President Bola Ahmed Tinubu has approved the establishment of an Infrastructure Support Fund (ISF) for the 36 states.
It is part of easures to cushion the effects of the petrol subsidy removal, according to Presidential spokesman Dele Alake.
He said this was made known during yesterday’s meeting of the Federation Account Allocation Committee (FAAC) in Abuja.
Alake’s statement further explained that the FAAC would be distributing N907 billion among the three tiers of government for June, out of the N1.9 trillion revenue.
“The new Infrastructure Fund will enable the States to intervene and invest in the critical areas of transportation, including farm-to-market road improvements; agriculture, encompassing livestock and ranching solutions; health, with a focus on basic healthcare; education, especially basic education; power and water resources, that will improve economic competitiveness, create jobs and deliver economic prosperity for Nigerians.
“The committee also resolved to save a portion of the monthly distributable proceeds to minimise the impact of the increased revenues occasioned by the subsidy removal and exchange rate unification on money supply, as well as inflation and the exchange rate.
“Out of the June 2023 distributable revenue of N1.9 trillion, only N907 billion will be distributed among the three tiers of government, while N790 billion will be saved, and the rest will be used for statutory deductions.
“These savings will complement the efforts of the Infrastructure Support Fund (ISF) and other existing and planned fiscal measures, all aimed at ensuring that the subsidy removal translates into tangible improvements in the lives and living standards of Nigerians.
“The Committee commended President Tinubu for the bold decision to remove the petrol subsidy, and even more importantly, for providing necessary support to the States to cushion the effects of the subsidy removal on Nigerians.”
During the FAAC meeting, there were intense negotiations between the Federal Government team and the governors before an agreement was reached on the amount to be shared.
The governors approved the Federal Government’s request not to share the entire N1.9 trillion realised in June.
The decision to save a larger portion was further ratified at the NEC meeting shortly before the commencement of the FAAC meeting.
This is the first time the governors are pushing to save revenue that will accrue directly to the federation account.
In the past, attempts to save excess revenue had been met with staunch resistance from the governors.
The Nation learnt that the Federal Government had convinced the governors to save N1 trillion of the June revenue and get FAAC to share the remaining N900 billion in order not to saturate the economy with cash and further worsen inflation.
Sharing the whole N1.9 trillion, the Federal Government, argued would also put additional pressure on the Naira and whittle down the desired impact of any palliative measures to cushion the subsidy removal.
Instead, both the federal and the state governments have agreed to keep the N1 trillion extra with the Central Bank of Nigeria (CBN) to shore up the foreign reserve and in turn, defend the Naira from further decline.
At the end of the FAAC meeting, a communiqué was issued detailing how the N907,054 billion should be shared.
At the meeting chaired by the Accountant General of the Federation, Dr. Oluwatoyin Madein, it was revealed that “the N907.054 billion total distributable revenue comprised distributable statutory revenue of N301.501 billion, distributable Value Added Tax (VAT) revenue of N273.225 billion, Electronic Money Transfer Levy (EMTL) revenue of N11.436 billion and Exchange Difference revenue of N320.892 billion”.
The total deductions for the cost of collection were put at N73.235 billion. The balance in the Excess Crude Account (ECA) remains $473,754.57.
The communiqué stated that out of the N907.054 billion total distributable revenue, the Federal Government received N345.564 billion, the state governments received N295.948 billion, and the councils received N218.064 billion. Additionally, a total of N47.478 billion was allocated to relevant beneficiaries as 13 per cent derivation revenue.
According to the revised FAAC figures, “the gross statutory revenue for June 2023 amounted to N1,152 trillion, which was an increase of N451.134 billion compared to the previous month’s N701.787 billion”.
From the N301.501 billion distributable statutory revenue, the Federal Government received N146.710 billion, states received N74.413 billion, and the councils received N57.370 billion. Furthermore, N23.008 billion was shared among relevant states as 13 per cent derivation revenue.
The gross revenue available from Value Added Tax (VAT) in June 2023 was N293.411 billion, marking a significant increase of N23.214 billion from May 2023’s N270.197 billion.
Out of the N273.225 billion distributable VAT revenue, the Federal Government received N40.984 billion, the state governments received N136.613 billion, and the Local Government Councils received N95.629 billion.
The N11.436 billion Electronic Money Transfer Levy (EMTL) was distributed as follows: the Federal Government received N1.715 billion, the State Governments received N5.718 billion, and the Local Government Councils received N4.003 billion.
Furthermore, from the N320.892 billion Exchange Difference revenue, the Federal Government received N156.155 billion, the State Governments received N79.204 billion, the Local Government Councils received N61.063 billion, and N24.470 billion was allocated to relevant States as 13 per cent mineral revenue.
According to the communiqué, there was a significant increase in Companies Income Tax (CIT) for June 2023. Import and Excise Duties, Value Added Tax (VAT), and Oil and Gas Royalties also saw substantial increases. However, the Petroleum Profit Tax (PPT) and Electronic Money Transfer Levy (EMTL) experienced considerable decreases.