In the 18-month time period between July 2018 and December 2019 a total of $1.54 billion flowed into Nigeria’s Excess Crude Account (ECA).
In the same period some 60 percent of the fund or $941 million flowed out to the Nigerian Sovereign Investment Authority (NSIA) and military for purchase of fertilizer and equipment.
The ECA is where Nigeria pays the difference between its budgeted benchmark oil price and actual receipts. Nigeria is Africa’s largest oil producer.
It is supposed to help smooth out the cyclical nature of oil prices on the domestic budget.
It has however become a kind of slush fund for the executive to appropriate funds as it wishes in largely opaque expenditures.
Curious excess crude expenditure line items in a recent document released by the budget office of the Federation, include consultancy fee and litigation expenses of $350 million undertaken in the First Quarter (Q1) of 2019.
Others are payments made to the Nigerian Sovereign Investment Authority (NSIA) to the tune of $14.55 million for Fertilizer purchase, $496 million for the purchase of Super Tucano Aircraft for the Nigerian Air force, and $380.5 million for the first batch of procurement of critical equipment for the Nigerian Army, Navy and Defence Intelligence Agency.
There are no indications on the procurement process for these contracts or the level of completion if any for jobs undertaken.
Nigeria’s Excess Crude Account tied for the world’s most poorly governed sovereign wealth fund, according to a report by the Natural Resource Governance Institute (NRGI).
“The government discloses almost none of the rules or practices governing deposits, withdrawals or investments of the ECA,” the report said.
It added that the account, along with the other worst performers, is “so opaque that there is no way to know how much may be lost to mismanagement.”
The Excess Crude Account (ECA) had an opening balance of $328.12 million as at 1st October, 2019.
The sum of $1.36 million being accrued interest on fund investment (September – November) was received into the account in the fourth quarter of 2019.
On the other hand, US$4.51 million was withdrawn from the account during the period.
This resulted to a closing balance of $324.97 million as at 31st December, 2019, according to the report.
Other payments made from the ECA are Paris club refund to States and FCT of $2.13 billion for the period, and states matching grants to UBEC of $250million.