In the wake of the subsidy removal on Premium Motor Spirit (PMS), commonly known as petrol, the statutory revenue allocations from the Federation Account soared to N10.14 trillion in 2023. This surge marked a substantial increase of N1.93 trillion compared to the previous year, according to data released by the Nigeria Extractive Industries Transparency Initiative (NEITI).
The removal of the petrol subsidy, initiated by President Bola Tinubu in May 2023, led to a significant rise in revenue allocations to the federal, state, and local governments. President Tinubu’s decisive move to eliminate the subsidy, as declared during his inaugural address on May 29, 2023, was promptly executed by the Nigerian National Petroleum Company Limited, resulting in a notable spike in petrol prices.
Following the removal of the subsidy, petrol prices surged from N198/litre to approximately N500/litre, with subsequent increases reaching as high as N617/litre at NNPCL-operated filling stations. Other marketers followed suit, pricing petrol between N660 and N700/litre depending on the location.
NEITI’s Executive Secretary, Dr. Ogbonnaya Orji, unveiled the latest report at the NEITI House, Abuja, emphasizing the agency’s commitment to enhancing public understanding of Federation Account allocations and disbursements.
A detailed breakdown of the revenue allocations revealed that the Federal Government received N3.99 trillion (39.37%), while the 36 states obtained N3.585 trillion (35.34%). Additionally, the 774 Local Government councils shared N2.56 trillion (25.28%).
Moreover, a comprehensive analysis of the N10.143 trillion disbursements in 2023 indicated a notable increase of N1.934 trillion or 23.56% compared to the previous year’s disbursement. This upsurge was attributed to improved revenue remittances to the Federation Account following the removal of the petrol subsidy and the floating of the exchange rate by the new administration.
While the total distributed revenue from the Federation Account witnessed a significant increase in 2023, the rise in allocations varied across different tiers of government, largely influenced by the revenue streams contributing to the inflows.
States and local governments recorded substantial increases in their allocations, reflecting the positive impact of the subsidy removal on revenue generation. Notably, Delta State received the largest share of N402.26 billion, followed closely by Rivers State and Akwa-Ibom State.
Furthermore, NEITI’s report highlighted the need for conservative estimates for crude oil prices and output to enhance budgetary performance and reduce budget deficits. It also emphasized the imperative for economic diversification and investment to bolster local production, reduce import dependency, and mitigate reliance on oil revenues.
NEITI’s FAAC Quarterly Reviews underscored the importance of collaborative efforts between the federal and state governments to address insecurity in rural communities, stimulate internally generated revenues, and foster citizen-centered innovations in leadership.
