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How Jonathan, Buhari Drew Down Excess Crude Account From A Peak Of $20bn To $0.37m

From a total balance of $20bn in 2009, the federal government has drawn down the Excess Crude Account to less than $1m as of Thursday, NewsNGR can report.

Just last Tuesday, it emerged during the Federation Account Allocation Committee meeting that the federal government again withdrew the sum of $35m from the Excess Crude Account to finance military operations in the maritime sector.

The ECA was created by the administration of former President Olusegun Obasanjo in 2004 for the purpose of saving oil revenue in excess of the budgeted benchmark, and had a balance of $20bn as at January 2009.

NewsNGR had reported that during the Tuesday meeting of the Federation Account Allocation Committee for July 2022, there was a balance of $376,655.09 in the ECA.

The FAAC Committee did not explain why it was drawn down from the previous balance of $35.7 million.

However, responding through a tweet, the federal government said the funds were used as advance payment for the purchase of patrol vehicles for the Nigerian Navy.

It said the withdrawal was imperative so as to consolidate on maritime security gains recorded in the Gulf of Guinea.

Writing through its Twitter handle, @NigeriaGov, the federal government stated: “The $35m disbursement from the Excess Crude Account is from June 2022 and is an advance payment for the purchase of brand new Offshore Patrol Vessels for the #NigerianNavy, as part of efforts to consolidate on maritime security gains recorded in the Gulf of Guinea.

“Earlier this year, Nigeria exited the International Maritime Bureau (IMB) Piracy List. Most recently, the IMB noted that there were zero actual/attempted piracy and ship-armed-robbery incidents in Nigerian waters in the first half of 2022.

“It is heartwarming to note the significant decline in piracy attacks by 77 per cent on Nigerian waters as reflected in the International Maritime Bureau Q3 2021 report… the latest IMB report shows that Nigeria has exited the IMB Piracy List.”

Persistent demand by states to fund various programmes and the inability of the Federal Government to generate adequate revenue to fund its operation had put pressure on it to draw down the ECA.

In 2012, the account recorded total outflow of N2.07tn. Out of this amount, the sum of N1.39tn was used to augment revenue distribution among the three tiers of government.

For the 2013 fiscal period, the sum of N1.99tn was taken out of the account by the federal government.

Out of this N1.99tn, about N1.08tn was withdrawn to augment revenue shortfall to the three tiers of government, while N505bn and N405.63bn were used for fuel subsidy payment and special intervention fund, respectively.

For 2014, the account was drawn down by N927.33bn. From this amount, N400.23bn went for fuel subsidy; N303.56bn for revenue augmentation and N223.54bn went into special intervention fund.

In the 2015 fiscal period, the federal government gave approval for the withdrawal of N458.14bn from the ECA. From this amount, N359.39bn went into petroleum subsidy payment; N98.19bn was used for revenue augmentation to the three tiers of government.

Similarly, the sum of N483bn was used for fuel subsidy payment while N190.58bn was transferred to special intervention fund.

In 2016, the administration of President Muhammadu Buhari withdrew the sum of N85.17bn to augment revenue to the three tiers of government, while the sum of N76.25bn was transferred to the Nigerian Sovereign Investment Authority in 2017.

Also, in 2018, the government again disbursed the sum of $2.87bn from the ECA according to documents obtained from the Budget Office of the Federation.

The amount was used to settle various obligations of the federal government.

The withdrawal for 2018 is significantly higher than the $250m taken in the 2017 period by about $2.62bn.

From the amount withdrawn in 2018, the sum of $1.76bn was withdrawn in the fourth quarter of 2018 by the government for the Paris Club refund to state governments.

The $1.76bn represents about 61 per cent of the entire $2.87bn withdrawn during the 12-month period.

The president also gave approval for the approval of $380.51m for the first batch of procurement of critical equipment for the Nigerian Army, Navy and Defence Intelligence Agency in the fourth quarter of 2018.

During the same period, the federal government also approved that the sum of $233.29m be withdrawn for states’ matching grant to the Universal Basic Education Commission.

In terms of inflows, the ECA recorded deposit of N2.31tn in 2012, N855.41bn in 2013, N796.7bn in 2014, N48.94bn in 2015, N242.72bn in 2016, N151.54bn in 2017 and $1.08bn or N329.4bn in 2018.

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