Jonathans Ambition to be President would Bankrupt Nigeria

Now that President Jonathan has decimated the Excess Crude Account
• Jonathans Ambition to be President would Bankrupt Nigeria

Around August 2007, the newly elected governors of the 36 states of the federation met and clamoured for the release and sharing of the excess crude funds. The governors had been mounting pressure on the former President, Umaru Yar’adua to approve the sharing of the money from excess crude oil sales as provided by the constitution, saying that it would help them stabilise in their states which treasuries had been looted by some of their predecessors.

According to them, injecting the excess funds into the economy would create job opportunities for the teeming army of unemployed youths in the country. But the Federal government through the CBN, under Professor Chukwuma Soludo refused to budge stating that sharing the funds in the Excess Crude Account, ECA, may be disastrous for the economy.

Fast-forward to February 2010. One of the first acts by Jonathan Goodluck upon being made acting president was to approve the disbursal of $2 billion from the country's windfall oil savings between the Federal and State governments. Fuelling suspicion that the disbursal was an attempt to quieten those who might otherwise seek to undermine him, a charge government and presidency officials then strongly denied.

At the inception of his government, President Jonathan Goodluck inherited about $7 billion in the Excess Crude Account.

The excess crude account stood at over $20 billion when Yar'Adua took over in 2007 but his administration regularly dipped into the account. Relatively high oil price meant the money in the ECA remained at $20.1 billion at the end of 2008. The account has a balance of $20 billion as at January 2009. By December 2009, Former President Umaru Yar’adua had reduced the Account to $7.8 billion.

Then in February 2010, Jonathan Goodluck, then Acting President asked Federal, States and Local governments to share $2 billion from an earlier balance of $6.2 billion, leaving about $4.1 billion in the account.

In March 2010, he approved the disbursal of a further $1 billion from the country's windfall oil savings, leaving about $3.1 billion in the account. The move brings to $3 billion the total amount of Nigerian oil savings that Jonathan approved for disbursal to the country's 36 states and government agencies in one month!

Then on Friday, August 13 2010, the Accountant-General of the Federation, Alhaji Ibrahim Dankwanbo announced to journalists shortly after the monthly Federation Accounts Allocation Committee meeting, which was chaired by the new Minister of State for Finance, Hajiya Yabawa Lawan-Wabi that the remaining $3 billion in the Excess Crude Account was depleted and shared among the Federal and State Governments this month leaving only about $460 million in the account.

$2 billion of it was shared among the three tiers of governments while $1 billion was set aside for the proposed Sovereign Wealth Fund which is yet to be signed into law, he said.
The present administration is raising concern about Nigeria's commitment to fiscal discipline. There are growing concerns that so much have been taken from the Excess Crude Account without tangible improvement in the lives of Nigerians.

Nigerians are asking; why is President Goodluck Jonathan in a hurry to deplete The Excess Revenue Account accrued from revenue derived from Crude Oil Sales, Petroleum Profit Tax (PPT) and Royalties over and above the budgeted benchmark of the Federal Government of Nigeria for each year.

The logic for saving excess crude revenue, according to the CBN is that the oil sector is highly volatile when one considers the past experience of oil boom and reckless spending of the 70s which caused depression around 1978 and forced the country to start borrowing.

While ECA was rightly used to meet the shortfall in revenues caused by low oil prices in 2008 and 2009, the worrying signs in terms of fiscal deficit and depletion cannot be ignored.

Alarmingly, of the $17 or so billion withdrawn from the account since February 2009, it appears that only $5.3 billion was invested in any capital project – Yar’adua’s emergency power project.

Even that investment has been somewhat opaque - Likened to Obasanjo’s investment of $16billion on Independent Power Project, IPP - there was no evidence that Yar’adua’s allocation actually went to Power Holding Company of Nigeria, PHCN.

The remaining withdrawals have been shared among the federal, state and local governments. Likely, these have been spent on recurrent items.

Does it have anything to do with preparations for the 2011 election?
In an address titled “Safe-guarding Nigeria’s Fiscal Health: Some Considerations for the Present and the Future”, delivered to mark the 24th and 25th combined convocation ceremony of the University of Calabar, 08 April 2010, former Minister of Finance and Director at the World Bank, Dr. Ngozi Okonjo-Iweala pointed out that while ECA was rightly used to meet the shortfall in revenues caused by low oil prices, the worrying signs in terms of fiscal deficit and depletion cannot be ignored.

Warning against depleting Excess Crude Account, Okonjo-Iwealla stated that Nigeria’s huge fiscal deficit, rising domestic debt, depletion of the Excess Crude Account (ECA) and the distress in the banking sector are issues that urgently need the attention of Jonathan’s cabinet.

Obviously, the absence of cranial matter between the ears of President Jonathan Goodluck means that nothing stops this warning from going in through one ear and escaping through the other ear.

Alternatively, it could be that Jonathans Ambition to be President would Bankrupt Nigeria.

More than one hundred days into his presidency it is now apparent that President Goodluck Jonathan has the ambition to remain president beyond 2011 despite his party’s zoning agreement.