You can’t drain excess crude account •Okonjo-Iweala tells governors of Nigeria

No Comments » April 13th, 2012 posted by // Categories: General Articles



You can’t drain excess crude account •Okonjo-Iweala tells govs

Written by Gbola Subair, Abuja

Friday, 13 April 2012

THE Coordinating Minister of the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, has carpeted the state governors for their insistence on sharing funds from the Excess Crude Account, which now has a  balance of  $3.6billion rather than  saving it in the Sovereign Wealth Fund (SWF).

The minister, who spoke at the first Civil Society Forum Agenda in Abuja, stated that the Excess Crude Account was supposed to metamorphose into the SWF.

However, she said  the governors were vehemently opposed to  it, saying that it was a fight to be able to get $1billion saved in the SWF.
At present,  she stated that the nation did not have anything to fall back on in case of any economic crisis, as every month, the funds in the Excess Crude Account were being shared by the various arms of government instead of being moved into the SWF.

According to her, “If oil prices drop now, we have nothing to cushion the effect as $3.6billion is not enough to take us for any length of time.”

She said the  period between 2003 and 2007 was the only steady time in the Nigerian economy, because that was when the country developed the Excess Crude Account and started saving.

Disclosing that  when the world economic crisis started in 2007, oil price went from $147 per barrel to $38 per barrel overnight,  the minister said “we were able to go to the pool we had to smoothen expenditure in the difficult years of 2008 and 2009. But if that happens now, we might not be able to handle it, as every month, the governors have been insisting on sharing the money, saying that they can save for themselves.

“Nigeria spends all it makes when oil price is high, but the moment it goes down, all sectors of the economy crash because there is no saving to fall back on,” adding that “it is the major reason why the country’s GDP growth goes up and down.”

The minister, who  disclosed that part of the transformation agenda of the present administration is to build infrastructure and  push something aside for the future, lamented that Nigeria was the only oil-producing country that did not have savings in any form, saying that it was very risky for the economy.

Dousing the fears being expressed  in some quarters that the SWF might not be well managed, the minister said there are provisions in the Act setting it up, which had taken care of issues relating to transparency, adding that there should be no fears by Nigerians that the money would not be well managed, as the government was doing it to safeguard the economy and Nigeria’s future.

The minister said at the moment, the nation is not selling up to 2.48million barrels as it ought to due to activities of pipeline vandals, which had forced production to drop.

“It is a pity that at the moment, we are not able to benefit from high oil price in the international market, because we are not producing as forecast for this year and this is affecting our revenue. There are other sectors of this economy that we can use to our advantage and the government is currently working hard to ensure that we develop other sectors to grow the economy.”

Okonjo-Iweala stated that Nigeria cannot continue to depend on selling only crude oil to the international market.

Okonjo-Iweala said more than 75 per cent of government revenue came from only one product that Nigeria sold, which is oil. She said it was very unhealthy that only crude oil would determine the growth of the Nigerian economy.

She frowned on the rate at which money was spent in the country without savings from high oil prices.

She said “when we have high oil prices and we are able to sell, we sell and spend everything. We don’t save anything. When the oil prices crash,” we also crash, that is why we are unable to meet present-day challenges, including salaries.”

The minister then spoke on the issue of fuel subsidy, stating that more than 39 per cent of the federal budget was going into fuel subsidy.
She stated that the government needed to stop the payment in order to improve on the roads and develop the health and education sectors.

The minister said that a country like Ghana that just found oil had also phased out its subsidies.

She stated that the government was looking at other revenue generating products for the country, including agriculture, saying more farmers could now get fertiliser and that previously it was the rich people that collected and sold it  in the market.

She stated that the minerals sectors had improved its input to the Gross Domestic Product of the country to about 18 per cent.

According to her, government was trying to create jobs, through programmes like the ‘You Win programme’, ‘Public Works programme’ and the SURE. She stated that the youth got jobs from the programmes strictly on merit.


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