According to a recent report by NEITI, Nigeria’s oil revenue savings were among the lowest in the world despite about N70trillion in earnings from the sector between 1999 and 2014.
The Nigeria Extractive Industries Transparency Initiative on Tuesday said it was high time the Federal Government embraced a robust policy to save a portion of oil and gas revenue for the rainy day and for the next generation.
It listed the urgent measures that must be taken to include the immediate transfer of all revenue savings in the Stabilisation Fund and the Excess Crude Account to the Nigeria Sovereign Wealth Fund.
The Executive Secretary, NEITI, Waziri Adio, lamented that in spite of the benefits and the huge revenues that had accrued from oil and gas over the years, Nigeria had one of the lowest natural resources revenue savings in the world.
He noted that the country currently had three oil savings funds made up of the Sovereign Wealth Fund, with a balance of $1.5 billion; Excess Crude Account, with $2.3billion; and the Stabilisation Fund, with N29.02billion ($95million).
The agency’s boss, who spoke at a press briefing in Abuja, stated that in the last 40 years of oil production, Nigeria had extracted about 31 billion barrels of its oil reserves.
Adio, however, noted that from 1980 to 2015, the country exported crude oil worth about $1.09trillion, but had a current balance of $3.9billion as of June 2017 in the three funds.
He noted that the absence of sufficient savings had left Nigeria severely exposed when the price of oil, the country’s main source of revenue and foreign exchange, began to plunge in 2014.
NEITI expressed regret that the $1.5billion currently in the SWF was one of the world’s worst ratio to annual budget at 10%, and one of the lowest SWF per capital ($8) globally.
In its occasional paper titled: ‘The case for a robust oil savings fund for Nigeria’, NEITI provided some global comparisons among resource-rich countries.
It said Norway, a country of 5.2 million people, had a sovereign wealth fund worth $922billion; Chile, $24.1billion; Angola, $4.6billion; and Botswana, $5.7billion. Others are Russia, with $89.9billion; and Kuwait, $592billion.
Adio recalled that the National Economic Council conducted a study in 2015, which revealed that inflow to the ECA between 2005 and 2015 was $201.2billion, while the outflow was $204.7billion, indicating that the amount withdrawn from the account exceeded what was transferred into it for the period.
Our paltry oil savings defeat the rationale for having such savings in the first place. Nigeria does not have enough oil savings to finance even a fifth of a year’s budget at the federal level, not to talk of having enough for investments or for the future generation, he said.