Nigeria’s excess crude oil funds hit $8.03bn

15 September 2012, Sweetcrude, ABUJA – Nigeria’s Excess Crude Account savings rose significantly in August to $8.03 billion, over $1 billion more than the savings in June.

Briefing the media at the end of the month’s Federation Accounts Allocation Committee, FAAC, meeting on Friday in Abuja, Accountant General of the Federation, Jonah Otunla, confirmed that the three tiers of government shared N570.61 billion from gross revenue of N564.89 billion earned in August.

The excess in the amount shared over the gross revenue was met through the N26.21 billion used to augment the shortfall in accrued revenues to the Federation Account during the month.

A major feature of the income-expenditure profiles of the Federation Account during the period under review was a sharp shortfall in crude oil exports earnings from N825.39 billion in the previous month by about N260.51 billion in August.

The decrease in revenues was linked to decline in crude oil production occasioned by a dip in Production Sharing Contract (PSC) and Modified Carry Arrangement (MCA) as well as a declaration of Force Majeure at Bonny Terminal and shutdown of Belema Gas Plant and Trans Nigeria Pipeline.

Otunla said the build up in the ECA was the result of fiscal retrenchment measures adopted by government at all levels to boost savings.

He explained: “The gross revenue of N564.884 billion received for the month was lower than the N825.396 billion received in the previous month by N260.512 billion. This was due to a drop in crude oil production and lifting operations as a result of Force Majure declared at Bonny Terminal and shutdown of Balema Gas Plant and Trans Niger Pipeline as well as decrease in Production Sharing Contract and Modified Carry Arrangement.

“The distributable statutory revenue for the month is N440.792 billion. There is augmentation of N26.214 billion as a result of the shortfall in revenue.

In addition, the sum of N35 billion is proposed for distribution under the SURE-P programme. Also distributed is the N7.617 billion refunded by NNPC. The total revenue distributable for the current month (including VAT) is N527.743 billion. There was exchange gain of N367.425 million”, Otunla stated.

A further decomposition of the revenue accruals on sectorial basis showed that both the minerals and non-mineral sectors suffered serious decline with the Mineral revenue ebbing by about N194.63 billion to N451.85 billion from the N646.47 billion earned in July. Similarly, the non-minerals revenue component also recorded a shortfall of about N65.89 billion, dipping to N113.04 billion in August from N178.92 billion in the preceding month.

The Federal Government through consensual agreement with other tiers of government had earlier set a $10 billion target for the ECA by the end of the year as part of steps being taken to achieve a stronger financial system stability and create a strong buffer for the economy in the face of the increasing volatility of the international oil market and depressive signals from the global economic environment.

At the June FAAC meeting, the Minister of State had stated the imperative of shoring up the ECA base in view of the ugly debt crisis situation in the Euro zone, Asian and American economies.

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  • Under the Obasanjo administration, the excess crude oil fund was saved up only to end up being frittered away by unconscionable politicians, and today, there is absolutely nothing to show for it. Yet, we are still on this road, chasing after shadows. We must realise by now that until we rejig our constitution which aids and abets unconscionable politicians in their repeated rape of the system, we will continue to go round and round in circles.