Presentation To The House Of Assembly Members On The State Of The State.

1. PRESENTATION TO THE HOUSE OF ASSEMBLY MEMBERS
ON THE STATE OF THE STATE
By Dr. John Kayode FAYEMI
Governor, Ekiti State
MONDAY, MARCH 03, 2014
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2. Introduction
• The Nigerian economy is highly dependent on the proceeds
from sale of oil;
• Oil represents 95% of Nigeria’s Foreign Exchange Earnings;
• Oil also represents 80% of budgetary revenue for the
Federation;
• Revenue from Taxes, custom etc represents 20% of
budgetary revenue;
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3. Introduction
Income from revenue generating Agencies are expected to be
transferred to the Consolidated Revenue account for
appropriation;
 Annual budget is based on a predetermined oil output and a
benchmark oil price below the international oil price approved
annually by the National Assembly;
Nigerian Daily oil Quota is currently 1.96mbpd;
The Daily oil output is 2.6mbpd including condensates which
are excluded from Opec oil quota and allowance for pipeline
damage;
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4. Introduction
 The Average oil benchmark price for National budget are as
follows:
 Year 2013 $79pb
 Year 2014 $77.5pb
 Every State Government in Nigeria depends largely on the
Allocation from the Federation Account;
 The Annual Budget of the State is predicated upon earnings
from the Federation Account;
 Consequentially, any major change due to poor handling /
depletion of the nations’ resources will usually have ripple
effects on the implementation of Budget at the State and Local
Government levels.
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5. Introduction
 The Average Actual oil production since January 2013 is not
less than 2.4mbpd;
 Average actual oil prices received:
 Year 2013 is $95 - $114;
 Year 2014 is $110pb
 At no time did Nigerian Oil sold less than $95 in 2013 and
$110 in 2014.
 Conclusively, Nigerian earned more revenue from oil sales in
2013 and 2014 than budgeted;
 This can be corroborate by a comparison of revenue reported
by CBN and the Federation Account Allocation Committee in
Tables 1- 3 below:
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6. Source: (1) CBN Monthly Economic Report
(2) Monthly Report of Federation Account Allocation Committee
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7. Source: (1) CBN Monthly Economic Report
(2) Monthly Report of Federation Account Allocation Committee
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8. Source: (1) CBN Monthly Economic Report
(2) Monthly Report of Federation Account Allocation Committee
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9. Source: (1) CBN Monthly Economic Report
(2) Monthly Report of Federation Account Allocation Committee
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10. COMPARISON BETWEEN CBN REPORT & FAAC REPORT ON REVENUE GENERATED IN 2013
• Comparative of CBN
monthly economic report and the
Monthly report of FAAC indicates that revenue accruing to the
Federation Account were not fully reported;
• NNPC has continuously failed to fully account and remit
proceeds of all oil exports into the Federation Account;
• The Federation account Allocation Committee reported
underpayment of N3.03tn oil proceeds received by NNPC to
the Federation Account;
• CBN recently reported
Federation Account;
underpayment
of
$20bn
into
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11. COMPARISON BETWEEN CBN REPORT & FAAC REPORT ON REVENUE GENERATED IN 2013
• Interest earned on funds accruing to Federation account are
not properly accounted for;
• Exchange rate used for receipts from sale of crude oil, gas
e.t.c is N154.70 to $1. This is below the budgeted exchange
rate of N160 to $1.
• The use of flat exchange rate of N154.70 to $1 for
computation of income accruing to the federation account is a
deliberate step to reduce the funds available to States and
LGAs;
• The Accountant General of the Federal Government is also the
Accountant General of the Federation. This negates the spirit
of a true Fiscal Federation requiring the separation of the two
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roles;

12. Impact of depletion of Federation Resources on Ekiti State
The financial resources of the States and LGAs are made up of
the followings:
•Revenue Allocation from Federation Account constitutes
between 80% – 90% of total revenue for most states of the
federation;
•Internally Generated Revenue and other sundry sources
constitute between 10% - 20% depending on the available
opportunities in the respective states;
•Failure to fully account for revenue accruing to the federation
has significantly affected distributable revenue to States and
LGAs.
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13. Impact of depletion of Federation Resources on Ekiti State

14. Impact of depletion of Federation Resources on Ekiti State
•
Report of earnings to the federation by CBN is an indication
that we earn more revenue than reported into the Federation
Account by the Federal Government.
•
The effect of the depletion of nations revenue has created
huge financial burden for State to meet its obligations;
•
Average monthly reduction due to our state is N481m per
month ;
•
Inability of the State Government to meet commitments as
and when due and increasing vicious circle of poverty in the
country.
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15. Request for Action
Considering the current high level of depletion of revenue
accruing to the Federation account which is now a subject of
dispute between FGN, CBN and NNPC, it is desirable that
this august body is enjoined to critically assess revenue into
Federation Account and direct;
• That all revenue accruing to the Federation Account should
only be reported in the Consolidate Revenue Fund;
• The abolition of the Excess Crude Account which has allowed
the Federal Government to manipulate the proceeds of
earnings into the Federation Account;
• The creation of the Office of the Accountant General of the
Federation which shall be separate from the Office of the
Accountant General of the Federal Government;
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16. Requested Action
•
Creation of the Office of the Auditor General of the Federation
which shall be separate from the Office of the Auditor
General of the Federal Government;
•
Audit of NNPC Account;
•
Immediate payment of all outstanding revenue due to the
Federation Account by NNPC;
•
Immediate review of the Revenue Allocation Formula which
was last done 15years ago;
•
Request the Supreme Court of Nigeria to expedite action on
pending constitutional cases with regards to Excess Crude
Accounts, Illegal Deductions and Sale of Sovereign Assets.
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17. THANK YOU.
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