NEITI reveals federation account received N14.4tr in two years
.Concerns over NDDC’s N2.41t expenditure amid transparency, accountability issues
The Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that the nation’s federation account received N14.38 trillion between 2020 and 2021.
The Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji, made this announcement during the unveiling of the 2020-2021 NEITI Fiscal Allocation and Statutory Disbursement (FASD) Industry report, yesterday.
In a breakdown of the revenue remittance to the federation account, the Nigerian National Petroleum Company Limited (NNPCL) remitted a total of N1.55 trillion, representing 10 per cent of the total remitted to the federation account during the period under review.
The report further showed that the now-defunct Department of Petroleum Resources (DPR), which has been unbundled into the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), remitted a total of N2.7 billion, representing 18.83 per cent of the total revenue remitted to FAAC during the period.
Additionally, the Federal Inland Revenue Service (FIRS) remitted a total of N2.13 trillion, solid minerals remitted N13.3 billion, non-minerals N4.8 trillion, VAT remitted N3.17 trillion, while CIT, NCS, and other taxes remitted N2.6 trillion, N2.02 trillion, and N85.2 billion respectively.
During the assessed period, the expenditure of N2.41 trillion by the Niger Delta Development Commission (NDDC) on projects, all labeled as emergencies, raised serious concerns about transparency, accountability, excessive costs, project planning, and execution processes.
The report stated that 97.71 per cent of the expenditure was on capital projects and 2.29 per cent on recurrent expenses. Completed projects include roads (N5.15 billion) and electricity (N1.42 billion), while ongoing projects include roads (N5.27 billion) and buildings (N5.27 billion).
NEITI, observing that all NDDC projects were classified as emergencies, recommended urgent audits on these projects to address the lack of adherence to the laid-down principles of project execution.
NDDC, as one of the benefiting agencies, received N355.27 billion as direct disbursements as required by law from FAAC. The report showed that this sum was received through the direct deduction of 15 per cent of the total monthly statutory allocations due to member states, remittances of 50 per cent of all monies due to member states from the ecological fund, and three percent of the total annual budget of oil companies for providing lasting solutions to the socio-economic difficulties of the Niger Delta region.
Further, the report showed that the Federal Government’s contribution to NDDC was N39.82 billion and N69.68 billion in 2020 and 2021 respectively, totaling N109.45 billion, representing 30.79 per cent of the N355.52 billion it received as allocation during the period under review.
NEITI’s research findings indicated that most of the 36 states heavily rely solely on FAAC allocations, posing a risk to their financial stability. This pattern, it said, hampers progress in economic diversification, debt reduction, and citizen-oriented projects and brings deviation from the intended agenda.
Hence, NEITI urged states to review strategies to improve Internally Generated Revenue (IGR).
The report noted that revenue from the Ministry of Mines and Steel Development (MMSD) doubled between 2017 and 2021, indicating a significant improvement in revenue collection. However, it said this remained low compared to the sector’s revenue potential based on mineral deposits.
“It states that revenues from solid minerals remain abysmally low compared to the sector’s revenue potentials,” the report emphasised.
NEITI suggested that the Federal Government explore methods to attract investment in the solid minerals sector, such as conducting a risk assessment and establishing a special purpose vehicle to minimise risks and promote investments. Additionally, the body said the government should create special financing options and incentives to encourage further investments in the sector.