Oil slump: FAAC disbursements drop in Q1 2019
The fall in oil prices slightly affected government earnings in the first quarter of 2019 as the Federation Allocation Account Committee disbursed N1.929tn between January and March this year.
The figure represents a 0.45 per cent decline from the N1.938tn disbursed for the same period in 2018, but 36.7 per cent higher than the N1.411tn disbursed in the corresponding period in 2017.
The information is contained in the latest issue of the Quarterly Review of the Nigeria Extractive Industries Transparency Initiative.
Total FAAC disbursements in Q1 2019 ended the recent trend of over N2tn disbursements which lasted for three consecutive quarters of 02 to Q4 2018.
A breakdown of the disbursements showed that the Federal Government received N803.18bn in the first quarter of the year.
This was 1.18 per cent lower than the N812.8bn the Federal Government received in the same period in 2018 and 46.2 per cent higher than the N549.1bn disbursed in the corresponding quarters of 2017.
A further breakdown showed that the 36 states shared N675.2bn in the first quarter of this year, representing 1.19 per cent decline on the N683.4bn disbursed to the states in Q1 2018 but 48 per cent higher than the N456bn disbursed in Q1 2017.
From the review, only the N398.44bn disbursed to local governments in Q1 2019 was higher by 1.28 per cent when compared to N393.4bn disbursed in the first quarter of 2018, and 47.8 per cent higher than the amount disbursed to them in 01 2017.
The NEITI review attributed the reduction in FAAC disbursements to drop in oil prices.
It stated that “Oil prices experienced a downward spiral from November 2018. Oil prices were above $80 per barrel in October 2018 but by December 2018, they had dropped to $57 per barrel. The average oil price for the first quarter of 2019 was $63.17 per barrel.
“Average oil price for the year 2018 was $71.06 per barrel. Thus, oil prices have been considerably lower in the first three months of 2019 than they were in 2018.”
Another striking disclosure in the NEITI Quarterly Review is that this year’s budgets as already presented by 35 states cannot be adequately funded even by combined net FAAC disbursements to each state in 2017 and 2018.
In addition, the NEITI Review noted that total state revenues (FAAC and Internally Generated Revenue) in 2017 and 2018 could not fund 2019 budgets of 28 states.