Nigerian government workers are likely to feel the pinch of declining federal allocations in the form of unpaid salaries as a growing petrol subsidy bill takes a toll on public finances.
Federal allocations fell to a five-year low in January 2022 at N574.66 billion. That is lower than the N619.34 billion for January 2021, N716.30 billion in 2020, N649 billion in 2019 and N655 billion in 2018.
Federal allocations, which are the lifeblood of a chunk of Nigeria’s 36 states, are dwindling as the state oil company, the Nigerian National Petroleum Company (NNPC), failed to remit its statutory funding to the Federation Account in January 2022.
The NNPC is projected to struggle this year with the burden of an expensive petrol subsidy, which will gulp N3 trillion, 30 percent of the government’s projected revenues for the year.
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A document detailing NNPC’s activities for the month under review indicates that it spent N210.38 billion on petrol subsidy during the month. That figure is likely to rise further with the rally in oil prices, making refined petroleum products more expensive.
The implication of shrinking allocations is that states have less cash to meet their obligations from payment of workers’ salaries to capital projects.
States that are most dependent on the federal handouts to cover their expenses will be the most impacted by the dwindling federal allocations.
Only five states, according to BudgIT, a civic group committed to government financial transparency, can finance their recurrent expenditure without allocation from the Federal Government.
