The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), has said state governments are right to demand a review of the revenue sharing formula of the Federation Account.
Immediate past acting RMAFC chairman, Shettima Abba-Gana, disclosed this to the News Agency of Nigeria (NAN), in Abuja, yesterday.
Abba-Gana, however, said reviewing the formula is not the solution to states and Local Government Areas’ (LGAs) quest for increasing their revenue.
Under the current sharing formula, the Federal Government takes the lion share of 52.68 per cent from the Federation Account.
The 36 states are allocated 26.72 per cent, while the balance of 20.60 per cent is given to the 774 LGAs.
He said: “Reviewing the formula is not an easy process and I am not particularly sure whether the review of the revenue sharing formula is the best solution for states.
This is because the formula itself is based on a foundation and that is the Constitution that has given the federal exclusive functions and states and LGAs concurrent functions.
Unless you move functions from one tier to another, it will be very difficult to just transfer funds boldly to another tier.”
He said the magnitude of what the states are requiring may not be necessarily easy without some constitutional amendments to look at what the concurrent and exclusive functions of the states, LGs and Federal Governments are. Abba-Gana, however, said what the RMAFC always advocated was getting more revenue that would be enough for the three tiers to share. He added that even government itself require more funds, especially with the current security situation in some parts of the country and the demand for infrastructure which also required funding.
“So what the RMAFC has always advocated for is to get more revenue, we have always been pushing that the Product Sharing Contracts (PSCs) be reviewed to increase the government’s take.
On the review of the PSCs, Abba-Gana said it is an ongoing process that had been done in the past and was last reviewed in 2008.
“In 2014, we did one and former President Goodluck Jonathan did not grant us leave to present it to him, as should be done constitutionally and, since then, we have not done another one.
“Though we have indicated that we need funds to do another one because we need to update it and do some traveling and research to be able to get current economic social realities before we can make anything as the new revenue sharing formula.
That is being considered now and whenever funds are available, the commission will start the process again to review what was done in 2014 and from what I am hearing, the present administration is serious about it.”
PSC is an arrangement used in the upstream sector for the exploration and development of petroleum resources and was adopted by Nigeria for the exploration and development of the offshore and inland basin.