These are challenging times for the federal and state governments as one major source of income to the federation account seems to be totally cut off.
On Monday, The National Petroleum Company Limited (NNPC) revealed it failed to remit monies to the federation account in May 2022 despite making N470.61 billion.
This is the fifth straight month NNPC has failed to credit the federal account while exporting crude at an average price of $100 per barrel.
Details of the June FAAC report obtained by Ripples Nigeria showed NNPC since the start of the year made N1.897 trillion, over N234.1 billion more than the expected revenue.
Sadly, however, NNPC said all the revenue had gone into various expenditure which includes petrol subsidy, oil search, Pipeline Security & Maintenance cost, National Domestic Gas Development and Nigeria Morocco Pipeline cost among others.
As expected, the bulk of the expenditure, N1.27 trillion, went toward recovery (also known as petrol subsidy).
In fact, NNPC said it has budgeted another N617 billion for petrol subsidy in June.
The report reads: “The Value Shortfall on the importation of PMS recovered from May 2022 proceeds is N327,065,907,048.06 while the outstanding balance carried forward is N617bn .”
“The estimated Value Shortfall of N845,152,863,012.97bn (consisting of arrears of N617bn plus estimated May 2022
Value Short Fall of N227,721,200,478.23) is to be recovered from June 2022 proceed due for sharing at the July 2022 FAAC Meeting,” it added.
The development means states have a tough road ahead and will have to look inwards to cover for the drop in federal allocations.
Already, some states have announced plans to slash workers’ salaries over dwindling income.
Kano Sate has already announced plans to slash workers’ salaries, following in the foot steps of the Ekiti State government that announced civil servants’ and political appointees’ salaries will be slashed in response to the present economic reality in the country.
Ekiti went further to suspend minimum wage implementation with no date of resumptions.
Ripples Nigeria had recently reported that pension contribution from governments dropped to a 16-year low in the first quarter of 2022.
From recent developments, it is more likely the figure will tank further.