In the last seven weeks, Nigeria is estimated to have accrued $2.1 billion into its excess crude account (ECA) at the minimum, enabled by spikes in crude prices amid conflicts beginning mid-January in North Africa, BusinessDay investigation can reveal.
This figure excludes domestic excess crude proceeds, as the investigation was based on exports of an average of 1.6 million barrels of crude per day, with the daily difference between increased crude prices and the budgeted benchmark price of $65.
Notably, crude prices went as high as $117 per barrel in the last few weeks.
Brent oil traded at $116 yesterday; its highest in over eighteen months.
With projections for the nation’s crude exports expected to increase sharply in April, Nigeria will be in line for another round of windfall if the current uncertainties - including the Middle East protest upsurge - causing the jerk in prices remain.
Sadly, the oil price spike does not elicit any delight from a cross section of analysts spoken to who note that given recent economic history and the continued irresponsible spending by the Federal and State Governments, this money would most likely be frittered away just as quickly as it was gained, with nothing to show for it.
Their pessimism stems from past misuse and sharing pattern of the excess crude funds by all tiers of government. The total appropriations have never been reflected in the budgets.
Ken Ukaoha, President National Association of Nigerian Traders (NANTS) told BusinessDay: “We’ve actually put it at $2.6 - $2.7 billion, not even $2.1 billion. This is not the first time we are having such a windfall. We’ve had such blessings a few years back when oil became gold; what did we do with it? It is one thing to have such revenue and it’s another thing to properly manage such funds because often, we become more rascally when we have more funds in our hands and that’s been the pattern of governance in Nigeria.”
Action Aid’s Hussein Abdul notes: “At the end of the day, the common man won’t feel the impact of this windfall. The thing is, opportunities like this do not come every time; just like it happened during the gulf war. The government doesn’t make strategic use of it, no strategic investment plan. This should have been used effectively to build infrastructure; but particularly, at the state level, what is shared is not made good use of. There is need for proper control and management.”
The ECA was created by the government of ex-president Olusegun Obasanjo in 2003 to act as buffer against the effects of the boom-bust cycle of crude oil revenue, as the difference between budgeted benchmark price for oil and actual market price is saved. In 2004, official records show that the ECA was about $5.1 billion. In 2007, this figure rose above $17 billion. In the first quarter of 2010, this sum had dropped to $3 billion. Before the latest spike in oil price, the ECA was reported to hold a little above a relatively paltry $3 million.
Eze Onyekpere, lead director, Centre for Social Justice, said: “What has happened is fiscal rascality of the worst order, pushed mainly from the governors. And we had a federal government that was, for all intents and purposes, a bit spineless; because they couldn’t have done that when Obasanjo was president. So, as far as I am concerned and as far as the Centre for social Justice is concerned, there is nothing concrete on ground as evidence of where this money was put into. They stole this money.”
Though, there is a current push in the National Assembly to replace the ECA with a National Sovereign Wealth Fund (NSWF) which is expected to manage Nigeria’s excess earnings from crude. The argument, however, is that unless a culture of integrity is introduced, varying the framework for the management of the income would not solve the problem.
“Whether it’s ECA or the sovereign wealth fund, the point is about sticking to principles and values by those in positions of leadership. If we have this band of rascally governors come back, which is likely to be the case, and if the president also comes back and he is ready to play ball with them, nothing is going to change,” Onyekpere surmises.
Vice President Transparency International in Nigeria, Ezenwa Nwagwu notes: “Citizens would have to become a little more vigilant and ask government to be responsible.”
