Nigeria Draws From Excess Crude Account To Augment Oil Revenue Shortfall

Nigeria Draws From Excess Crude Account To Augment Oil Revenue Shortfall

The Nigerian government has withdrawn an additional 15.6 billion Naira from the Excess Crude Account to augment shortfall in oil revenue generated in November 2014.

Figures released by the Federation Accounts Allocation Committee (FAAC) showed a drop in crude oil revenue from 87 million dollars in October to 77 million dollars November.

The shortfall was triggered by the drop in crude oil price, resulting in the withdrawal from the Excess Crude Account.

Briefing reporters on Friday on the outcome of the FAAC meeting in Abuja, the Minister of State for Finance, Mr Bashir Yuguda, said that 580 billion Naira was shared between the Federal, State and Local Governments for the month of December 2014.

Mr Yuguda said that the shared amount comprised statutory revenue of 474 billion Naira, and 6.3 billion Naira refunded by the Nigerian National Petroleum Corporation (NNPC).

Breakdown Of Revenue

Other components of the money, according to him, were Value Added Tax (VAT) of 73.5 billion Naira, and an additional 15.6 billion Naira from the Excess Crude Account which was released to augment shortfall in revenue generated during the period.

Giving the breakdown of revenue among the three tiers of government, Yuguda said that the Federal Government received 220 billion Naira, states got 111 billion Naira, while local governments got a total of 86 billion Naira.

A former president of Nigeria, Olusegun Obasanjo had on January 5 blamed the present economic woes facing the nation on the depletion of the Excess Crude Account and the external reserves.

Obasanjo made the assertion at a meeting with women leaders from the south-west states held at his hilltop residence in Abeokuta, the Ogun State capital.

The women from Oyo, Ogun, Ekiti, Lagos, Osun and Ondo States had met with the former leader to express their displeasure over what they termed the parlous state of the Nigerian economy and some knotty issues in the polity.

Insecurity in the north-east, corruption, girl child education and effective representation of women topped the talks.

After listening to the barrage of challenges slowing down the nation’s socio economic development, as listed by the Iyalode of Yorubaland, Alaba Lawson, the former President blamed it all on bad leadership, saying “the country does not deserve the current state it has found itself”.

He said that his administration left $25 billion in the excess crude accounts in 2007 which was shored up to about $35 billion by the Yar’Adua’s administration, while he left $45 billion in external reserve.

“Our economy should not have been this bad. When I was leaving office about eight years ago, I left a very huge reserve after we had paid all our debts. Almost $25billion we kept in what they called excess crude. The excess from the budget we were saving as reserve for the rainy days. When we left in May 2007, the reserve was said to have been raised to $35billion,” he said.

Government Strategies To Cushion Shortfall

Nigeria’s Finance Minister, Dr. Ngozi Okonjo-Iweala, in November 2014, had given an assurance that the government had put strategies in place to deal with falling oil prices for as low as $60 dollars per barrel.

The Minister said the scenario-based approaches developed to cushion the unfavourable effects of the falling prices were comprehensive and supported by extensive consultations with global analysts such as the International Monetary Fund.

She said short to medium term strategies, mainly targeted at the poor and vulnerable, had been developed.

“People should not get fixated on the $73 dollars. It is just the midpoint of the range we have. If it falls to $70, we are ready with additional measures. We have organised a set of measures around $73 dollars. We have further measures at $65 and a third set of measures at $60,” she said.

Dr Okonjo-Iweala said part of the medium term strategy was a revenue target of three billion dollars over the next three years with substantial cuts on expenditure both recurrent and capital.

She, however, said the cuts would not affect priority sectors – infrastructure, health, education and security – that would focus on the poor and average Nigerians.

The Finance Minister emphasised that although the global environment was uncertain, Nigeria had the strategies to cushion the effects.