The total distributable revenue, available to be shared between the three tiers of the Nigerian government, increased from about N786.161 billion in May to about N1.9 trillion in June, over a 100 per cent increase.
The three tiers of the Nigerian government, however, agreed to share less than half of the revenue earned in June among themselves after agreeing to save a large chunk of the revenue, an official has said.
Dele Alake, spokesperson to President Bola Tinubu, said in a statement that the federal government, states and local governments shared N907 billion of the total N1.9 trillion (48 per cent shared) revenue earned in June.
The amount shared in June was still over N100 billion higher than the N786 billion shared between the three tiers of government for May.
Of the almost N1 trillion remaining of the June revenue, Mr Alake said, “N790 billion will be saved, and the rest will be used for statutory deductions.”
The total N786 billion shared for May was after deductions but is still less than half of the distributable revenue for June (N907 billion shared + N790 billion saved).
Mr Alake suggested that saving a large chunk of the June revenue was a way of managing inflation that would have arisen if all the revenue was shared in the aftermath of the recent removal of petrol subsidy.
“The committee also resolved to save a portion of the monthly distributable proceeds to minimize 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,” Mr Alake wrote.
President Tinubu had on 29 May, during his inauguration, announced the removal of subsidy on petrol which the government was spending almost a trillion naira on monthly.
The removal of the subsidy has caused hardship for many Nigerians with its attendant increase in the prices of goods and services. However, the subsidy removal also led to increased government revenue with total distributable revenue increasing from about N786.161 billion in May to about N1.9 trillion in June as the government earned money that would in the past be used to subsidize petrol.
Although the government has announced a series of palliatives to cushion the impact of petrol subsidy removal, many Nigerians are still reeling from the policy as petrol prices continue to rise.
In his Thursday statement, Mr Alake said Mr Tinubu also approved “the establishment of the Infrastructure Support Fund (ISF) for the 36 States of the Federation as part of measures to cushion the effects of the petrol subsidy removal on the people.”
“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 spokesperson wrote.
Read Mr Alake’s full statement below.
President Bola Tinubu has approved the establishment of the Infrastructure Support Fund (ISF) for the 36 States of the Federation as part of measures to cushion the effects of the petrol subsidy removal on the people.
The approval was disclosed at the monthly meeting of the Federation Account Allocation Committee (FAAC), on Thursday, 20 July 2023, in Abuja.
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 minimize 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 commends 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.
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