‘Nigeria falls short in prudent, robust oil revenue savings plans’

Nigeria has for 38 years lacked prudent and robust oil revenue savings scheme that can tie it over expected volatility of oil prices and the eventual depletion of its oil reserves, says the Nigeria Extractive Industries Transparency Initiative (NEITI) in its latest report.
Between 2005 and 2015, a total of $201.2 billion accrued to Excess Crude Account (ECA) but $204.7 billion was withdrawn from the ECA during same period, indicating that withdrawal was 102 percent of deposit.
According to the report, “Nigeria has about three decades of experience in implementing different oil revenue funds. However, attempts at oil revenue savings have been plagued by contested Legal frameworks, governance issues and inadequate political will.”
Waziri Adio, NEITI executive secretary, while commenting on the report, said a national consensus on saving for tomorrow had become urgent to prepare the country to overcome frequent commodity price volatility and depletion of non-renewable resources.
Adio observed that the portions of mineral resource revenues excluded from the national budget and held as part of the country’s reserve and could greatly enhance the country’s capital balances and attract investors’ confidence.
He also explained that these could attract significant flow of foreign capital into the economy, adding that the funds could also support the provision of critical infrastructure and social interventions during major national emergencies.
He further observed that in spite of the benefits and huge revenues that had accrued from oil and gas over the years, Nigeria had one of the lowest natural resource revenue saving in the world.
According to Adio, Nigeria currently has three oil saving funds such as SWF with $1.5 billion; ECA with $2.3 billion, and the Stabilisation Fund with $95 million.
He explained that in the last 40 years of oil production, Nigeria had extracted about 31 billion barrels of its oil reserves, saying however that from 1980 to 2015, the country exported crude oil worth about $1.09 trillion but had a current balance of $3.9 billion as of June, in the three funds.
He further said the different oil revenue saving funds should be consolidated and the legal framework harmonised, specifically the 0.5 percent stabilisation funds and the ECA should be merged with the Sovereign Wealth Fund.
“As this multiplicity of savings with different rules has led to uncoordinated and widespread extra-budgetary spending,” he said.

 

KELECHI EWUZIE