Excess Crude Oil Savings Account;Federal, state & local government in Nigeria share

bn

The Federal Government, state and local governments in Nigeria are reported to have shared $1billion from the $4billion Excess Crude Account (ECA) in December 2010. An emergency meeting of the Federation Account Allocation Committee (FAAC) (which some newspapers claim was "shrouded in secrecy"), attended by the commissioners of finance and their accountants-general in the 36 states, was reportedly held on December 31, 2010.

The allocation was disbursed in US dollars and the Federal Government received $458.31million, the states received $232 million, and the local governments received $179 million. The oil-producing states also shared a balance of $130 million based on derivation - Bayelsa State received $47.1m, Akwa Ibom, $43.6m; Rivers, $40.6m; and Delta, $33.0m.

Kano, Lagos and Kaduna had the highest allocation for non-oil producing states:Kano state received $20m, Lagos state received $15m and Kaduna state received $15m.

The meeting is said to have been held only two weeks after the December allocation of over N500bn was shared and just two weeks before the next FAAC meeting in January 2011 where another monthly disbursement should occur. Reports say that that the state governors pressured the presidency for the funds to be released so they can “address the huge infrastructure deficit” in their states.

In 2008, President Yar’Adua had ordered that dollar allocations from the Federation Account to all tiers of government be stopped due to the legal and constitutional implications of releasing dollars when the legal tender in Nigeria is Naira.

The Minister of State for Finance and chairman of the FAAC, Hajiya Yabawa Wabi, said "We are here because we got an approval to share $1 billion from the ECA to the three tiers of government and this we are doing because the ECA is a financing item in the 2010 budget of both the federal and state governments.

“The budget year has been extended to March 2011 by the National Assembly and that is why we need to share this amount to form part of the 2010 budget,”

"Since only the capital budget was extended to March, the money will only be meant for capital projects. The money was approved by the president. No other money was shared apart from this and the money has already been cash-backed.

“In this regard, while the Federal Government had $458.31 million, states will share $232 million, local government areas will share $179 million and the derivation states will share $130 million.”

Alhaji Rebo Usman, the chairman of commissioners’ forum, also said “we have to meet because there is no way we could share money without a meeting of FAAC members. That is why we had to hold this emergency meeting to take care of that decision that was taken by the National Economic Council.

“This money is not an end-of-the-year bonus, it belongs to the three tiers of government and the ECA is like savings and the governors believed that there is the need to fund some ongoing projects that are taken place, both at the federal and state level.

“So it is normal that the money was taken at this time of the year to fund some of our operations.“The ECA is an account that belongs to the three tiers of government and anytime we are in need, we have a right to use it to fund projects.”

The Conference of Nigerian Political Parties released a statement condemning “the squandering of the Excess Crude Account” and reducing it from over $20bn on June 1, 2007 to less than $3bn at the end of 2010 saying, “How can President Goodluck Jonathan account for the hurried sharing of $1bn to the three tiers of government on December 31, 2010? Of what urgent purpose was the $1bn meant for? Is it for politicking?

Is it New Year bonus? Why was this meeting on the eve of the New Year of the Federation Accounts Allocation Committee, convened secretly as an emergency meeting?”

How can such spending be justified?.