Governors Under Scrutiny Over $50bn Excess Crude Expenditure – NESG Report

Governors Under Scrutiny Over $50bn Excess Crude Expenditure – NESG Report

The Nigerian Economic Summit Group (NESG) has shed light on how the country’s $50 billion Excess Crude Account was utilized by state governors in 2010, funds that could have mitigated petrol subsidy challenges.

In a statement released on Wednesday, NESG CEO Dr. Tayo Aduloju highlighted that the global financial crisis of 2007-2008 had only a limited impact on Nigerian companies due to the substantial fiscal buffer provided by the Excess Crude Account (ECA). This buffer effectively shielded the country from external economic shocks.

However, in 2010, state governors challenged the legality of the ECA in the Supreme Court, which enabled them to access and distribute the funds held in the account. The federal government subsequently allocated the $50 billion to the 36 state governors during the transition period between the death of late President Umaru Musa Yar’Adua and the assumption of office by former President Goodluck Jonathan.

Aduloju explained that Nigeria’s fuel subsidy issues began when the country shifted from a savings-based subsidy model to one based on current revenues. He pointed out that historical mismanagement of fuel subsidy resources by successive administrations has consistently compounded the problem.

“Between 1999 and 2010, the subsidy was funded from savings rather than borrowing. We managed our first boom well, and by the end of President Obasanjo’s tenure, the Excess Crude Account held over $60 billion,” Aduloju said.

He noted that the subsidy removal strategies faced by different administrations—such as those of Tinubu, Buhari, and Jonathan—vary significantly, but the core issue remains the mismanagement of fiscal resources by previous governments.

This discussion comes at a time when the Nigerian National Petroleum Company Limited has recently increased the price of Premium Motor Spirit (petrol) from N617 to N897 per liter, exacerbating the economic burden on Nigerians. Additionally, the Tinubu administration’s removal of the fuel subsidy in May 2023 saw petrol prices rise from N238 to over N500 per liter.

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