AFTER almost a decade-and-a-half of operating under a contested legal status, the Excess Crude Account is now undergoing a process of legalisation. Reports have it that a bill that will provide a legal framework for the continued existence of the account, dubbed Excess Revenue Fund Account, has already passed the second reading stage at the House of Representatives.
Although a welcome development, it is long overdue. In a democracy, where transparency is the guiding principle of governance, it is an absurdity to operate a public accounting system that is not only steeped in rampant corruption, but is also subject to arbitrariness and abuse. Elimination of these shortcomings is part of the things the new law would seek to address.
A 2004 creation of the Olusegun Obasanjo Administration, the ECA is defined by an online financial website, Investopedia, as a Nigerian government “account used to save oil revenues above a base amount derived from a defined benchmark price.” Primarily, the ECA was introduced to protect budgets against shortfalls that might arise from crude oil price volatility. It sought to protect public expenditure from being patterned on the boom-and-bust cycle of the international oil market.
However, the account has over the years become more or less a slush fund which both the federal and state governments turn to whenever they are broke. For instance, in 2010, when the late President Umaru Yar’Adua was sick and his deputy, Goodluck Jonathan, was experiencing opposition from a cabal that did not want him to succeed his ailing boss, the governors, who needed money from the ECA, pushed for his confirmation as the Acting President so that he could assume the legal status required to release money for the governors from the ECA.
Also, in the name of executing various infrastructure programmes, especially in the power sector, both tiers of government have appropriated money arbitrarily from the ECA, even without the consent or knowledge of the local governments that are also part owners of the account. A typical example was the recent approval that was said to have been given for the withdrawal of $1 billion to buy equipment for the military in the ongoing counter-insurgency battle against Boko Haram and other security challenges facing the country.
Although the concept of saving money for a rainy day seemed quite appealing when it was first mooted, not carrying the stakeholders along when money is withdrawn has been a chief source of disagreement among the different tiers of government. At a point during the tenure of Jonathan, Adams Oshiomhole, then the governor of Edo State, publicly challenged the then Finance Minister, Ngozi Okonjo-Iweala, over alleged unauthorised withdrawals from the ECA. The then minister also reportedly claimed that approval for the withdrawal of $2 billion for the payment of fuel subsidies was unilaterally given by Jonathan, after she had earlier claimed that it was at the behest of all the stakeholders.
A visibly angry Oshiomhole was quoted as saying, “You have heard of the last instalment of $4.1 billion that was in the Excess Crude Account as of November 2014, and from that time till today, we have not – when I say we (I mean the) federal, state and local governments – touched that money. We have not agreed to take anything out of it, and yet, it has been drawn down to about $2 billion, which means $2.1 billion has disappeared.”
Legalising the ECA will resolve the constitutional question that always crops up over its existence. For instance, Section 80 (1) of the Constitution says, “All revenues or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into other public fund of the Federation established for a specific purpose) shall be paid into and form on Consolidated Revenue Fund of the Federation.” This makes spending of any money that does not pass through the CRFF – such as the ECA – illegal.
But in trying to give a legal backing to the ECA, the lawmakers have to thrash out other areas of conflict, including the rights of the states and local governments to decide whether they are comfortable with the Federal Government taking charge of their own share of the money or not. This had in the past led to a legal tussle, with the states challenging the right of the central government to keep the former’s share of the money.
Besides, there is also the small matter of finding a common ground between the two arms of the National Assembly after the Senate last year passed a resolution abolishing the ECA through a motion entitled, “The Excess Crude Account: an illegality and a drain pipe.” During the debate, Rose Oko, who proposed the motion, said, “For instance, it was reported that the ECA increased from $5.16 billion in 2005 to over $20 billion in 2008, and decreased to less than $4 billion by 2010, with no known tracking of its operations.” Currently, the account has been reportedly drawn down to just $2.3 billion.
For the ECA to make the right impact, there have to be binding rules regarding the inflows and outflows of revenues. According to a global oil and gas think tank, Revenue Watch Institute, whatever law is made should be such that would give the fund a solid legal standing, spelling out details of revenue inflows, how and when they can be accessed and for what purpose. “The steady stream of discretional withdrawals from ECA has occurred as a result of this failure to institutionalise and protect the saved resources,” the institute says.
As an oil producing country, Nigeria has to find a way of managing her resources to maximise the benefit to the citizenry. Other countries have opted to invest in a Sovereign Wealth Fund, which has paid off for them. So, if Nigeria has chosen to continue with the ECA, it has to be done transparently and the withdrawals have to pass through the normal appropriation process.
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