Factual Pursuit of Truth for Progress
Nigeria’s excess crude account has dipped by 89 per cent in the last eight years as it increased from $4.1bn in November 2014 to $472,513 in the same period of 2022.
This was part of a statement by the Ministry of Finance, Budget and National Planning on Wednesday, the ECA’s balance as at November 23, 2022, stood at $472,513.64.
The ECA is the Federal Government’s fiscal account that was created to save revenues—in excess of the budgetary benchmark price—that were generated from oil sales, according to Investopedia, an investment and business dictionary.
However, economists say due to lack of inflows, oil market vagaries and the country’s revenue crunch, the account has depleted in the last eight years
“It is a simple fact that when you spend money from an account and you are not adding to it, it will deplete,” said Professor of Economics at Covenant University, Ogun State, Jonathan Aremu.
“For you to increase the ECA, the oil price must rise above the budgeted price. If it does not, nothing goes in. Also, if what you are spending is higher than what goes in, it depletes. This is the situation,” he further said.
Brent crude sold at $88.45 per barrel at 4pm on Wednesday. WTI crude, on the other hand, was $81.13 per barrel at the same time. Oil benchmark in the 2022 budget was $57, but the current oil prices are still about $30 above the benchmark. However, the ECA has been on the decline in spite of higher oil prices since early 2022 driven by Russia-Ukraine war.
Meanwhile, the Federation Account Allocation Committee, FAAC, at its meeting, shared a total of N736.782bn to the three tiers of government as the allocation for the month of October, 2022.
According to the Ministry of Finance, Budget and National Planning’s statement, from this stated amount, inclusive of gross statutory revenue, value added tax, exchange gain and augmentation from non-oil revenue, the Federal Government received N293.955bn, while the 36 states got N239.512 bn.
Local government councils got N177.086bn, while the oil-producing states received N26.228bn for 13 per cent derivation.
While the Federal Government got N31.992bn from it, states received N106.642bn, while local government councils were given N74.649bn.
But the gross statutory revenue of N417.724bn distributed was lower than the sum received in the previous month, from which the Federal Government was allocated the sum of N206.576bn; states, N104.778bn; local councils, N80.779 billion; and oil-producing states, N25.591bn.
Also, N70 billion augmentations were distributed to the three tiers of government. The Federal Government received N36.876 billion; states got N18.704 billion; while local government councils were given N14.420 billion.
An extra N30bn augmentation from non- oil revenue was also distributed. The Federal Government received N15.804bn; states got N8.016bn; while local government councils were given N6.180bn.