By Daniel Edu
Experts have expressed concern over the Excess Crude Account (ECA) as it remains unchanged with a balance of $474 million for the past two years, despite the Nigerian National Petroleum Company Limited (NNPCL) remitting N907 billion to the Federal Account Allocation Committee (FAAC).
In June 2023, the NNPCL resumed its remittances to FAAC after suspending them due to substantial fuel subsidy expenses. However, according to documents obtained by journalists from the July 2023 FAAC meeting, the ECA’s balance remains the same as it was in December 2022, even though N907.054 billion was paid into the FAAC purse.
Out of the total distributable revenue of N907 billion, the Federal Government received N345 billion, State Governments received about N296 billion, and Local Government Councils received N218 billion. Additionally, a total of N47 billion was allocated to the relevant states as 13 per cent derivation revenue.
Energy expert Bala Zaka expressed concerns about the stagnant ECA balance, calling it “very dangerous and negative.” The ECA is designed to save extra funds generated when crude oil is sold above the approved budget benchmark. However, Zaka pointed out that Nigeria had budgeted the crude oil price for 2023 at $75 per barrel, while international Brent had risen to $82 per barrel last week before dropping to $80 per barrel.
The ECA has experienced a significant decline over the past eight years, plummeting by 89 per cent from $4.1 billion in November 2014 to $472,513 in the same period of 2022.
Professor of Economics at the Olabisi Onabanjo University, Sheriffdeen Tella, attributed the unfortunate situation to the lack of discipline in the Nigerian government. He noted that the Governors’ Forum had previously opposed the account, arguing that it is their money and the Federal Government has no right to withhold its use.
In response, the NNPCL’s Chief Financial Officer, Umar Ajiya, released a separate statement stating that the company also remitted N123 billion (N81 billion as monthly interim dividend and N42 billion as 40 per cent Production Sharing Contract on profit oil). The statement did not disclose the amount paid in taxes and royalties.
The NNPCL emphasized that these remittances demonstrate the company’s positive trajectory under the leadership of Mallam Mele Kyari, in accordance with the Petroleum Industry Act (PIA).