fbpx
Promoting Good Governance.

FG to review revenue sharing formula, amid falling global crude prices

ON Tuesday, the federal government reiterated its commitment to review the revenue allocation procedure for Federal, States and Local Governments to meet the current economic demands Chairman, of the Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, Elias Mbam disclosed in Abuja according to a NAN report.

He stated that the new sharing formula is expected to allocate States and Local Governments more monies with a long term plan to expand and increase the scope of revenue collection.

“My agenda is to expand the sources of revenue for the federation. I will like to expand the cake that we are sharing so that people will get a reasonable quantity.

“So, we will encourage states and let them know what is available outside oil and gas so they can develop those aspects of the economy to their own benefit,’’ he said.

While 13 per cent of oil and gas federally collected revenue is returned to the oil-producing states as derivation revenue to compensate for ecological disasters arising from oil production.

Revenue from the federation account is shared between the three tiers of government with the federal government staking claim to 52.68 per cent, the 36 state governments share 26.72 per cent and 20.60 per cent is allotted to the 774 local governments.

Proceeds from oil constitute about 90 per cent of the country’s total revenue, however, the 2019 budget, signed by President Muhammadu Buhari in May, was based on oil production of 2.3 million barrels per day with an oil benchmark price of $60 per barrel.

In October 2018, Brent crude (Nigeria’s crude type) hit a record high of $86.74 per barrel, a development that prompted the Federal Executive Council to lift the price of crude oil for the 2019 budget at $60 per barrel, up from $50.5 for the 2018 budget.

Declining crude oil prices, in the global market currently pegged at $59.79 per barrel, is likely to affect the federally generated revenue distributed across the three tiers of government.

Mbam stated that the commission plans to constitute a standing committee by next week to review the revenue sharing formula after repeated failed attempts in the past.

“I intend to do this through diversification in areas outside oil and gas, and that includes solid minerals, agriculture and manufacturing,” he said.

Comment on this:

This site uses Akismet to reduce spam. Learn how your comment data is processed.