Oil slump: Allocation to states, LGs to drop by N32bn

Brent crude oil

24 November 2014, Abuja – The decline in the price of crude oil in the international market may have led to a reduction in the 2015 allocation to states and local governments from N3.969tn in the 2014 budget to N3.937tn in 2015.

The proposal, which is contained in the revised 2015-2017 Medium Term Expenditure Framework sent by President Goodluck Jonathan to the National Assembly, is N31.91bn lower than the amount approved in the 2014 fiscal period.

The sources of allocation, according to the document, are from the federation account, Value Added Tax and stabilisation fund (Excess Crude Account).

Jonathan had last Wednesday submitted the revised MTEF to the National Assembly, in response to the declining oil price at the international market.

He had said the recent development in the international oil market necessitated that the MTEF be revised to allow for adjustment in some of its key parameters.

In the MTEF, a copy of which was obtained by our correspondent on Sunday, the document stated that while the sum of N2.24tn should be allocated to states, the 774 local governments should share the sum of N1.697trn.

The 2015 figure of N2.24trn for the 36 states is N17bn lower than N2.257tn shared in 2014.

Similarly that of local governments is also expected to decline by about N15bn from N1.711tn to N1.697tn.

Giving a breakdown of the 2015 allocation to the 36 states, the document put their share of federation account, VAT pool and stabilisation fund at N1.728tn, N420.44bn and N91.55bn, respectively.

This is against the N1.665tn, N405.82bn, and N185.94bn allocated under the same sub-heads in the current fiscal period.

For the 2015 allocation to local governments, the MTEF put their share of the federation account, VAT pool and stabilisation fund at N1.332tn, N294.31bn and N70.58bn, respectively.

The amount approved for the 774 local governments in 2014 under these fiscal items were N1.284tn, N284.07bn and N143.35bn.

The Chairman, FAAC Commissioners Forum, Mr. Timothy Odaah, had during an interview in Abuja called for more allocation to the states and local governments to enable them to complete ongoing projects.

He said since elections were coming and coupled with the fact that provisions for security and other elections logistics were expensive, it would be difficult for the states to carry on with developmental projects owing to paucity of funds.

Odaah said, “FAAC commissioners forum has asked for $2bn to be accessed specially from the foreign excess crude account because the states and local governments are really suffering.”

– The Punch

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