2018 budget: Fresh crisis looms over excess crude account (ECA)

THERE are hints of a recurrence of the perennial crisis over budget consideration and passage by National Assembly just days after President Muhammadu Buhari presented a N8.6 trillion proposal to a joint sitting of the national legislators.

Findings by Saturday Tribune revealed that a major plank of the crisis is predicated on a decision by the legislators to annul the Excess Crude Account (ECA), aligning with a long-held position of state governors.

Excess crude account is used to save oil revenues above a base amount derived from defined benchmark price established in 2004 with an objective of protecting planned budgets against shortfalls due to volatile crude oil prices.

Since May 29, 2015, however, only $87 million has been deposited into the account in April 2017 mainly due to collapse in oil prices and also activities of Niger Delta militants who engaged in a relentless blowing up of oil installations.

The 2018 budget proposal is predicated on budget benchmark of $45 per barrel and production of 2.4 million barrels per day and an inherent deficit of N2.005 trillion.

Shortly before Buhari arrived at the National Assembly to deliver the budget proposal on Tuesday, when rejecting a motion to probe the ECA, the National Assembly adopted another motion to instead abolish the account altogether.

The 1999 Constitution does not envisage any centralised saving by the federation as it stipulates that every accrual into the Federation Account must be shared every month by the three tiers of government.

A motion by Senator Rose Oko (PDP-Cross River) and co-sponsored by 18 other senators also called on the executive to pay the amount above the oil benchmark into the Federation Account in compliance with the constitution.

It further requested the executive to act in conformity with Sections 80 (1-4) and 162(1-3) of the 1999 Constitution (Amended) in its revenue receipt and expenditure.

Presenting the motion, Oko expressed regret that the ECA was not in tandem with Sections 80(1-4) and 162(1-3) of the 1999 Constitution.

She stressed that the accruals to the ECA was expected to be the amount above the benchmark of crude oil sales.

The Senator disclosed that between May, 2015 and August, 2017, about 122.2 million dollars had accrued and ought to have been paid to the ECA and decried that ECA had been a source of huge revenue leakage in the country, adding that it had created room for arbitrariness.

A director at the Federal Ministry of Finance (pleading anonymity) who spoke with Saturday Tribune during the week said payments into the accounts had been haphazard due to the bad economic condition, which the country ran into.

The director said however, that since things have begun to improve, deposits would be made soon and announced during the next meeting of Federation Account Allocation Committee (FAAC) as such excess accruals are collected usually over a two-month period before being deposited into the ECA.

The source also stated that withdrawals were made during the recession period to augment what was shared to the three tiers of government.

Nonetheless, our correspondent learnt from legislative sources also that there is a determination to reduce the inherent deficit in the budget by increasing the benchmark to at least $60 per barrel.

It will be recalled that there is a case pending at the Supreme Court filed by state governors against the Federal Government over the creation of ECA out of which the Sovereign Wealth Fund (SWF) was established.

The governors, had through their counsel, Chief Adegboyega Awomolo (SAN), applied to the Supreme Court to restrain the federal government from making any withdrawals howsoever from the account styled the “ECA” (or any account replacing same by any name howsoever), pending the hearing and determination of a suit they filed in 2008.

They also asked the apex court to order that all sums standing to the credit of the account styled the “ECA” (or any account replacing same by any name howsoever) be paid into a dedicated account at the instance of the court or be otherwise secured as the court may deem fit, pending the hearing and determination of the substantive suit.