FAAC allocation rises to N2.43tn as oil revenue rebounds

The Federal Government, 36 states and 774 local government councils shared N2.428tn from the Federation Account in October 2026, representing an increase of N90bn, or 3.85 per cent, from the N2.338tn distributed in September.

The increase followed a recovery in statutory revenue, supported by improved receipts from petroleum-related taxes, royalties and import duties, despite a decline in Value Added Tax collections.

The allocation, which represents revenue generated in September, was approved at the October meeting of the Federation Account Allocation Committee held in Abuja.

This was disclosed in a statement issued on Thursday by the Director of Press and Public Relations in the Office of the Accountant-General of the Federation, Bawa Mokwa.

According to the statement, “A total sum of N2.428tn, being September 2026 Federation Account Revenue, has been shared to the Federal Government, States and the Local Government Councils.”

An analysis by The PUNCH showed that the latest distribution marked a modest recovery from the sharp decline recorded in September, when FAAC allocations fell by N669bn, or 22.2 per cent, from the record N3.007tn shared in August.

Despite the improvement, the October allocation remained N579bn, or 19.3 per cent, below the August peak, which was the highest monthly FAAC distribution in reviewed records dating back to 2019.

The allocation was also N122bn, or 4.8 per cent, below the N2.550tn distributed in July, although it exceeded the N2.300tn shared in June.

According to the FAAC communiqué, gross statutory revenue increased by N246.384bn, or approximately 8.6 per cent, to N3.096tn in September from N2.850tn in August.

The improvement followed a sharp contraction in the preceding month, when statutory revenue declined by N1.508tn from N4.359tn recorded in July.

“According to the communiqué, gross statutory revenue of N3.096tn was received for the month of September 2026. This was higher than the sum of N2.850tn received in the preceding month by N246.384bn,” the statement read.

However, gross VAT collections declined by N17.972bn, or 2.2 per cent, to N816.872bn in September from N834.843bn in August.

The decline reversed the increase recorded in August, when VAT receipts rose by N40.875bn from N793.968bn in July.

The statement said, “Gross revenue of N816.872bn was available from the Value Added Tax in September 2026. This was lower than the N834.843bn available in the month of August 2026 by N17.972bn.”

Further analysis showed that total gross Federation Account revenue increased by N228bn, or 6.2 per cent, from N3.685tn in August to N3.913tn in September.

However, the increase in gross collections did not translate into a corresponding rise in distributable revenue because deductions, transfers, refunds and savings also increased.

The communiqué indicated that N131.758bn was deducted as cost of collection in September, compared with N125.142bn in August, representing an increase of N6.616bn.

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Similarly, transfers, refunds and savings rose by N131bn, or 10.7 per cent, from N1.221tn to N1.352tn.

Consequently, the amount available for distribution increased by only N90bn despite the N228bn rise in gross revenue.

The N2.428tn distributable revenue comprised N1.672tn in statutory revenue and N756.587bn from VAT.

The statutory component increased by N107bn, or 6.8 per cent, from N1.565tn distributed at the September meeting.

In contrast, distributable VAT declined by N16.646bn, or 2.2 per cent, from N773.233bn to N756.587bn.

A breakdown of the October allocation showed that the Federal Government received N832.242bn, compared with N804.897bn in September, representing an increase of N27.345bn.

The 36 state governments received N799.872bn, up by N5.559bn from N794.313bn in the previous month.

Similarly, the 774 local government councils received N560.660bn, representing an increase of N5.518bn from N555.142bn.

Oil-producing states also benefited from a significant increase in derivation revenue, which rose by N51.661bn, or 28 per cent, from N184.388bn to N236.049bn.

The derivation allocation represents 13 per cent of mineral revenue distributed to benefiting states in accordance with the revenue-sharing framework.

From the N1.672tn distributable statutory revenue, the Federal Government received N756.583bn, while states received N383.749bn.

Local government councils received N295.855bn, while N236.049bn was distributed to benefiting states as derivation revenue.

For the N756.587bn distributable VAT revenue, the Federal Government received N75.659bn, states got N416.123bn, and local governments received N264.805bn.

The communiqué also revealed mixed performances across major revenue sources in September.

Petroleum Profit Tax, Hydrocarbon Tax, petroleum royalties, import duty, Common External Tariff levies and excise duty recorded significant increases.

However, Companies Income Tax, Capital Gains Tax, Stamp Duties Tax, VAT, mineral royalties, gas-flared penalties, rental gas-flared fees and miscellaneous oil revenue declined considerably.