Financial analysts and experts have continued to express worry over the non-remittance of oil proceeds from the Nigeria National Petroleum Company (NNPC) Limited.
In separate chats with Blueprint, the experts said the NNPC’s action was impacting heavily on Federation Accounts Allocation Committee (FAAC)’s disbursement to the three tiers of government.
They said NNPC’s failure to remit to the federation account was one of the challenges of Nigeria’s structural deficit and happening due to the company’s inefficiency to apply proper investment strategy to safeguard the nation’s wealth.
Nevertheless, the NNPC management of today and its prevailing challenges cannot be isolated from the international oil shock, coupled with the raging Russian-Ukraine war.
According to the National Bureau of Statistics (NBS), FAAC allocation to the federal, state, and local governments between January and March 2022 was N2.18 trillion lower than the N2.24 trillion allocated in the fourth quarter of 2021.
Political economist and development researcher, Adefolarin Olamilekan, averred that the FIRS is the biggest agency oiling the Nigerian economy with enough remittance and revenue largely due to the pragmatic management put in place by the current management of the Service.
According to Olamilekan, Nami has been doing the needful to salvage Nigeria’s revenue sources, with professionalism and competency; that government money is well accounted for, transparently collected and resourcefully disbursed.
“Nami and its team at the FIRS today must be saluted for rescuing the nation because it is the FIRS remittance, collection, and disbursement mechanism that is helping to tap financial resources from the nonoil sector. Just as the NNPC has failed to remit to the national purse, FIRS’s proactiveness and stratagem have paid off.
“The management has been discharging its responsibility within all sense of assiduousness as a federal agency,” Adefolarin said.
In a brief chat with Blueprint, Special Assistant (Media & Communication) to the Executive Chairman of FIRS Johannes Oluwatobi Wojuola, said the narrative has changed as the Service’s monthly remittance to FAAC is 60 percent of the allocation.
He said: “The question thus is, which oil has been running the machinery of the government? It is the taxes collected by the FIRS! The average monthly contribution of the FIRS to FAAC as of today is at least 60%. The reality is that the new cash cow of Nigeria is the taxes collected by the FIRS.
“Again, it is a matter of fact; the FIRS is today leading the drive to wean Nigeria from oil revenue dependency.
“Last year, the FIRS achieved over 100% of its collection target. It collected N6.405 trillion for the year 2021. This is the highest sum ever collected by the Service, and the first time the Service’s collection crossed the N6trillion mark. 31.36% of this sum was collected from the oil sector, while 68.64% was collected from the non-oil sector. About six years ago, the ratio was the other way round with over 60% of revenue coming from oil sources. This tells you that the trajectory of revenue mobilization is changing from a predominance of oil sources to non-oil sources.”
However, business consultant and public affairs analyst, Agaba Wilson Agaba, said the myriads of challenges bedeviling the company coupled with the high cost of petroleum products in the international market had made it extremely difficult to remit oil sales proceeds to the federation account.
He noted that “the inability of the NNPC to remit proceeds from oil sales to the federation account is not surprising due to the myriad of challenges bedeviling the organization.”
These include the over-bearing subsidy currently gulping over N4 trillion, low production, poor management of the nation’s refineries, and oil theft among others.
“…As international oil price increases, the government also pays more for fuel subsidies because we do not refine locally and are left with no option but to import the refined products from other countries at an international price.
“As of 04-Jul-2022, data available on globalpetrolprices.com indicates that the average price of gasoline around the world is USD1.47 per liter while live data available at tradingeconomics.com shows that the average global price per liter of fuel as of today July 12, 2022, is USD1.1.
“Also, as of today, July 12, 2022, the official exchange rate is 1 USD to 415.0816. This puts the current global fuel price at approximately NGN456. But the government-approved price of fuel is NGN165 per liter. This implies that, for every liter of fuel consumed in Nigeria, the government pays N291. If you multiply this by 100 million liters per day you have about N29.1 billion per day.”
Wilson Agaba, who also doubles as Managing Director of Dreamheight Global Consult, noted that with the FIRS constantly improving its tax collection rate, there would be a shift in the revenue source of the government.
“However, two things we can say are that; the FIRS has certainly gotten better in tax collection and there is a noticeable shift in the country’s source of revenue. Overall, a lot still needs to be done to reposition the Nigerian economy for sustainable growth and development,” the expert further said.
Culled from Blueprint Newspaper
