FAAC shares N739.965bn to FG, states, LGAs for September, with October allocations uncertain as govts bicker over $418m deduction

Federation Account Allocation Committee (FAAC) has disbursed the sum of N739.965 billion to the three tiers of government as revenue from the federation accounts, representing September allocations.

This is, however, as the fate of October allocations to all tiers of government remain uncertain as all parties to the dispute surrounding deduction on the Paris Club loan refund are yet to agree on timeline for the actual deductions to commence.

The meeting by all parties ended inconclusive, Thursday, though with the Federal Government is likely to bow to pressure from the other tiers to delay the deductions till after October.

Federal Government had already issued promissory notes to some unnamed recipients in the form of consultants said to have facilitated the deal to get the Paris Club to write off the loan, and was already set to commence deductions from states and local governments’ accounts for the payments.

The Federal Government had in 2006 paid $12 billion to get an $18 billion debt write-off by the Paris Club of international creditors.

However, after realizing that the payment was made directly from the revenue accruing to the entire federation, the states and local governments which did not owe the Paris Club demanded a refund.

At a meeting called last Friday, state commissioners of Finance were suddenly informed by the Permanent Secretary, Federal Ministry of Finance that deductions from local governments’ allocations had started in order to pay the Paris Club consultants.

There were reports that some consultants, who claimed a percentage of the refunds as payment for services they said they rendered to the states and local governments, went to court to demand their pay.

Attorney-General of the Federation (AGF), Abubakar Malami, had negotiated an out-of-court settlement with the contractors and consultants, while the sum of $418,953,670.59 was agreed on as the judgment debt.

President Muhammadu Buhari has since given the go-ahead to the Ministry of Finance to commence deductions from the October allocations to states and local governments.

However, the Nigeria Governors’ Forum (NGF), which opposed the payment, approached the court to stop the implementation of the controversial agreement.

Chairman of the Forum of Commissioners of Finance and Benue State Commissioner for Finance, David Olofu, confirmed that state governors would meet with the President over the controversial deductions.

Olofu also disclosed that the commencement of deductions forced FAAC to suspend the revenue distribution for the month of October indefinitely, last Friday.

A meeting scheduled for Thursday on the matter ended in deadlock which prompted fears over payment of October salaries to pubic workers across the country.

Olofu recalled that the governors’ forum had objected to the deductions and requested that a forensic audit be carried out to ascertain the true position of things.

Olofu expressed dismay with the commencement of deductions even though the governors objected to such.

According to him, the deduction is illegal because the issue is in court.

“We went to the FAAC meeting (last Friday) for the month of October and noticed that the Paris Club deductions had commenced.

“The assignment is in respect of local government councils though I don’t know the nature of the assignment (work done in local government areas) but it is in respect of consultancy on the Paris Club loan refund.

“The decision was to suspend the distribution of revenue for the month of October pending the resolution of this issue. Recall that the governors’ forum objected to the deductions,” he said.

Clarifying further on the impasse, Ekiti State Commissioner for Finance, Akin Oyebode, said the issue in contention is not about the money being unavailable, but rather the modus for disbursing in view of the deductions by the government.

“It (allocation) will be released. It was not withheld. The issue had to do with deductions, which were made on the accounts of the states and local governments. Our position, which has been clearly stated by the Chairman of the Forum of Finance Commissioners, is that we believe that those deductions are being challenged and should not even start unless the claims are verified.

“Also, if we are a federation and we are equal partners, we don’t believe that we should just come to a meeting and see deductions on our statement that were not previously discussed and agreed on. That is the principle of federation that we are upholding and defending. It is not an argument per se. It is just that it is a principle that the federating units should be upheld at all times,” Oyebode said.

On his part, the Delta State Commissioner for Finance, Fidelis Tilije, said the NGF would meet the President on the matter.

“The issue hasn’t been resolved and we are hoping that the NGF will have a meeting with Mr. President and we will take it from there. As for the allocation for the month of October, Delta State has not received it.”

However, Director, Information, Press and Public Relations, Office of the Accountant-General of the Federation, Henshaw Ogubike, declined to provide update on the issue from his end.

“There is no update; if there is any update on the issue, I will send it,” he stated.

On when the next FAAC meeting would be held to resolve the issues surrounding October allocations, Ogubike said: “Don’t ask me for an update, because normally I send the update if there is any; if there is any press release, I will send it.”

Meanwhile, a total sum of N739.965 billion has been shared by the three tiers of government as revenue from the federation accounts allocation committee (FAAC).

This is the revenue from September disbursed in October.

Deputy Director (Information), Ministry of Finance, Budget and National Planning, Oshundun Olajide, who disclosed this in a statement on Thursday, added that the disbursed fund is N43 billion higher than the N696.965 billion received from FAAC in August as revenue allocated in September.

According to FAAC, the total distributable revenue comprised of distributable statutory revenue of N577.765 billion, distributable value-added tax (VAT) revenue of N159.096 billion and exchange gain of N3.104 billion.

Out of the total revenue, the federal government received N301.311 billion, the states got N220.272 billion, and local government councils were allocated N164.176 billion.

Oil-producing states also received N54.206 billion as 13 percent derivation, while gross revenue available from value-added tax (VAT) for September was N170.850 billion.

From the VAT revenue, the federal government got N23.864 billion, states received N79.548 billion, while local government councils were allocated N55.684 billion.

September’s VAT revenue is lower than the N178.509 billion available in August by N7.659 billion.

A sum of NN692.283 billion was distributed as statutory revenue.

From this amount, the federal government received N276.008 billion, the state governments received N139.995 billion; while the local government councils received N107.930 billion and 13 percent derivation from mineral revenue was N53.881 billion.The statement noted that petroleum profit tax (PPT), oil and gas royalties, and excise duty increased significantly, while import duty, VAT and companies income tax (CIT) decreased marginally.

Also, FAAC said the balance of the excess crude account stood at $60.860 million at October 28, 2021.