A recent analysis of the Federation Account Allocation Committee (FAAC) communiqus and data released by the National Bureau of Statistics (NBS) found that Nigeria’s oil-producing states received a total of N810.77 billion in 13 percent derivation revenue payments from the Federation Account in the first eight months of this year. This represents a significant increase of 105.12 percent compared to N395.26 billion received in the corresponding period of 2023.
The breakdown of the payments shows that the oil-producing states received N57.92 billion in January, N85.10 billion in February, N166.24 billion in March, N90.12 billion in April, N106.50 billion in May, N95.60 billion in June, N109.82 billion in July 2024, and N99.47 billion in August.
Nigeria’s constitution mandates that oil-producing states, including Abia, Akwa Ibom, Anambra, Bayelsa, Delta, Imo, Edo, Ondo, and Rivers, receive 13 percent of oil revenue from the Federation Account as the Derivation Fund. This fund is intended to be used exclusively for the benefit of the communities affected by mineral exploration and production activities.
According to the Director of Information and Public Relations at the Federal Ministry of Finance, Mohammed Manga, the FAAC shared a total sum of N1.203 trillion as Federation Allocation for the month of August 2024. From this amount, the Federal Government received N374.925 billion, the States received N422.861 billion, the Local Government Councils received N306.533 billion, and the Oil Producing States received N99.474 billion as derivation (13% of Mineral Revenue).
In addition to the revenue payments, N81.975 billion was allocated for the cost of collection, while N992.617 billion was earmarked for Transfers Intervention and Refunds. These significant financial contributions can be attributed to the recent increase in Nigeria’s oil output, as reported by OPEC. The country’s crude oil production reached 1.352 million barrels in August, representing an increase from 1.307 million barrels in July.
In 2023, the World Bank predicted that oil-producing states would receive N52 billion more in Federation transfers compared to the previous year. This demonstrates the government’s commitment to supporting the development of these regions and mitigating the negative impacts of mineral exploration and production activities.
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