Experts kick as Excess Crude Account drops to $72.41m
…PTF, CPC monitor COVID-19 vaccine distribution
By Kayode Tokede
Finance experts have called on President Muhammadu Buhari to stop the draining of Excess Crude Account (ECA) following the announcement by the
Minister of Finance, Budget and National Planning, Zainab Ahmed, on Thursday that the nation’s excess crude account (ECA) balance as at March 16, 2021, stood at $72,412,384.88. The ECA is a fund established by the administration of former President Olusegun Obasanjo in 2004 to stabilize the country’s economy and smooth out the impact of price volatility in oil exports. It is funded by the difference between the market price of crude oil and the budgeted price of crude oil as contained in the government’s appropriation bill.
Industry analysts suggested that the current increase in crude oil price provides another opportunity for Buhari’s administration to save the excess against period of oil price downturn.
Dr Samson Adamolekun, an Associate Professor of Development Economics stated that the administration of President Buhari should avoid mistakes if the past whereby governors put pressure on the Federal Government to share Excess Crude Account.
Vice President Coalition if South-South Chambers of Commerce,Industry,Mines &Agriculture Dr (Engr) Lucky Akhiwu called on Buhari to put up a strong monitoring committee to monitor the ECA so that it will not be another drain pipe like the 13 per cent derivation fund which governors of oil producing states have failed to utilise for development.
According to BudgIT, this figure decreased from $2.07 billion in May 2015 when President Muhammad Buhari took over to $631million in December 2018 and $324million in October 2019.
It recorded an increase during Buhari’s administration from $2.07bn in April 2015 to $2.26bn in April 2016.
According to Investopedia, despite its good intentions, the ECA has been riddled with controversy, allegations of corruption, and uncertain performance.
For instance, Obasanjo had alleged that his administration left $25 billion in the account which was later denied by the ministry of finance that Obasanjo left $9.43 billion in the excess crude account.
The ECA later increased to $20bn in 2009 during the administration of late President Umaru Yar’Adua. During the administration of former President Goodluck Jonathan, it decreased from $4.56bn in January 2011 to $2.07by in April 2015. However, it received an increase with a peak figure of $8.65bn by in December 2012.
The ECA has transitioned since 2011 to a new sovereign wealth fund, which has had better results to date.
The estimates shows that $107bn was withdrawn from ECA from Jan. 2004 to Apr. 2018.
Ahmed who made the financial figures public in Abuja, during the National Economic Council (NEC) meeting in Abuja further stated that Stabilization account balance as at March 16, 2021 was N24, 994, 821,242.14 while Natural Resources Development Fund Account balance as at 16th March, stood at N90, 744,488,087.88.
While speaking at the annual meeting of the International Monetary Fund and World Bank in 2016, Ngozi Okonjo-Iweala, two-time finance minister and now the Director General World Trade Organization (WTO) credited with setting up ECA in 2004, had said there was no political will to save excess crude revenue under Jonathan, blaming governors in particular.
“We tried it in Nigeria, we put in an oil price based fiscal rule in 2004 and it worked very well,” she said.
“We saved $22 billion because the political will to do it was there. And when the 2008/2009 crisis came, we were able to draw on those savings precisely to issue about a 5 percent of GDP fiscal stimulus to the economy and we never had to come to the bank or the fund.”
In response, the Minister of Transportation Rt Hon Rotimi Amaechi, who was the chairman of the governors’ forum under Jonathan, said governors asked that the money be shared because it kept reducing.
The Senior Special Assistant to the President on Media & Publicity, Office of the Vice President, Laolu Akande in a statement stated that Yemi Osinbajo, at the meeting, commended the National Primary Health Care Development Agency (NPHCDA) for smooth coordination of the nation-wide distribution of the COVID-19 vaccines.
Making a presentation to the National Economic Council, the NPHCDA Executive Director, Dr Fiasal Shuaib, said all States except Kogi has received their Vaccines, noting that Kogi was yet to receive due to the non-repair of their Cold-Chain Store coupled with the State’s concerns around the contradictory information about the vaccines.
According to him, the Independent Corrupt Practices and other Related Offences Commission (ICPC) has been co-opted to support the PTF on Vaccine Accountability to ensure the safekeeping of the vaccines.
Shuaib who revealed that there was a plan to commence weekly record of a dashboard showing level and efficacy of the inoculation by the end of Monday, March 15, 2021, said there was a need for tight security around the vaccines in the States to avoid being vandalized by hoodlums.
He assured that the second tranche of the Vaccines would be received in the country before the second dose of the vaccines intake is concluded.
The Council also received an update from the National Economic Council (NEC) ad hoc committee interfacing with the presidential taskforce on COVID 19 to ease the lockdown of the economy by the Chairman of the Committee Dr Ifeanyi Okowa, Governor Delta State, and the Director-General of the Nigerian Centre for Disease Control (NCDC), Dr Chikwe Ihekweazu.
On the implementation of broadband access in the country, the Minister of Communications and Digital Economy, Mr Ali Isa Pantami sought the support of NEC in the formulation and implementation of policies that will ease broadband penetration in Nigeria.
He said, “All States should support us by adhering to the N145 Right Of Way (ROW) charge per linear meter. The long-term benefits are far more than the initial fees being collected.”
Before the NEC consensus to peg the ROW charge at N145, there were instances the fees varied between N5000 – N10,000.
“We need a Point of Contact in each State as the interface on broadband and digital economy issues, and each State is also encouraged to have an institution or department to handle requests regarding broadband and the digital economy.”
Highlighting some of the benefits derivable in increasing broadband access in the country, the minister noted that “the World Economic Forum predicts that over 60% of global GDP will be digitized by 2022 and that within the next decade, digital platforms will be used to create close to 70% of new value.”
Pantami added that “the Information and Communications Technology (ICT) sector recorded the highest growth rate of all the sectors of the Nigerian economy in both the fourth quarter of 2020 (Q4 2020) and the entire year 2020. This was based on the Q4 2020 Report on Nigeria’s Gross Domestic Product (GDP) released by the National Bureau of Statistics (NBS) released.”
Further highlighting the achievements in the ICT sector, the Minister disclosed that “the Information and Communications Technology (ICT) sector recorded the highest growth rate of all the sectors of the Nigerian economy in both the fourth quarter of 2020 (Q4 2020) and the entire year 2020. This was based on the Q4 2020 Report on Nigeria’s Gross Domestic Product (GDP) released by the National Bureau of Statistics (NBS) released.”
History of Excess Crude Account
Excess Crude Account the equivalent of the Sovereign Wealth Fund, has plunged to $2.45 billion as oil prices continue to fall.
The balance in the dollar component of the excess crude oil revenue account depleted to about $2.45 billion in December 2014.
The account, which stood at about $4.11billion in October, dropped to about $3.11billion in November 2014.
Though there was a controversy of a missing $1billion from the account during the month, the Minister of Finance, Ngozi Okonjo-Iweala said the money was used for the payment of part of the outstanding debt to petroleum products marketers.
