Bauchi State Governor, Senator Bala Mohammed, Thursday warned that Nigeria will be in chaos and financial hardship if the NNPC does not rethink its decision to make zero remittance to the Federation Account in April because of the need to defray the cost of petrol subsidy.
The NNPC had in a letter to the Accountant-General of the Federation warned that it would be unable to make any remittance to the central account of the federation for distribution in May because it needed to defray around N111 billion cost of February’s subsidy on petrol.
Reacting to the NNPC’s zero allocation notice, Mohammed said: “You have just heard that the NNPC said that they will not be able to give money to FAAC. I don’t know the amount of chaos that would cause because most of the states are depending on the Federation Account.”
He attributed the downturn in the economy to what he described as the cluelessness of the All Progressives Congress (APC)-led administration.
According to him, it is “because of the cluelessness and lack of capacity to manage the economy that we have found ourselves in this. There is even a blame game between the members of the party within the APC.”
Mohammed told reporters after the National Executive Committee (NEC) meeting of the Peoples Democratic Party (PDP) in Abuja that the PDP, if given a chance in 2023, would not be arrogant with power.
“So, I think we are not going to be arrogant. We know the mistake we committed before and we have taken steps to correct them. We are presenting to Nigerians the better framework, better platform for them to really actualise their aspirations,” he said.
The Bauchi state governor said that the task before the PDP is to ensure unity within its rank ahead of the 2023 general election.
Meanwhile, analysts on Thursday called on the federal, state and local governments to prioritise their spending and be more creative in generating internal revenue as a way of coping with the hard times heralded by dwindling revenue from the Federation Account.
The analysts, in separate interviews with THISDAY, also urged sub-national governments to defer expenditures that could be delayed till the revenue situation improves as well as to develop measures that would help boost internally generated revenue (IGR) in the states.
They spoke against the backdrop of a letter, dated April 26, 2021, by the Nigerian National Petroleum Corporation (NNPC) to the Accountant-General of the Federation, Mr. Ahmed Idris, that it will not be able to remit any funds to the Federation Account in April for distribution in May, in a bid to recover about N120 billion spent on petrol subsidy.
The analysts called on states to look inwards and come up with ingenious plans to boost their revenues by encouraging more investments as well as creating an enabling environment for businesses.
They stated that the announcement by NNPC about not remitting revenue to the Federation Account was particularly “very worrisome.”
The Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, in his reaction, explained how petrol subsidy affects government’s revenue.
He said: “The truth is that what this points to is the fact that subsidy is a cost to the NNPC and a cost to the government and the bottom line is that when subsidies increase, the revenue available to run government’s activities is reducing. So, there is an inverse relationship between subsidy, the level of subsidy and the level of revenue available to the government.”
Managing Director/Chief Executive, Dignity Finance and Investment Limited, Dr. Chijioke Ekechukwu, said it was high time the government recognised the need to change fiscal allocation policy and allow the states to be self-sufficient and self-sustaining.
He said the development was an indication that the federal government needed to allow the pump price of petroleum products to be determined by demand and supply and “not by any meeting with the labour union.”
“But it is also a time for these governments to look inwards and harness other sources of revenue to cushion the effect,” added.
Similarly, President, Capital Market Academics of Nigeria, Prof. Uche Uwaleke, stated that austere times equally calls for cutting costs and reducing wastes in government spending.
He said the development should be of concern to Nigerians, especially civil servants at the state level as salaries would either be delayed or not paid, adding that a shortfall in projected revenue will also affect states’ capacity to pay contractors handling various projects.
Uwaleke said the situation would “adversely affect the distributable revenue for the months that NNPC is unable to remit money to the Federation Account due largely to rising under recovery costs or fuel subsidy.”
“This is because the NNPC is a major contributor to that pool. The others are the FIRS, Customs and to a little extent, Ministry of Solid minerals,” he added.
According to him, given the situation, state governments should reprioritise their spending and make salary payment a priority.