…By for TDPel Media. Experts have expressed concern over the discovery that the balance in the Excess Crude Account (ECA) has remained stagnant at $474 million for the past two years, despite substantial remittances totaling N907 billion to the Federal Account Allocation Committee (FAAC) by the Nigerian National Petroleum Company Limited (NNPCL).
This situation has raised eyebrows among energy analysts and economists due to its implications for Nigeria’s financial stability and fiscal discipline.
NNPCL Resumes Remittances after Fuel Subsidy Issues
Naija News reported that the NNPCL resumed remittances to the FAAC in June 2023, ending a period of suspension caused by significant fuel subsidy expenses.
However, despite this resumption, the balance in the excess crude account remained unchanged at $474 million, the same amount recorded as of December 15, 2022, despite a substantial remittance of N907.054 billion.
Distribution of Remittances to FAAC
Out of the total distributable revenue of N907 billion, the Federal Government received N345 billion, the State Governments received approximately N296 billion, and the Local Government Councils received N218 billion.
An additional sum of N47 billion was shared among relevant states as 13 per cent derivation revenue.
Concerns Raised by Energy Expert
Energy expert, Bala Zaka, expressed deep concern about the unchanging trend in the Excess Crude Account balance, describing it as “very dangerous and negative.”
The ECA was established to save extra funds generated when crude oil is sold above the approved benchmark in the budget.
However, the failure to see substantial growth in the account amidst rising international crude oil prices has raised red flags.
Declining Trend and Lack of Fiscal Discipline
Over the past eight years, the Excess Crude Account has seen an alarming decline of 89 per cent, dwindling from $4.1 billion in November 2014 to a mere $472,513 by the end of 2022.
Professor of Economics at the Olabisi Onabanjo University, Ogun state, Sheriffdeen Tella, attributes this unfortunate situation to a lack of fiscal discipline within the Nigerian government.
He points out that the account has faced opposition from the Governors’ Forum, which has advocated for its funds to be accessible for their use, leading to potential mismanagement and misuse of funds.
NNPCL’s Additional Remittances and Positive Trajectory
In response to the concerns raised, the NNPCL Chief Financial Officer, Umar Ajiya, released a separate statement affirming the company’s compliance and responsible financial conduct.
The firm disclosed that it also remitted N123 billion, including monthly interim dividends and a percentage of production-sharing contract profit oil.
Despite this, the issues surrounding the stagnant balance in the Excess Crude Account remain a pressing matter.
Conclusion
The unchanging balance in the Excess Crude Account, despite significant remittances, has become a cause for concern among experts and analysts.
Nigeria’s fiscal discipline and financial stability are at stake, and urgent measures may be needed to address this situation.
Ensuring transparency and proper management of the Excess Crude Account will be crucial to safeguarding the country’s economic future.