Financial Energy Review
The balance in the Excess Crude Account has remained stagnant at about $474m in the last two years despite remittance of N907bn to the Federal Account Allocation Committee by the Nigerian National Petroleum Company Limited.
The NNPCL had resumed remittances to FAAC in June after failing to do so due to huge fuel subsidies expenses.
According to a communiqué issued at the end of the FAAC meeting for July 2023, the balance in the excess crude account was $473,754 as of June 2023, the same amount in the purse as of December 15, 2022, while it paid N907.054bn into the FAAC purse.
The meeting was chaired by the Accountant General of the Federation, Dr. Oluwatoyin Madein.
From the total distributable revenue of N907bn; the Federal Government received N345bn, the State Governments received about N296bn and the Local Government Councils received N218bn. A total sum of N47bn was shared to the relevant states as 13 per cent derivation revenue.
Energy expert, Bala Zaka, described the trend as “very dangerous and negative.”
The ECA is an account created to save the extra funds made anytime the country sold crude oil higher than the approved benchmark in the budget.
For example, if the crude oil benchmark was $70 per barrel and the commodity sold for $75 per barrel, the excess $5 was saved for rainy days.
While Nigeria had benchmarked crude oil price for 2023 at $75 per barrel, international Brent had risen to $82 per barrel last week before dropping to $80 per barrel as at Friday. It is worthy of note that Nigeria’s crude grade, Bonny Light usually preferred by international refinners, sells +$1 above dated Brent.
The account had declined by 89 per cent in the last eight years, moving from $4.1b in November 2014 to $472,513 in the same period of 2022.
Professor of Economics at the Olabisi Onabanjo University, Ogun state, Sheriffdeen Tella, said the unfortunate situation occurred due to government’s discipline.
“You will recall that the Governors’ Forum kicked against the account claiming it is their money and the Federal Government has no right to deny them of its use.
“So, if money is transferred into such account now, the same argument will arise. It’s a practice worldwide but Nigerian governments are not disciplined. Many are always looking for money to steal; to live big, to amass personal wealth and remain greedy.”
In a separate statement released by the NNPCL Chief Financial Officer, Umar Ajiya, the firm said it also remitted N123bn(N81bn as monthly interim dividend and N42bn as 40 per cent Production Sharing Contract on profit oil) in addition to compliance on payment of royalties and taxes.
Ajiya did not disclose how much it paid in taxes and royalties.
“This clearly shows that the company under the leadership of Mallam Mele Kyari is moving in a positive trajectory as enshrined in the PIA,” the statement said.
