Public investment in government-owned enterprises is expected to facilitate the delivery of services, provide public goods as well as yield profits, interest, surplus and dividends arising from the proper management of the investment. Under the Fiscal Responsibility Act, this surplus is termed “operating surplus”. It is the equivalent of dividends in private or publicly quoted companies.
The payment to the government is a distribution share of the operating surplus and not a tax or levy. In the private sector, such outfits aim at remunerating their investors with dividends and bonus/script shares. Having been set up with public funds, it is expected that the ‘capital’ injected in the setting up/running costs is remunerated appropriately.
However, there are different types of GOEs and their classification based on the source of their funding is the most relevant for the calculation of operating surplus due to government. Some GOEs are fully funded from the budget, others are partially funded from the budget while some are self-funded after the government has provided the initial capital setting them up.
If the GOE or agency is partially funded from the Consolidated Revenue Fund of the Federal Government, it should limit its annual expenditure within its internally generated revenue to not more than 60% of its gross revenue and remit 40% of its gross revenue quarterly into the consolidated revenue fund of the Federal Government which shall be considered as payment on account with respect to its operating surplus.
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