18 July 2017, Sweetcrude, Abuja — The Nigeria Extractive Industries Transparency Initiative, NEITI, Tuesday, lamented that after 40 years of crude oil and gas exploration, Nigeria could only save $3.9 billion in its three oil savings funds, the stabilization fund, the Excess Crude Account and the Sovereign Wealth Fund.
Speaking in Abuja, during the presentation of its Occasional paper titled ‘The case for a robust oil savings fund for Nigeria’, Executive Secretary, NEITI, Waziri Adio, disclosed that in spite of the benefits accruable from oil exploration and the huge revenues that have accrued from oil and gas over the years, Nigeria has one of the lowest natural resource revenue savings in the world.
He stated that the Sovereign Wealth Fund currently has a balance of $1.5 billion, the Excess Crude Account with $2.3 billion and the stabilization fund with N29.02 billion ($95M).
According to Adio, in the last forty years of oil production, Nigeria has extracted about 31 billion barrels of its oil reserves. However, from 1980 to 2015, the country exported crude oil worth about $1.09 trillion but has a current balance of $3.9 billion dollars as at June 2017 in the three funds.
He said the time has arrived for Nigeria to embrace fully a robust policy to save a portion of oil and gas revenue for the rainy day and for the next generation.
The urgent measures that need to be taken, according to him, include the immediate transfer of all revenue savings in the stabilization fund and the Excess Crude Account into the Nigeria Sovereign Wealth Fund.
He maintained that a national consensus on saving for tomorrow has become urgent to prepare the country to overcome frequent commodity price volatility and depletion of non-renewable resources.
He highlighted the fact that portions of mineral resource revenues that are excluded from the national budget and held as part of a country’s reserve can greatly enhance a country’s capital balances, attract greater investors’ confidence and significant flow of foreign capital into the economy.
These funds, he said, also support the provision of critical infrastructure and social interventions during major national emergencies.
He further called for the consolidation of the three oil savings funds, stating that, “These “different oil revenue saving funds should be consolidated and the legal framework harmonised.
“Specifically, the 0.5% Stabilisation Funds and the Excess Crude Account (ECA) should be merged with the Sovereign Wealth Fund, as this multiplicity of savings funds with different rules has led to uncoordinated and widespread extra-budgetary spending.
“Apart from depleting the savings in each fund, such unrestricted spending defeats the purpose for which the funds were set up in the first place which is to shield the economy from revenue volatility.”
Adio disclosed that the $1.5 billion currently in the Sovereign Wealth Fund is one of the world’s worst ratio to annual budget (10%), and one of the lowest Sovereign Wealth Fund per capita ($8) globally.