The Minister of Finance, Mrs. Kemi Adeosun, has disclosed that the federal government is looking for a new window to fund the oil joint venture (JV) cash calls. This will help free more funds for sharing monthly by the three tiers of government, she said.
The Minister of Petroleum, Dr. Ibe Kachikwu, she said, had made a proposal to the Federal Executive Committee (FEC) to fund the cash calls under modified carrier agreements (MCAs), whereby the partners can raise funds via the debt market.
"This point in time when oil price is down, it becomes very compelling for state governments to have more money to share until oil prices recover.
"It is something we are exploring very actively. The reason why it is very important to states is because the cash call obligations are huge this month," the minister said.
She said MCAs were being introduced in order to make more funds available for sharing by the three tiers of government at the monthly Federation Account Allocation Committee (FAAC) meetings.
The MCAs were introduced in the oil and gas sector by the Olusegun Obasanjo administration as an alternative funding arrangement for its cash call obligations. It allows international oil companies (IOCs) or joint venture partners to raise funds from financial markets to fund the federal government's share of cash calls and recover their cost through crude oil lifting in oil concessions governed by Joint Operating Agreements (JOAs).
Briefing journalists after the FAAC meeting where the various tiers of government met to share the allocation for the month of January, Adeosun said the gross statutory revenue of N290.861 billion received for the month was lower than the N315.019 billion received in the previous month by N24.058 billion.
According to her, shut-in and shut-down of production for repairs and maintenance continued during the period under review, adding however that there was a slight increase in production if crude in December.
She noted that the resulting income was marginal due to a 10 per cent drop in oil prices. She stated that the drop in the average price of crude oil from $43.40 in November to $39.04 in December 2015 resulted in a revenue loss of $22.55 million.
She, therefore, put the distributable Statutory revenue for the month of January at N290.861 billion, adding that the sum of N8.330 billion was refunded by the Nigerian National Petroleum Corporation (NNPC) to the federal government.
"Also, there is an exchange gain of N3.378 billion, which is proposed for distribution. The total revenue distributable for the current month(including VAT) is N370.388 billion," she said.
Adeosun added that the gross revenue available from Value Added Tax (VAT) was N69.719 billion as against N62.071 billion distributed in December 2015.
Giving the breakdown of how the three tiers of government shared the N370.388 billion, Adeosun said the federal, states and local governments got N137.473 billion, N69.728 billion, and N53.757 billion respectively while 13 per cent derivation accounted for N22.380 billion.
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