By Louis Achi
Nigeria’s Naira continues in its weak form on Wednesday as it depreciated to N990 to a dollar at the parallel market as demand overweighs supply in the foreign exchange market.
This was witnessed the previous day, Tuesday seeing it at N950 to the dollar.
But there was marginal gain on the naira on the official Investors and Exporters’ (I&E) FX Window, as it appreciated by N771/$1, compared to N777/$1 from the previous day (Tuesday).
It would be recalled that the President in his early days in office abolished the multiple exchange rate regime that, however, didn’t solve the surge of the local currency against the dollar. Rather, things got worse as the system was allowed to be determined by market forces.
The current exchange rate was doubled compared to N460/$1 as at Monday, May 29, 2023 while at the parallel market it was sold for N780/$1 the day the president was sworn in.
According to the Chairman, Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Bello Shehu, the naira witnessed a record low in one day.
Shehu said about N5.24 trillion came to the coffers of the federal government between January and June 2023.
With the current rate N990/$1 at the parallel market and the official I&E window which closed at N771, the gap between the official and parallel market has widened to N219.
A currency dealer, Mr Ibrahim Salisu, told THISDAY that the surge in demand witnessed yesterday was due to speculation.
“Today started off normal but around 11:30 am till evening, we don’t know what may be responsible but dollar became scarce. I’m unable to find even $2000 as we speak,” Salisu was quoted saying.
On the I&E window on Wednesday, figures showed a total turnover of $64.36 million as against $71.01 million exchanged the previous day, a proof of diminishing supply.
On revenue to the government, about N5.24 trillion was generated between January and June 2023, according to Shehu.
He said that the Nigerian National Petroleum Company (NNPCL) JV Petroleum Profit Tax (PPT) gulped N627.30 billion, as captured by the Federation Account Allocation Committee (FIRS), but spent by the NNPCL for other FGN obligations.
He explained the figures reflected in the monthly report to the Federation Account Allocation Committee (FAAC) by the Central Bank of Nigeria (CBN) under the CBN Federation Account Component Statement.
Shehu, however, disclosed that the NNPCL did not account for the said figure nor did it specify if it was profit revenue or forms of revenue as against the Petroleum Industry Act (PIA) 2021.
Weighing in on the matter, THISDAY quoting a source said NNPCL’s non remittance to federation account is essentially due to subsidy payment.
“It had to net off the subsidy on importation of pms, since it was compelled to sell at far below cost price.”
Aside from the NNPCL non remittances, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) remitted N823.51 billion while the FIRS recorded a gross collection of N3.65 trillion but remitted N3.02 trillion, retaining the difference as the cost of collection during the review period.
Also, the Nigeria Customs Service (NCS) remitted N764.63 billion, as contained in a statement by Shehu.
Also, the sum of N1.49 trillion was realised as Value Added Tax (VAT) while N83.02 billion accounted for revenues from Electronic Money Transfer Levy (EMTL) out of which N3.32 billion was paid to FIRS as cost of collection.
About N82.03 billion and N3.32 billion as cost of collection on PPT/CIT and EMTL collections respectively in the period was received by FIRS.
Meanwhile, both FIRS and NCS in total received N59.59 billion as cost of collection within the period under review while the NUPRC received N33.96 billion.
Similarly, N16.68 billion was realised from the solid minerals sector.
The sum of N1.38 trillion was shared to the three tiers of government (federal, state and local government) in line with the approved VAT sharing formula during the period while N1.11 billion was paid in consultation fees on VAT, according to the RMAFC boss.
Statutory allocations to the three tiers of government stood at N3.06 trillion.
He further disclosed that N48.10 billion was paid to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), adding that, “this money was collected by NUPRC as penalty on gas flared.”
Weighing in on statutory deductions, about 32.27 percent was deducted from the total gross inflow into the federation account, this he said was worrisome on the federation account.
Rolling out the figure, Shehu disclosed that the sum of N1.69 trillion was deducted at source by the office of the Accountant General of the Federation (AGF) as approved statutory deductions.
Also, N70 billion was deducted from the federation account by FIRS under the name of FIRS Priority Projects in the second quarter.
To ameliorate this, he opined that some drastic steps need to be taken to boost revenues to the three tiers of government for economic development and growth.
The RMAFC boss also recommended that payment of the cost of collection to revenue-generating agencies should receive a cost of collection that is commensurate with the revenue generated against its revenue target in the Appropriation Act.
In addition, he emphasised the need for the government to review the payment of 100 per cent (less cost of collection) revenue realised from gas flared penalty to the NMDPRA, adding that the gas flare penalty was hitherto a Federation Account revenue component taken over by the PIA, 2021.
Also, he suggested the need for holistic review of all legislations on statutory deductions which will pave the way for an increase in the amount to be shared among the three tiers of government; greater emphasis on the solid minerals sector to improve revenue generation therefrom and further achieve economic diversification.
On FIRS’ needless deduction under the ‘priority projects’, Shehu advised such should stop to avoid the case of the NNPCL where a humongous funds was deducted as first line charge under the NNPC priority projects; and that all accruals due on 13 per cent Derivation should be deducted as at when due to avoid refunds in the future.
Shehu said, “This is to guarantee accountability, probity, and transparency in the management of the Federation Accounts and disbursements to the 3-tiers of government.”
Further recommendations include, NNPCL JV PPT should be paid to the federation account through FIRS, adding that such taxes should not be retained by the company in the name of financing FGN priority projects.
He added that NNPCL should be compelled to remit revenues to the federation account as and when due in compliance with the provisions of the PIA, 2021.
