disbursement for the quarter was however about 36.7 per cent higher than the N1.411trillion disbursed in the corresponding period in 2017.

NEITI said total FAAC disbursements in the first quarter of 2019 ended the recent trend of over N2 trillion disbursements which lasted for three consecutive quarters between the second and fourth quarter of 2018.

Details of the disbursements showed the federal government received a total N803.18 billion in the first quarter of this year, which was about 1.18 per cent lower than the N812.8 billion received in the same period in 2018. The figure was about 46.2 per cent higher than the N549.1 billion disbursed in the corresponding quarters of 2017.

The 36 states shared about N675.2 billion in the first quarter of this year, representing 1.19 per cent decline, from about N683.4 billion disbursed to the states in the first quarter of 2018, but 48 per cent higher than the N456 billion disbursed in the corresponding period in 2017.

From the review, NEITI said only the N398.44 billion disbursed to local governments in the first quarter of 2019 was higher by 1.28 per cent compared to about N393.4 billion disbursed in the first quarter of 2018, which is about 47.8 per cent higher than the disbursement in the same period in 2017.

The NEITI review attributed the reduction in FAAC disbursements to the drop in global crude oil prices during the period.

“Crude oil prices experienced a downward spiral from November 2018, from above $80 per barrel in October 2018, to about $57 per barrel by December 2018.

“Average oil price for the first quarter of 2019 was $63.17 per barrel, against the corresponding price of $71.06 per barrel for 2018.