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Nigerian governors are seeking ways to achieve steady revenue receipts from crude oil to ensure fiscal stability for both the federal and sub-national governments.
The chairman of the Nigerian Governors’ Forum, Kayode Fayemi, said given the central role oil revenues play in funding the budgets of the various tiers of government in the country, there is need to strengthen their partnership with the state-owned oil company to realise that objective.
Mr Fayemi, who is also the governor of Ekiti State, spoke in Abuja when he led some members of the Forum to meet with the newly appointed Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari.
The governor was accompanied by his Sokoto State counterpart, Aminu Tambuwal; the director general of the NGF, Bayo Omoigui-Okauru; and other top officials of the Forum’s secretariat.
In his remarks, Mr Fayemi told Mr Kyari that over the last few years, the NGF built a working relationship with the NNPC on matters relating to the size and distribution of oil revenues in the country.
According to him, both organisations have held series of engagement meetings to discuss ways of addressing the challenges facing the oil industry and lamented the impact of the falling crude oil prices as well as the cut in oil production on the revenue of states.
The growth and stability of the oil industry, he said, has a significant bearing on the plans of the various governments at all levels, whether federal, state or local government.
He also said that the monthly allocations from the Federation Account Allocation Committee (FAAC) to the three tiers of government have been unstable for some time as a result of the challenges associated with challenges the industry is grappling with.
The NGF chairman said in June 2014 when crude oil price at the international market was at its peak, allocations from the FAAC rose to as high as N1.1 trillion.
However, in May 2016, with the drop in crude oil prices, FAAC allocations shared by the three tiers of government dropped to a record low level of just over N289 billion.
Apart from the fall in crude oil price and production, Mr Fayemi said other challenges that have compounded the instability in the oil market include the impact of cash call obligations to the joint venture operated by the NNPC and the accumulated liabilities.
Other challenges include crude oil theft/losses through sabotage by unpatriotic elements in the Niger Delta region, with over 200,000 barrels of crude oil lost daily to oil theft, and another 500,000 barrels per day deferred in production shut-ins.
Also, he said the existing regulation for Production Sharing Contracts (PSCs) grossly limits government royalties and tax revenues.
