EXCESS CRUDE ACCOUNT A BRAZEN SLUSH FUND

EXCESS CRUDE ACCOUNT A BRAZEN SLUSH FUND

It simply cannot be the case that an  Excess Crude Account  which has swallowed a whooping $107.4 billion  since it was established should be beyond the scrutiny of  the Nigeria people. If the so called Excess Crude Account (ECA) could talk I suspect it would have a harrowing tale to tell. It would reveal hitherto unknown details of transactions hidden from public scrutiny. It would be telling the story from its sick bed after years of abuse, mistreatment and deceit. It would also be telling us that it should not have existed after 2011, when the Nigerian Sovereign Investment Authority (NSIA) bill was passed. Nigerians should have known from the very begining that anything that has 'excess as' a part of its title would not end well. You don't need to be Freud  to have foreseen its outcome. Now at a time of crisis, that rainy day we hoped would never come, like Old Mother Hubbard in the children's nursery ryhme, the cupboard is bare.

The ECA was stablished in 2004 with the primary objective  to protect Nigeria’s planned budgets against shortfalls caused by  crude oil price volatility. The premise was sensible and it was anticipated  that this prudent measure would insulate a Nigerian economy, entirely dependent on crude oil receipts  and provide a counter cyclical buffer against the effects of  external economic shocks.

 

At its high water mark in 2008 the ECA had an account balance of  over $20 billion.  A decade later in 2018 it had shrunk to $1.8 billion, as of today in 2020 it is now reported as having only $71m.  The account has global notoriety as well as legal uncertainty and is universally acknowledged as the worst of its type in the world. In a recent report by the NRGI it commented  "The government discloses almost none of the rules or practices governing deposits, withdrawals or investments of the ECA," . If any example is needed last December,  the Federation Accounts Allocation Committee (FAAC)reported  that the ECA balance stood at  $631 million  barely three weeks after the Minister of Finance, Zainab Ahmed,  had confirmed  the account balance as $2.319 billion. A shocking revealation made more alarming by the absence of any transparency or accountability.

 Whilst account drawings are inevitable and  in itself a decline in an account balance is  unremarkable, it is the opaque processes and lack of transparency which constitute the problem. The  clandestine wayway in which the ECA is operated confirms its status as a dark pool of money used for nefarious ends.. A source of funds outside the aegis of the National Assembly and with no oversight for the Executive. The ECA is unconstitutional and illegal and according to the Nigeria Senate 'a slush fund' which should be abolished. The evidence seems to support the notion that State Governors  and the Executive have had carte blanche access to the account. The Senate are prepared to abolish the ECA, but stop short of probing it. The Senate is a well established retirement home for ex- state Governors.

  In order to resolve the vexed issue of the ECA and to provide legal certainty , a statue the Nigeria Sovereign Investment Authority (NSIA) bill was passed into law. The NSIA Act, 2011 created the NSIA and authorised the establishment of  three ringfenced funds (Nigeria Infrastructure Fund, Future Generation Fund and Stabilization Fund) which are jointly owned by the three tiers of Government to prepare for the eventual depletion of Nigeria’s oil resources. The ECA should have ceased to exist from such a time and all the deposits held in the ECA transferred to the NSIA, the only possible reason for its continued existence was its usefulness as an impenetrable black box. Its ability to evade scrutiny.

An analysis of the Excess Crude Account (ECA) spending by categories  provided by Premium Times, showed that in the last fifteen years, distribution to the three tiers of government, at the highest, was $61.86 billion. Spending on oil subsidy in the same period was $12.06 billion, debt financing took $15.42 billion and investment on power projects $8.71 billion. The empowerment project popularly known as Sure-P got $5.74 billion while the stabilisation fund, through payments to Sovereign Wealth Fund, was only $1.25 billion. Additionally, the NNPC pipeline and joint ventures operations on gas took $1.51 billion. The other expenditures from the ECA were Security, Transportation and Sundry Contingencies with $496.37 million, $250 million and $100.38 million respectively. It is notable that the information obtained via the FOI Act is legacy data with no means of interrogation.

 Nigerians need to reflect on the fact that an illegal and unconstitutional account maintained by the Federal Government is being used with impunity to evade the scrutiny of the Nigeria people . Whilst reflecting on that they would also do well to reflect on the fact that despite a preponderance of evidence of malfeasance relating to this account, the National Assembly is not prepred to scrutinise this  in any way lest proof of corruption emerges in their ranks. Even if the money has been squandered, which seems most likely, the Nigeria people need to identify those responsible for such profligacy with their  resource endowment  and such actors need to be held accountable.

Femi Ogunkolati, London 

 

 

 


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