The Excess Crude Account (ECA) in Nigeria has remained stagnant at approximately $474 million over the past two years, even though the Nigerian National Petroleum Company Limited (NNPCL) remitted N907 billion to the Federal Account Allocation Committee (FAAC). The balance in the ECA was reported at $473,754 as of June 2023, the same amount as of December 15, 2022, despite the recent remittance.
The ECA was established to save surplus funds from crude oil sales when prices exceeded the approved benchmark in the national budget. However, the account’s balance has declined significantly in the last eight years, dropping by 89% from $4.1 billion in November 2014 to the current level.
Energy expert, Bala Zaka, expressed concern over this trend, calling it “very dangerous and negative.” The stagnant ECA balance raises questions about financial discipline and management of government funds.
International Brent crude oil prices recently reached $82 per barrel, surpassing Nigeria’s benchmark of $75 per barrel. Despite the higher oil prices, the ECA balance has not seen any significant increase.
Economist Sheriffdeen Tella pointed out that the situation arose due to a lack of government discipline, and the Governors’ Forum’s opposition to the ECA further complicates the issue. Some experts believe that a lack of financial discipline and a tendency to prioritize personal gain could be contributing factors to the stagnant ECA balance.
While the NNPCL resumed remittances to the FAAC after halting due to fuel subsidy expenses, the firm also paid N123 billion, including dividends and Production Sharing Contract profit oil, in addition to complying with royalty and tax payments.
Despite the positive trajectory of the NNPCL under the leadership of Mallam Mele Kyari, the stagnant ECA balance remains a pressing concern for Nigeria’s financial management.