30 August 2017, Sweetcrude, Lagos — States and Local Government in Nigeria received N243.758 billion from the Nigerian National Petroleum Corporation, NNPC, N450 billion debt repayment since October 2011.
According to a report by the Nigeria Extractive Industries Transparency Initiative, NEITI, payments to state governments totaled N151.446 billion while payments to local governments came to N92.311 billion.
The NEITI report explained that disbursements of this refund to states and local governments actually commenced in October 2011 with N15.234 billion, which was for the first and second installments of the refund.
Thereafter, the report said a total of N7.617 billion was disbursed in each of the next 30 months, implying a total of 32 monthly installment payments of N7.617 billion.
For each of these payments, NEITI noted that states received N3.742 billion, local governments received N990.266 million, while oil producing states shared an additional N2.884 billion for 13% derivation.
The report further stated that refunds to the Federal Government started in September 2014 with N10 billion, while disbursements in subsequent months were N6.330 billion.
NEITI disclosed that these payments of N6.330 billion per month to the Federal Government continued for 31 consecutive months, until April 2017.
“A total of N243.758 was refunded to states and local governments while a total of N206.242 billion was refunded to the federal government. Thus, a total of N450 billion was refunded by the NNPC to the Federation Account between September 2011 and April 2017,” the report said.
NEITI said NNPC’s N450 billion indebtedness was for portions of domestic crude oil receipts it had withheld from November 2004, adding that the payment schedule was worked out between the Federation Account Allocation Committee (FAAC) and the NNPC in September 2011 following pressure from various quarters.
It said, “This offers encouraging signs for the possibility of such arrangements for future repayments by the NNPC. NEITI’s Policy Brief released in March 2017 identified unremitted payments by the NNPC and NPDC to the Federation Account totaling N316.074 billion and $21.778 billion.
“A similar arrangement could be worked out for funds withheld or monies not yet paid by NNPC and its subsidiaries, especially NPDC.”
NEITI further stated that between the first quarter of 2015 and the first quarter of 2017, domestic debt servicing had consistently outstripped external debt servicing.
According to the report, in the first quarter of 2015, domestic debt servicing made up over 93% of total debt servicing, adding that the figure did not change much by the first quarter of 2017 as domestic debt servicing was over 92% of total debt servicing.
It said, “Domestic debt servicing has consistently contributed over 90% of total debt servicing since 2015. The Central Bank of Nigeria (CBN) in its Communique No. 114 of the Monetary Policy Committee (MPC) Meeting of July 24 and 25, 2017 indicated that credit to government has been growing while credit to the private sector has been falling, indicating the likeliness of crowding out effect on private sector investment.
“Concerns about such crowding out effect on the private sector was one of the motivating reasons for the recent decision of the federal government to refinance maturing domestic debt with foreign debt.”