Now that President Jonathan has decimated the Excess Crude Account
Now that President Jonathan has decimated the Excess Crude Account - • Jonathans' Ambition to be President would Bankrupt Nigeria
Around August 2007, the newly elected governors of the 36 states of the federation met and clamoured for the release and sharing of the excess crude funds. The governors had been mounting pressure on the former President, Umaru Yar’adua to approve the sharing of the money from excess crude oil sales, saying that it would help them stabilise in their states which treasuries had been looted by some of their predecessors.
According to them, injecting the excess funds into the economy would create job opportunities for the teeming army of unemployed youths in the country. But the Federal government through the CBN, under Professor Chukwuma Soludo refused to budge stating that sharing the funds in the Excess Crude Account, ECA, may be disastrous for the economy.
Fast-forward to February 2010. One of the first acts by Jonathan Goodluck upon being made acting president was to approve the disbursal of $2 billion from the country's windfall oil savings between the Federal and State governments. Fuelling suspicion that the disbursal was an attempt to quieten those who might otherwise seek to undermine him, a charge government and presidency officials then strongly denied.
At the inception of his government, President Jonathan Goodluck inherited about $7 billion in the Excess Crude Account.
The excess crude account stood at over $20 billion when Yar'Adua took over in 2007 but his administration regularly dipped into the account. Relatively high oil price meant the money in the ECA remained at $20.1 billion at the end of 2008. The account has a balance of $20 billion as at January 2009. By December 2009, Former President Umaru Yar’adua had reduced the Account to $7.8 billion.
Then in February 2010, Jonathan Goodluck, then Acting President asked Federal, States and Local governments to share $2 billion from an earlier balance of $6.2 billion, leaving about $4.1 billion in the account.
In March 2010, he approved the disbursal of a further $1 billion from the country's windfall oil savings, leaving about $3.1 billion in the account. The move brings to $3 billion the total amount of Nigerian oil savings that Jonathan approved for disbursal to the country's 36 states and government agencies in one month!
Then on Friday, August 13 2010, the Accountant-General of the Federation, Alhaji Ibrahim Dankwanbo announced to journalists shortly after the monthly Federation Accounts Allocation Committee meeting, which was chaired by the new Minister of State for Finance, Hajiya Yabawa Lawan-Wabi that the remaining $3 billion in the Excess Crude Account was depleted and shared among the Federal and State Governments this month leaving only about $460 million in the account.
$2 billion of it was shared among the three tiers of governments while $1 billion was set aside for the proposed Sovereign Wealth Fund which is yet to be signed into law, he said.
The present administration is raising concern about Nigeria's commitment to fiscal discipline. There are growing concerns that so much have been taken from the Excess Crude Account without tangible improvement in the lives of Nigerians.
Nigerians are asking; why is President Goodluck Jonathan in a hurry to deplete The Excess Revenue Account accrued from revenue derived from Crude Oil Sales, Petroleum Profit Tax (PPT) and Royalties over and above the budgeted benchmark of the Federal Government of Nigeria for each year.
The logic for saving excess crude revenue, according to the CBN is that the oil sector is highly volatile when one considers the past experience of oil boom and reckless spending of the 70s which caused depression around 1978 and forced the country to start borrowing.
While ECA was rightly used to meet the shortfall in revenues caused by low oil prices in 2008 and 2009, the worrying signs in terms of today's fiscal deficit and depletion cannot be ignored.
Alarmingly, of the $17 or so billion withdrawn from the account since February 2009, it appears that only $5.3 billion was invested in any capital project – Yar’adua’s emergency power project.
Even that investment has been somewhat opaque - Likened to Obasanjo’s investment of $16billion on Independent Power Project, IPP - there was no evidence that Yar’adua’s allocation actually went to the Power Holding Company of Nigeria, PHCN.
The remaining withdrawals have been shared among the federal, state and local governments. Likely, these have been spent on recurrent items.
Does it have anything to do with preparations for the 2011 election?
In an address titled “Safe-guarding Nigeria’s Fiscal Health: Some Considerations for the Present and the Future”, delivered to mark the 24th and 25th combined convocation ceremony of the University of Calabar, 08 April 2010, former Minister of Finance and Director at the World Bank, Dr. Ngozi Okonjo-Iweala pointed out that while ECA was rightly used to meet the shortfall in revenues caused by low oil prices, the worrying signs in terms of fiscal deficit and depletion cannot be ignored.
Warning against depleting Excess Crude Account, Okonjo-Iwealla stated that Nigeria’s huge fiscal deficit, rising domestic debt, depletion of the Excess Crude Account (ECA) and the distress in the banking sector are issues that urgently need the attention of Jonathan’s cabinet.
Obviously, the absence of cranial matter between the ears of President Jonathan Goodluck means that nothing stopped this warning from going in through one ear and escaping through the other ear.
Alternatively, it could be that Jonathans Ambition to be President would Bankrupt Nigeria.
More than one hundred days into his presidency it is now apparent that President Goodluck Jonathan has the ambition to remain president beyond 2011 despite his party’s zoning agreement.
