The recent moves by the Nigerian Senate to abolish the Excess Crude Account is worrisome and an unwelcome development. It is a step in the wrong direction and totally out of tandem with the wishes, yearnings and aspirations of the Nigerian people.
In a motion titled “The Excess Crude Account:An illegality and a drain pipe” sponsored by Senator Rose Oko (Cross River, North) and 42 others, they requested the Executive to act in conformity with sections 80 (1-4) and sections 162 (1-3) of the 1999 constitution as amended which stipulates that all revenues accruing to the Federal Government should be paid into the Federation Account. They further stated that the Excess Crude Account was an illegality since it is unknown to law and urged the Executive to pay the amount above the oil benchmark into the Federation Account while it appropriates a portion of the fund to the Sovereign Wealth Fund.
The Excess Crude Account was set up in 2004 by former President Olusegun Obasanjo to provide savings for the country and stabilization for the economy during periods of shortfall in oil revenue. Accruals to the Excess Crude Account was expected to be the amount above the benchmark of crude oil sales. When Obasanjo left office on May 29th, 2007, he left $25 billion dollars in the ECA and by the end of the year 2007, the account balance in the ECA was a whopping $67 billion dollars
Between 2007 and 2011, when Presidents Yar’adua and Jonathan held sway, the ECA got depleted to less than a billion dollars. The money was shared to all the 36 state governors due to pressure mounted on the President by these governors who claimed that they needed these monies for the infrastructural development of their various states. But there is very little to show for the much talked about infrastructural development in these states as what we see are a litany of decaying and abandoned projects all over the nooks and crannies of Nigeria. Some of these monies were simply shared among the many political associates, appointees and friends of these governors who promptly transferred these monies to their private bank accounts in Europe and America. Moreover, when the rainy day came as typified in the global crash in oil prices in 2014 which resulted in huge revenue shortages for Nigeria since we run a mono economy heavily dependent on oil, it triggered an economic recession which we are yet to fully recover from. Today, 20 states of the federation are unable to pay workers salaries and allowances for about a year now.
What the Senate should do is to legalize the ECA through the creation of the relevant laws and regulatory framework with a proviso that half of the money accruable to the ECA should be invested in the Sovereign Wealth Fund. We should not throw away the baby with the bath water. We need to save for financial contingencies in the future like a fall in the global price of crude oil and also to provide for generations unborn so that in the future when the world’s shifts it’s attention away from fossil fuels, we do not suddenly become a poor nation overnight begging for aid from other countries in order to survive.