By Omoh Gabriel, Business Editor
The dwindling revenue accruing to states and local governments in the federation from the excess crude account is the source of contention between the Minister of Finance, Olusegun Aganga and the 36 state governors in the country.
While the minister is proposing the use of proceeds of the excess crude account to set up a sovereign wealth fund to invest in projects that will yield future streams of income for the country, the state governors are insisting on alternatives or sharing the money and allowing individual state to handle its own portion its own way.
The governors voiced their opposition to the idea of a sovereign wealth fund to manage the countryâ€™s oil wealth, on Tuesday.
Aganga on assumption of office as Finance Minister has championed the idea of a sovereign fund to help the nation save some of its oil revenues for the future, invest in critical infrastructure and help stabilise government finances when world oil prices are volatile.
Agangu wants the fund to replace the current arrangement by which Nigeria saves oil revenue above a benchmark price into an Excess Crude Account, ECA, a pillar of reforms launched in 2003 by Dr. Okonjo-Iweala which was endorsed by the International Monetary Fund in Nigeria Policy Support Instrument, PSI. But there is no clear legal basis on which to determine how the savings in the ECA should be shared between the tiers of governmentâ€”federal, states and localÂ governmentsâ€” leading to constant political wrangling and the squandering of much of the money.
State governors have been among the main beneficiaries of allocations from the account.
Aganga has said the main aim of the sovereign wealth fund would be to establish a firm legal framework for the management of Nigeriaâ€™s windfall oil savings.
Govs canvass alternative funding
â€œWe the governors think there should be an alternative source of funding to be used (for the sovereign wealth fund) than that of the excess crude account,â€ Benue State governor, Gabriel Suswan told reporters after a meeting with Aganga. He did not elaborate on what alternative source of funding the sovereign wealth fund could be drawn from.
It would be recalled that the Accountant-General, Mallam Ibrahim Dankwambo had said the excess crude account was depleted and now stood at $3.4 billion, less than a quarter of the amount it contained at the start of the current presidential term three years ago.
According to him, much of the savings in the excess crude account has been disbursed and what is left based on what the three tiers of government in the country agreed on earlier will not be enough to make any significant impact on the budget if the prices of oil falls below the budget bench mark.