The three tiers of governments consisting of federal, states and local government areas shared N3.95 trillion from the Federation Account within the first half of the year.
The disbursements, according to the Nigeria Extractive Industries Transparency Initiative (NEITI) was made by the Federation Accounts Allocation Committee (FAAC) and represented an increase of 41 per cent when compared to the N2.79 trillion distributed in the similar period of 2017.
The NEITI report attributed the positive development to the rise in crude oil prices and similar increase in oil production stressing that increase disbursements recorded the second quarter of 2018, is the highest since the third quarter of 2014.
A breakdown of the disbursements contained in the latest edition of the NEITI Quarterly Review 2018, showed that the federal government received N1.65 trillion, states received N1.38 trillion while local governments got the least share of N795billion. The disparity in the revenues received by each of the three tiers of government was based on the revenue sharing formula of the Federation as stipulated in the constitution.
The lowest monthly figure of N635.6 billion disbursed in the first half of 2018 was N121.4 billion higher than the highest monthly figure (N514.2billion) disbursed in the first half of 2017 and N218 billion higher than the highest monthly figure (N417billion) for 2016. “These figures clearly indicate that revenue accruing to the Federation in the first half of 2018 completely outstripped revenues in the previous two years”, stated the report.
The Quarterly Review further disclosed that total FAAC disbursements in the second quarter of this year was 46 per cent higher than the figure for the same period last year and 127 per cent higher than the figure for the same period in 2016. The report noted that while N2trillion was shared in the second quarter of this year, N1.38 trillion was disbursed during the same period last year and only N886.38 billion was shared in the second quarter of 2016. “In fact, Q2, 2018 was the first time an amount in excess of N2trillion was disbursed since Q3 2014. This is a run of 14 consecutive quarters of disbursements below N2trillion.”
Describing the development as phenomenal, the report stated that the increase of disbursements recorded in the second quarter of 2018, was the highest to the Federation since the third quarter of 2014. It attributed the positive development to the rise in crude oil prices and similar increase in oil production. “Average oil price in 2016 was $43.5 per barrel, while in 2017 oil price averaged $54.2 per barrel.’’
However, in the first six months of 2018, average oil price was $70.6 per barrel. Thus, on the average, oil price increased by 62.2 per cent between 2016 and the first half of 2018”, the NEITI Quarterly Review asserted. “Total oil production in 2016 was 661.1 million barrels while the figure was 690 million barrels in 2017. In 2016, average monthly oil production was 55.1 million barrels while it was 57.5 million barrels in 2017. For the first two months of 2018 for which data is available, average production was 59 million barrels.”
Meanwhile, oil prices increased yesterday as U.S. drilling for new production stalled and as the market eyed tighter conditions once Washington’s sanctions against Iran’s crude exports kick in from November.
Brent crude futures climbed to 77.33 dollars a barrel.
U.S. West Texas Intermediate crude futures were at 68.19 dollars per barrel from their last settlement.
The U.S. rig count has stagnated since May, after staging a recovery since 2016, which followed a steep slump the previous year amid plummeting crude prices.
Outside the U.S., new U.S. sanctions against Iran’s crude exports from November were helping push up prices.
Energy consultancy FGE said several major Iran customers like India, Japan and South Korea were already cutting back on Iran crude.
“Governments can talk tough. They can say they are going to stand up to Trump and/or push for waivers. But generally the companies we speak to … say they won’t risk it,” FGE said.
“U.S. financial penalties and the loss of shipping insurance scares everyone,” it said in a note to clients.
With U.S. rig activity stalling and Iran sanctions looming, the oil market outlook is tightening.
“Investors have largely turned positive again … likely welcoming the return of backwardation,” said Edward Bell, commodity analyst at Emirates NBD bank.
While Washington exerts pressure on other countries to fall into line and also cut imports from Iran, it is also urging other major producers to raise their output in order not to create too strong a price spike.
U.S. Energy Secretary Rick Perry will meet counterparts from Saudi Arabia and Russia on Monday and Thursday, respectively, as Trump administration seek world’s biggest exporter and producer to boost output.
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