Some experts have decried the growing opaqueness in the petroleum industry, saying from 2007 to 2017 the country could not account for about $83 billion of the withdrawals made from the Excess Crude Account, ECA.
The administration of Nigeria’s Excess Crude Account, ECA has for several years been shrouded in secrecy as experts have continued to query the “loss” of a substantial part of the fund through shady circumstances.
At a round table on Savings and Stabilization Mechanism for Nigeria, Dr. Obiageli Ezekwesili, a former Vice President (Africa Region) of the World Bank, and Odein Ajumogobia, SAN, a former Minister of State, Petroleum Resources and Chairman of the Expert Advisory Panel of the Nigerian Natural Resource Council NNRC admonished Nigerians to escalate issue and get the nation’s leadership to reverse the trend.
Organized by the Oil Revenue Tracking Initiative of the Shehu Musa Yar’Adua Foundation, other key participants at the round table were a financial analyst, Bode Longe, former Executive Director of the Department of Petroleum Resources, Austin Olorunsola, a member of the Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, Prof. Adenikinju as well as participants from the media.
At the event, Mr. Longe said expected inflow into the ECA within the period under review should have been $168 billion.
He said: “While withdrawals by the Federation Account Allocation Committee FAAC, the SURE-P and the National Integrated Power Project NIPP gulped $82.92 billion, the balance in the account as at December 2017 was $2.32 billion, with $82.26 billion unaccounted for. This comes to N11.579trillion, that is, 49 percent of the funds.
“It is fuzzy what actually accrues to the ECA. It is unclear how much has come in. The second layer of the problem has to do with withdrawals from the account. It is also hazy. So, the focus here is a push for more transparency in the ECA administration.
A good start would be if all withdrawals go through the Federation Accounts Allocation Committee, FAAC.
At least, we get the FAAC reports monthly. And so we will be able to see what those withdrawals are for.”
On her part, Ezekwesili recalled how the ECA was created under the President Olusegun Obasanjo’s administration, saying it was time Nigeria gave the fund a constitutional backing.
“The way to think of it is the rule that was put in place when the ECA was established which simply says that there will be an oil-based fiscal rule that determines the benchmark price on the basis of which the budget of the country is formulated and any other revenue above and beyond that will be considered a surplus which is to be held in an account called the ECA with the CBN.
”That was a political arrangement. What then needed to happen was to move that arrangement forward by amending the constitution to reflect that political desire to have a stabilization fund because the idea of the ECA is that you will pack some money that are in excess of what you need for your expenditure at a time when you have bonus revenue because you are going to need it to smoothen your expenditure over the course of the period when you may have your down times so that you are not spending on a boom-bust trajectory.
”If you have volatility in your public expenditure, you cannot achieve economic growth. So, the ECA became necessary in order to smoothen, to make sure that the necessary kind of investments that you have to do annually, public investment, is as smooth as possible.
“What then happens is that nations used this best practice of having a set-aside fund like the Norwegians did with their oil fund account which is now over a trillion dollars because they ensured they enshrined it within constitutional provisions.
”We have not done the same. So, a political arrangement of the ECA was important for it to happen when it did. The forward measure was to have been, now do something with the constitution where S. 162 expects everything that enters into the federation account to be shared among the three tiers of government.
”We must insist as citizens that it is way past time for the ECA, which is a mere political arrangement, to now be a constitutional mandate imposed upon all our levels of government. ”Let the President of the country and the National Assembly lead this process, inviting the governors and local government chairmen and have a discussion that will lead to an amendment of the constitution for this purpose.
“Countries like Botswana and even Ghana later found oil have done it.”
In a communique at the end of the roundtable, participants asked the National Assembly to take urgent steps to give constitutional backing to the ECA and perhaps come up with a Petroleum Revenue Management Act.
