The Nigerian Economic Summit Group has explained how state governors spent the country’s $50 billion Excess Crude Account in 2010, which would have served as a buffer for petrol subsidy challenges.
The Chief Executive Officer of NESG, Dr Tayo Aduloju, disclosed this in a statement on Wednesday.
He recalled that the global financial crisis of 2007 and 2008 had minimal pressure on Nigerian firms because the country had a substantial fiscal buffer in the ECA, which greatly shielded it from external economic shocks.
However, in 2010, the state governors approached the Supreme Court to declare the ECA illegal, giving them the basis to share the funds domiciled in the account.
According to him, the federal government disbursed the $50 billion fund to the 36 state governors between when late President Umaru Musa Yar’Adua died and when former President Goodluck Jonathan took charge.
He stressed that Nigeria’s fuel subsidy problem came when the country moved from a savings-based subsidy model to a revenue base.
Aduloju added that the recurring problem of fuel subsidy operation historically in Nigeria is the mismanagement of the resources by successive administrations.
“Between 1999 and 2010, we operated a savings-based subsidy operation. In other words, we were paying for the subsidy from savings. We were not borrowing to pay the subsidy.
“We were simply paying from the Excess Crude Account because we managed our first boom well. I think when former President Obasanjo left office, the Excess Crude Account had over $60bn.
“Without answering these questions, the policy choice—such as balancing the current account, of which subsidy removal is one option—becomes a facade. And therein lies the problem.
“The subsidy removal that Tinubu inherited is not the same as the subsidy removal that Buhari inherited, and it’s also not the same as what Jonathan faced. They are different operations.
“But the consistent issue is that each mismanagement of our fiscal resources by previous governments compounded the problem for the next government,” he stated.
This comes amid the recent hike in the pump price of Premium Motor Spirit (Petrol) to N897 from N617 by Nigerian National Petroleum Company Limited retail outlets, which has worsened the pains of Nigerians.
Recall that in May 2023, the Tinubu administration also announced fuel subsidy removal, which saw petrol prices increase to over N500 per liter from N238.
