Abuja - Allocation from the Federation Account available for sharing this month by the tiers of government reduced by N17.38 billion compared to what was shared last month.
The allocation for December last year, distributed last month was N387.77 billion compared to the N370.38 billion distributed yesterday for January.
The decline in the allocation was attributed to the drop in oil prices from $43.4 to $39.04 which resulted in revenue loss amounting to $22.55 million.
Finance Minister Kemi Adeosun told reporters at the end of the monthly Federation Account Allocation Committee (FAAC) meeting in Abuja last night that the drop in the funds distributed was caused by several reasons including oil production shut- in and shut downs; continued drop in oil price and the diversion of Federation Account revenue to fund the Joint Venture Cash (JVC) call commitment to oil majors in the production of crude minerals.
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She confirmed that as a result of the continued oil price slump and inability of government to meet the JVC cash call commitment, government was working a modified carrier strategy to raise funds from the debt market to fund the commitments as it could no longer be guaranteed from oil proceeds.
To reduce the negative impact of cash call obligations on the Federation Account, Mrs Adeosun said the Nigeria National Petroleum Corporation (NNPC) is proposing a Modified Carry Arrangement (MCA) which would be more beneficial to the country because of the continuous decline in oil prices.
- News 24