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Govt to Spend N36bn from Excess Revenue
• Okonjo-Iweala: It’s for states to cushion effect of fuel price hike From Kunle Aderinokun in Abuja, 11.21.2004
The Federal Government has concluded plans to spend N36.6 billion out of the N641.265 billion ($4.8 billion) so far realised from the excess crude proceeds to cushion the effect of fuel price increases. Disclosing this at the weekend in Abuja, Finance Minister, Dr. (Mrs) Ngozi Okonjo-Iweala, also said the money saved in the excess crude account surpassed the Federal Government’s projections of N609 billion by the end of the year. Okonjo-Iweala who fielded questions from finance correspondents after the Federation Account Allocation Committee (FAAC) meeting said the N36.6 billion to be taken out of the excess crude proceeds to cushion the effect of fuel price increases include the N12.6 billion grant to the states to ease transportation problems and N2 billion to subsidize the price of kerosene monthly. She said the Federal Government has decided to grant 32 states N100 million, which they will double to purchase buses for use in alleviating the pains of transportation in the urban and rural areas, and the hike in fuel prices. She added that the remaining four states following the Federal Capital Territory (FCT) will be given N200 million which they will also double for the same purpose. The four states THISDAY gathered, are Lagos, Rivers, Kano and Oyo, which were granted special status because of their high population and difficult terrain. "As you know Mr. President and the Federal Government are very anxious to move on with implementation of these measures to cushion the effect of fuel the Nigerian people. So he had asked me to move in on it. We have discussed with the states on how we are going to implement these measures. Number one is on the issue of transportation and procurement of buses for the Nigerian population, in which the Federal Government has said it would give a N100 million grant to 32 states. the states would also double that to procure buses for the people. "And then for four states and the Federal Capital Territory(FCT), the Federal Government would give N200 million and the states and FCT would double that (N400 million). The four states and FCT have a large population of urban people. Although the buses are not meant only for the urban they can also be for rural use," she said. She said having discussed the implementation with the commissioners of finance and accountants-general of the various states, who were participating in the FAAC, the conclusion was that there was need for further consultations with the governors on the issue. Okonjo-Iweala said already all the states have agreed on the cushioning for the kerosene. "I didn't see any disagreement on cushioning the effect of (high cost of) kerosene with all tiers of government participating in the course of this, which will be about N2 billion a month to subsidize the cost of kerosene to the poor people of the country," she added. She said "each state would participate according to the revenue allocation formula. The states would contribute in that regard. I think that was a good outcome. We would wait for further consultations between commissioners and governors." She noted that "we projected that about N609 billion would be saved by the end of this year, of which Mr. President and governors at the National Council of State and the National Economic Council have agreed to save 50 per cent of the excess crude oil earnings to cushion the volatility of oil prices. That would be saved." "As you can see even as we speak the oil prices have been moving very rapidly and it is now on a downward path. The idea is that Nigerians should not suffer from what it used to suffer in the past; that when oil prices start coming down we don't have any more money even to pay salaries.So, we saved 50 per cent to cushion the impact of further downward pressure on oil prices in the future. "Now 50 per cent of the excess crude oil money we saved in the year 2004 would be spent in 2005. And the Federal Government has already included its own portion in the budget. I believe the states are planning to do the same. Now the 50 per cent of the excess crude oil money that we are going to spend would be used for the cushioning measures that we are talking about," she added. The finance minister pointed out that the states will contribute to the amount meant for cushioning the effect of the price hike from the excess crude proceeds. Noting that "these ones that we are doing are short term measures," she said the Federal Government has also embarked on long-term measures. She disclosed that "the Federal Government's portion of the excess crude savings would go to roads and to power. This is what most Nigerians want to see improvement on. So, the budget of the Ministry of Works, Federal Roads Maintenance Agency and the Ministry of Power and Steel had increased considerably by that amount to improve the roads at least at the federal level." Meanwhile the Federal Government generated a total N207,280,829,369 as revenue in October 2004, as stated in the Federation Account domiciled at the Central Bank of Nigeria (CBN). The Federation Account Component Statement for October 2004 signed by Senior Manager, Banking Operations Department of the CBN, B.K. Gbolade and Assistant Director, Banking Operations Department of the CBN, C.R. Okafor revealed that revenue from the Nigeria National Petroleum Corporation (NNPC) was N102,634,801,293.94 while Ministry of Petroleum Resources brought in N24,327,891,321.92. Federal Inland Revenue Service (FIRS) and Customs and Excise Account made N63,398,523,066.34 and N16,919,613,686.80 respectively for the month under review. Analysis showed that for NNPC, crude oil receipts (1st- 31st October 2004) accounted for N154,100,873,327.81 and CBN/NNPC Oil and Gas Revenue Naira Account represented N59,159,265,306.06. When N45,012,600,000 for Joint Venture Cash Call (JVC) and N65,649,737,339.93 for excess crude were deducted, it leaves a balance of N102,634,801,293.94. For the revenue from Petroleum Resources Ministry, royalties amounting to N46,652,484,355.78 ( less excess proceeds on royalties- N22,742,463,226.40) gave N22,910,021,129.38 while gas flared and miscellaneous oil revenue were N410,088,692.54 and N7,781,500 respectively. Revenue from the FIRS came from petroleum profit tax (PPT) from oil companies N112,375,669,249.31 (less excess proceeds on PPT of N60,111,159,363.51), company income tax (CIT)- N5,714,176,205.64 and other taxes- N5,419,836,974.90. The Customs and Excise Account revealed that a total of N15,232,702,659.53 was collected as import duty while Excise Duty and Fees accounted for N1,590,099,504.21 and N96,811,523.06 for the month under review.
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