The Head of the African Department of the International Monetary Fund, Abebe Selassie, has said the Nigerian Excess Crude Account is one of the worst managed Sovereign Wealth Fund in the world.
Selassie said this on Friday on the sidelines of the G-20 Finance Ministers and Central Bank Governor’s meeting at the IMF/World Bank meetings in Washington DC.
Selassie said: “There have been two sovereign wealth funds in Nigeria.
“There has been the excess crude account and the Nigeria Sovereign Investment Authority.
“The NSIA has been run transparently and on standard best practice and it has been doing a good job.
“The concern that we have is about the ECA, because if you recall that the ECA economically was set up to save resources when oil prices are high, and to be drawn on when oil prices are low, we do not think that the ECA has been doing effectively enough job that way.
“When oil prices fell, the economy was very hard in the last couple of years.
“We feel like a much better job could have been done, saving enough more in the ECA when oil prices were at $100 and $120 per barrel.”
However, the Federal Government says it will from now use revenue accrued in the Excess Crude Account to improve the funding of the Nigeria Sovereign Investment Authority.
The Minister of Finance, Zainab Ahmed, said: “The ECA is an account where we put our savings from excess crude sales.
“We are supposed to be making this savings as a matter of routine but over the years we have not been able to do that.
“But we will try to start saving in the ECA routinely.
“The NSIA is supposed to be funded from the ECA but unfortunately because the build up is very slow, we have only increased our investment in the NSIA periodically.
“So we want to change that to make it as a matter of routine that every FAAC once we pass a certain threshold, we save.”
Ahmed said, however, that the cooperation of the state governments was critical in actualising federal government’s plan to increase funding to the NSIA.
“We need the co-operation of the states as well because often times we see the states putting pressure, that they want all the funds to be used for the running of their states,” she said.
Ahmed also said that the Excess Crude Account was run in an open and transparent manner.
She said: “We declare every month to the national economic council the balance of the excess crude account, what has come in and what has come out.
“After every NEC, there’s a press briefing and that information is provided as well.”
The Excess Crude Account is a special account established to warehouse excess revenues from the prevailing crude oil price at the international market.
Income generated above the approved crude oil benchmark price in the annual budget is saved in the account.
Withdrawal from the account is subject to the approval of the three tiers of government and the Federal Executive Council.