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NNPC’s interim dividend payment contributes to the fiscal uptick as oil revenue surges

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By Samuel Bankole

The Nigerian National Petroleum Company Limited (NNPCL) interim dividend payment, as well as Petroleum Profit Tax (PPT) and royalties, boosted the country’s oil revenue in October, according to the Central Bank of Nigeria’s (CBN) economic report for October.

However, despite a 7.4 percent rise in federally collected revenue relative to the previous month, there remains a 13.1 percent shortfall compared to the budget benchmark.

The provisional FGN retained revenue improved by 4.2 percent but fell short of the monthly target by a significant 42.2 percent. Concurrently, FGN expenditure increased by 2.6 percent but fell short of the benchmark by 25.9 percent.

The deficit expanded by 1.5 percent, reflecting that the improved revenue was insufficient to offset the fiscal gap. However, consolidated public debt stood at N87,379.40 billion, equivalent to 38.7 percent of GDP, comfortably within the 40.0 percent national threshold.

Gross Federation account revenue saw improvement, primarily driven by higher collections from oil sources.

Federal Account receipts reached N1,533.11 billion, a 7.4 percent increase from September 2023, but fell short of the budget by 13.1 percent.

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This positive performance can be attributed to enhanced collections from PPT, royalties, the Production Sharing Contract (PSC), and the NNPCL’s 2023 interim dividend payment.

Despite the surge in oil revenue, non-oil revenue continued to dominate federation revenue, constituting 67.2 percent.

Oil revenue, totaling N502.70 billion, exceeded the September 2023 level by 99.2 percent but remained below the budgetary target of N803.63 billion.

Improved collections from Companies Income Tax (CIT) and Value-Added Tax (VAT) boosted non-oil revenue, surpassing the monthly target of N960.92 billion by 7.2 percent.

The increase in collection relative to the budget underscores the sustained tax reform efforts by fiscal authorities.

However, non-oil revenue saw a 12.3 percent decline compared to the preceding month, indicating potential areas for continued fiscal optimisation.

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