The Nigeria Extractive Industries Transparency Initiative (NEITI) has called for the transfer of all the country’s oil revenue savings into the Nigerian Sovereign Investment Authority (NSIA).
Dr Orji Ogbonnaya Orji, the Director, Communications of NEITI, made the call in a statement on Wednesday in Abuja.
Orji said that the position was made known in NEITI’s paper titled: “The case for a robust oil savings fund for Nigeria’’, adding that position was informed by the transparency rating of the NSIA by the global Sovereign Wealth Institute.’’
He said that NSIA had been scored nine out of 10 on the Sovereign Wealth Institute’s transparency index, the highest score by any African Sovereign Wealth Fund.
He said that the Nigeria Sovereign Wealth Fund was set up in 2011 to build a savings base, develop infrastructure and provide stabilisation in times of economic stress for the country.
He said that the fund was structured into three components – the Future Generations’ Fund 40 per cent, Nigeria Infrastructure Fund 40 per cent and 20 per cent for the Stabilisation Fund.
He said that from a modest ‘seed capital’ of less than 310 million dollars in 1996, the total asset value of the Norway’s sovereign wealth fund “is currently 922 billion dollars’’.
He therefore recommended that the 95 million dollars currently in the Stabilisation Fund and the 2.3 billion dollars in the ECA should be transferred into the Sovereign Wealth Fund as investment savings.
According to him, the NSIA Act 2011 is an improvement on the legislations for the ECA and the 0.5 per cent Stabilisation Fund in terms of comprehensiveness, transparency and accountability.
He said that the ECA and the 0.5 per cent stabilisation fund were established each by a single clause in fiscal legislations with no specific governance, transparency or accountability requirements
“The NSIA is a comprehensive legislation with extensive corporate governance and management provisions in line with global principles and best practices,” he said.
He said that NSIA law emphasised professionalism and technical expertise of both management and members of the NSIA board with clearly defined reporting requirements and accountability relationships between the management, board, and council.
Orji said that while the NSIA made N192billion return on its investments, the ECA and the 0.5 per cent Stablisation Fund recorded zero returns on investment.
He expressed concern that unlike the Sovereign Wealth Fund, the ECA and the Stabilisation Funds had suffered all kinds of abuses over the years thus undermining the objectives for which they were set up.
He said that the NEITI Fiscal Allocation and Statutory Disbursement Audit report released in 2013 had revealed that while N109.7 billion was transferred into the ECA for the period 2007 to 2011.
“The sum of N152.4 billion was withdrawn from the account and as at May 31, the account had an outstanding sum of N29.02 billion.
“The paper further revealed that between 2005 and 2015, 201.2 billion dollars accrued to the ECA, but 204.7billion dollars was withdrawn from the same account. In other words, outflows were 102 per cent of inflows.’’
NEITI noted that the relevant laws that prescribed the condition for disbursement of the 0.5 per cent Stabilisation Fund and the ECA did not specify how the funds should be withdrawn and allocated.
NIETI’s said: “The inherent pitfalls in this arrangement became glaring in a recent report by the National Economic Council Committee on the ECA.’’
“In the report, the President of Nigeria, the Federation Accounts Allocation Committee (FAAC) and the CBN were listed at various times as approving authorities for withdrawals from the ECA.
“These indiscriminate withdrawals, showed that Nigeria had no prudent and robust oil revenue savings scheme for purposes of generational equity.’’
Orji explained that the fund started off with a seed capital of one billion dollars in 2012.
He said that in November 2015 and March 2017, the government transferred additional 500 million dollars into the fund bringing the total savings to 1.5 billion dollars.
NEITI, however, observed that while these savings were significantly below projected transfers to the NSIA, it was satisfied that “the funds under the management of the authority have not been depleted unlike the other oil savings accounts – the Excess Crude Account (ECA) and 0.5 per cent Stabilisation Fund.’’
Orji advised Nigeria to learn from resource-rich country like Norway, adding that Norway transfers all oil revenues into its Sovereign Wealth Fund known as the Government Pension Fund Global.
“It then proceeds to disburse only the amount needed to finance any deficit in its budget as Norway’s budget is based on non-oil revenue.’’
He also renewed the agency’s advice to the government to ensure constant savings whether oil prices “are high or low’’.
According to him, this underlined the need for regular payouts from the investments proceeds as stipulated in NSIA Act, to compensate beneficiaries, especially the three tiers of government for their sacrifice in saving for the rainy day.
He further suggested that government should also delink its expenditure (budget) from oil revenues and pursue prudent macro-economic policies capable of shifting attention to the non-oil sectors.
He urged the Federal Government and the states to speedily resolve the litigation before the Supreme Court to ensure that remittances were made into the fund without interruptions
(Source: NAN)