The $4m Legal Fee from ECA
Some of the payments made by the Buhari government for some comical services often leave me wondering whether the interest of the public is paramount. The latest of such puzzling expenditures is the $4 million paid to an unknown lawyer from the Excess Crude Account (ECA) for God knows what. Precisely 14 days ago, the Senate asked the Accountant General of the Federation, Ahmed Idris, to supply details of the lawyer who was paid the $4 million from the already depleted excess crude account, and the nature of the job done. Ahmed is still struggling to come up with this information. I guess the reason for the depletion in the ECA is now obvious.
The ECA, an escrow account set up by the federal government, into which the difference between the budget benchmark price of crude oil and the actual sale price thereof in the world market is paid, is now in a mess. The money in this account is used to serve as buffer in the event of fluctuation in oil price or reduction in supply to the international market. Unfortunately, this is now impossible. Nigeria currently has $71.8 million in the ECA, down from the $2.2 billion which the Buhari administration inherited from the Jonathan administration in 2015. The money in the ECA, rose to $2.6 billion in 2016, but went down to $2.4 billion in 2017. The money was further depleted in 2018 to $631.4 million; $324.9 million in 2019 and reduced drastically to $71.8 million in 2020.
Now, crude oil price has fallen far below Nigeria’s 2020 budget benchmark price of $57 per barrel, no thanks to Coronavirus. Economic crisis looms as crude oil price continues to slide. The ECA that should help us at this period has been badly depleted. The exhaustion of the ECA has made Nigeria more vulnerable.
The ECA, created by the Obasanjo government in 2004, rose from $5.1 billion in 2005 to more than $20 billion in November 2008. The depletion of the account has been unending since 2009. This means that the Yar’Adua and Jonathan government are also guilty of plundering the ECA. The Obasanjo government saved for the rainy day while others depleted the savings. Now, the ECA that should serve as our buffer while oil price is tumbling is gone. The storm is already gathering. Tougher times are around the corner.