The Nigerian government withdrew $1 billion from the Excess Crude Account (ECA) to fund security amid depleting oil revenue, the Minister of Finance, Budget, and National Planning, Zainab Ahmed, said on Wednesday.
She made this revelation while briefing State House Correspondents at the end of the cabinet meeting presided over by President Muhammadu Buhari on Wednesday.
Ahmed’s intervention comes amid concerns raised by the reduction in the balance of the ECA.
Reports said Tuesday that the balance in the account fell significantly from $35.7 million it was as of June 2022 to $376,655.09 as of July 25, 2022.
Reuters said the nation’s accountant general released the figures late on Tuesday but did not give a reason for the steep drop.
On Wednesday, Ahmed said the volatility in the global oil market accounted for the drop in the ECA balance.
“On the issue of the excess crude account, in the past four years, because of volatility in the oil market, we have not had accrual to the excess crude account,” she said.
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“So, what we have had has been gradually used up for different purposes and it is always used in consultation with the National Economic Council that is the governors because this is a federation account.
“The last approval that was given by the council was the withdrawal of $1 billion to enhance security. We have been utilizing that and the last tranch of that has been finally released because deployment to security agencies is based on the contracts that are executed and it’s been used strictly for that security purpose. So, the utilization of the account is with the full knowledge of the Governors.”
The slump in the ECA came as allocation to the federal, state, and local governments increased by N121.624 billion while FAAC shared a total sum of N802.407 billion for June.
The sum of N680.783 billion was shared in the preceding month of May and N656, 602 in April.
However, the rise in June allocation was attributed to tremendous increases in Companies Income Tax (CIT) and Petroleum Profit Tax (PPT), although oil and gas royalties declined marginally.
Nigeria relies on oil revenue to fund infrastructure and settle overheads, but it has struggled to benefit from surging crude prices due to pipeline vandalism and low production.
Last week, details emerged of how Nigeria’s debt servicing costs outpaced public revenue, raising fears of debt crises.
The International Monetary Fund (IMF) has in recent times advised Nigeria and other African countries currently experiencing high debt levels to take proactive measures to restructure their debts in order to avoid fiscal crises.
Meanwhile, the Ministry of Finance, Budget and National Planning Wednesday presented a draft expenditure framework for the country, for the next three years.
Ahmed said the draft document is for 2023-2025, with an assumption of crude oil price of $70 per barrel for 2023, $66 for 2024, and $62 for 2025. It also contained an estimated production rate of 1.69 million barrels per day for 2023 and 1.813 million barrels per day for 2024 and 2025.
She said: “The assumptions that we made for the next medium-term framework from 2023 to 2025 is that crude oil price will be at $70 per barrel for 2023, $66 per barrel for 2024, and $62 per barrel for 2025.
“Crude oil production is projected to be 1.69million bpd for 2023 and 1.813million bpd for both 2024 as well as 2025.”
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