Let me repeat for emphasis:
At the inception of his government, President Jonathan Goodluck inherited about $7 billion in the ECA Account. $3billion and later another $1billion was shared among the State and Federal Government immediately Jonathan got into office as part of the agreement reached with the governors for them to allow him become Acting President leaving a balance of $3billion.
And now, in preparation for the 2011 election, the balance has been squandered!
Nigerians have cause to be worried as our Federal Government’s domestic debt amounted to N1.75 trillion naira or US$13.6 billion at the end of 2006 but by the end of 2009, it had virtually doubled to N3.23 trillion or US$21.8.
Today, foreign debt is also rising. Few years after repaying huge foreign debts, the country’s external loan is to reach $9.4 billion this year based on a proposed 2010 borrowing plan of Jonathan’s Federal Government.
In a letter to the National Assembly dated August 4, 2010, President Goodluck Jonathan requested the legislature to approve external borrowing of $5.242 billion in addition to the present $4.2 billion foreign debt owed by the country.
And observers are asking: what is going on?
Jonathan spends like a drunken sailor!
Not done yet, President Jonathan Goodluck has earmarked $154.3 million or N23.2 billion for the purchase of three new jets for the Presidential Air Fleet. The planes, include a Gulfstream G550 and two new Falcons 7X Aircraft.
This notwithstanding that the presidential fleet currently boasts of eight aircraft - including a 70-tonne Boeing business jet bought in 2006 by former President Olusegun Obasanjo, the Gulfstream V, and Gulfstream IVSP, and two Falcon 900s.
Not too long ago, the INEC under Iwu (Prof. Maurice Iwu) requested a "paltry" sum of N3 billion. Now, Professor Atahiru Jega is jumping the figure to N72 billion. Finally, N87.72 billion was approved for Jega.
This notwithstanding that a third world country like Nigeria, Bangladesh registered 80 million voters at a cost of $65 million in 2008 and today the good old Prof. Jega needs $500 million to register 65 million voters
Thirdly, As Nigerians cry out that the Federal Government has budgeted N10billion Naira for Nigeria@50 celebrations, Jonathan reduced it to N6.5 billion, then N9.5billion. Finally Nigerians learnt that N17 Billion would actually be spent on the jamboree.
Again I emphasize; Nigerians should carefully monitor President Jonathan Goodluck. I have the feeling that by the time Goodluck Jonathan finishes with Nigeria, not only will the treasury be empty, we will be at the pre-1999 level of debt!
Goodbye to Excess Crude Account
President Olusegun Obasanjo created the Excess Crude Account in 2004 into which oil revenue in excess of budgeted benchmarks, which were invariably set below the high international market price the country enjoyed virtually all through his eight-year tenure, was deposited.
There was much opposition to the account led by the Hamman Tukur of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) on grounds that it was, at best, of dubious legality because our constitution stipulates that all revenues collected by the Federal Government should go to the Federation Account. Obasanjo still went ahead presumably because the account would, at least ostensibly, enable the country save for rainy days.
The account peaked around $20 billion in January 2007.
The logic for saving excess crude revenue, according to the CBN is that the oil sector is highly volatile when one considers the past experience of oil boom and reckless spending of the 70s which caused depression around 1978 and forced the country to start borrowing. That incident also ushered in the famous austerity measure and the rate of abandoned projects when the oil price crashed with nothing to fall back on as the country did not save for the rainy day.
However, the illegality of the Excess Crude Oil Account and the uses it is put into, are among issues everyone talked about, and yet nobody did anything about them. For years Nigerians, including the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), noted the illegality, but no action followed.
At one time a member of the House of Representatives condemned the National Economic Council's approval of an illegal removal of $5.3 billion from the Excess Crude Oil Account purportedly for emergency power projects under Late President Umaru Yar’adua.
Hon. Patrick Obahiagbon pointed out the illegality saying that the withdrawal violated Section 162 (3) of the Constitution which states: "Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the local government councils in each State on such terms and in such manner as may be prescribed by the National Assembly."
More elaborate provisions are in Section 80 (1) "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 any other public fund of the Federation established for a specific purpose) shall be paid into and from one Consolidated Revenue Fund of the Federation.
(2) No moneys shall be withdrawn from the Consolidated Revenue Fund of the Federation except to meet expenditure that is charged upon the fund by this Constitution or where the issue of Appropriation Act or an Act passed in pursuance of section 81 of this Constitution.
(3) No moneys shall be withdrawn from any public fund of the Federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of the moneys has been authorised by an Act of the National Assembly.
(4) No moneys shall be withdrawn from the Consolidated Revenue Fund or any other fund of the Federation, except in the manner prescribed by the National Assembly."
Governor Jonah Jang of Plateau State, a member of the National Economic Council, equally condemned the retention of the illegal account from which he aided the award of $5.3 billion to the Federal Government. He, like other Governors, usurped the powers of State Assemblies to allocate state funds for expenditure in Sections 120 and 121.
Like General Ibrahim Babangida’s dedicated accounts, the excess crude account was wantonly abused because there is no clear law on how the money should be used. Between the President and the Governors, they can draw from the account as they please. An account that holds billions of idle dollars will not escape the attention of even an angel.
Today the savings in the account is finished!
Good riddance?
