By NBF News

The Federal Government, yesterday, shared N615 billion with state governments, just as they spoke with one voice over the controversial fuel subsidy. They agreed that the subsidy should be removed and the money ploughed into providing critical infrastructure for the country.

They equally won the protracted battle at the cash sharing meeting yesterday as the Federal Government agreed to release $2billion from the excess crude account for the states for the continuation of contracts that have been stopped.

The Minister of State for Finance, Alhaji Yerima Lawan Ngama who announced this to journalists in Abuja after the Federation Account Allocation Committee (FAAC) meeting also noted that the committee shared N615.757billion for the month of October this year among the three tiers of government.

He said: 'Apart from this we are also going to affect some payment from the excess crude account about $2billion will be released to various tiers of government. And with that we believe that the various projects that have been started will be completed to put this economy on the path of growth.'

He recalled that the meeting was adjourned last week, as he said: 'We met last week and we had to adjourn. We resumed today and we have already successfully concluded the meeting.'

Asked why it took so long to share the cash, he noted that the commissioners and governor are no longer comfortable with the soaring increase of subsidy of petroleum products.

The minister explained that because the nation's pump price is fixed, the Federal Government ends up in a situation that the subsidy increases every month making the burden unbearable for the commissioners and governors who believe that the cost is unjustifiable.

His words: 'For sometimes we have been deliberating on this issue of petroleum subsidy. The commissioners are not comfortable with the rising cost of fuel subsidy. The government has it as a policy to subsidize petroleum products but because of the increasing amount of pump price and the fact that our own fuel pump price is fixed, we end up in a situation where the subsidy has been increasing from month to month.

'And the burden has been come unbearable to the commissioners. This is because whatever resources we raise we have a decision to make as to how to use our own revenue: whether to use it for payment of subsidy or to use our own revenue for the provision of our physical infrastructure and provision of social for our citizens. The governors and the commissioners believe that total amount that is devoted to the subsidy is so high that it is not justifiable.'

On the sharing of revenue, Ngama said for the for the month of October, 2011, the gross revenue available from the Value Added Tax (VAT) was N51.640billion as against N60.739 billion distributable in the preceding month, resulting in a decrease of N9.099billion.

He added that the distributable statutory revenue for the month is N440.471 billion which shows a decrease of N112.672billion or 20% when compared to that of September 2011. In addition, the sum of N113.398billion is proposed as augmentation as a result of the shortfall in distributable revenue. The minister said the total distributable revenue for the current month (including VAT) is N603.444billiion and this shows a decrease of N8.009BILLION OR 1.13% compared to the amount distributed in September 2011.

Continuing, he said there was exchange gain of N4.046billion being the difference between the average rate and the budgeted rate.

According to him, the Federal Government got N250.18b statutory payment, the states received N139.17billion while the local government areas got N101.744billion.