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FAAC: FIRS, Custom, NUPRC receive billions more in allocation in Jan 2024 than each State – Report
A report by Agora Policy revealed that the Federal Inland Revenue Service (FIRS), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigeria Customs Service (NCS) received billions more from federation allocation in January 2024 than each individual State in the country.
The report analysed the percentage of the cost of collection of FIRS, NUPRC and NCS in January 2024.
Cost collection refers to the percentage of the revenues the agencies collect on behalf of the Federation every month.
The FIRS receives 4% of non-oil revenues; the NUPRC gets 4% of royalties, rents, and other revenues from the oil and gas sector; and the Nigeria Customs Service receives 7% of customs duties and levies.
These costs are deducted at the monthly FAAC meetings before federally collected revenues are distributed to the three tiers of government and other statutory recipients.
What is in the Report
According to the report, Nigeria spent a total of N78.30 billion as a cost of revenue collection in January 2024, this is higher compared to the total amount disbursed by the Federal Account Allocation Committee (FAAC) to each of the 36 states and the six geopolitical zones in the country.
- A breakdown of the report revealed that FIRS received a total of N43.35 billion in January while NCS received a total of N2.07 trillion.
- The report also revealed that the oil revenue agency, NUPRC got a total of N16.27 billion in the same month.
- Meanwhile, the report showed that none of the 36 states of the Federation received up to this amount as federation allocation, as the state with the highest gross allocation for the month was Delta State which received N39.59 billion.
“FIRS received N43.35 billion as cost of collection. None of the 36 states of the Federation received up to this amount as Federation allocation.
“The state with the highest gross allocation for the month, Delta State, got N39.59 billion, which means that FIRS not only received an amount more than what each of all the 36 states but also got 109.49% of the allocation of the state with the highest gross allocation,” the report stated.
Sharing Formula Internally Flawed
According to the Abuja-based think-tank, the cost-of-collection approach might have served a useful purpose at some point in the past.
However, recent developments show that this method is now fundamentally flawed. It enables abuse, distortions, and wasteful expenditures.
Agora Policy therefore recommends that this approach needs to be jettisoned in favor of more efficient and transparent alternatives.
“It enables abuse, distortions, distractions, and wasteful expenditures. The utility of the approach has been overtaken and is thus no longer tenable,” said Agora Policy.
Furthermore, a detailed analysis by Agora Policy revealed that the combined amount received by these agencies in the first month of the year is higher than the allocation given to each of the six geo-political zones.
“The gross allocations to the six geo-political zones for the same month were as follows: N56.60bn for the North-East; N55.58 billion for the North-Central; N76.09 billion for the North-West; N47.75 billion for the South-East; N141.85 billion for the South-South; and N86.60bn for the South-West,” it added.
