Government of appeasement? Jonathan drains excess crude account, approves $1b disbursal

Is the disbursal an attempt to quieten those who might otherwise seek to undermine him?

Nigeria’s Acting President Goodluck Jonathan on Friday approved the disbursal of a further $1 billion from the country’s windfall oil savings, leaving about $4.1 billion in the account, government officials said. The move brings to $3 billion the total amount of Nigerian oil savings that Jonathan has approved for disbursal to the country’s 36 states and government agencies since he took over as acting leader just over a month ago.

The Federal Government is draining the excess crude account as it is now left with a balance of $3.2 billion. The Minister of State for Finance Remi Babalola said at the monthly Federation Accounts Allocation Committee (FAAC) yesterday in Abuja that Acting President Goodluck Jonathan has approved the sharing of another $1 billion from the account. The minister said the money was for “urgent national developmental programmes” but gave no further details.

It also reduces the level of the OPEC member’s windfall oil savings to less than a quarter of where they stood in 2007, when President Umaru Yar’Adua’s administration took over at the helm of sub-Saharan Africa’s second-biggest economy.

“The additional $1 billion was distributed today among the three tiers of government for some specific projects so these projects are executed before the rainy season,” Babalola said after a meeting of the committee which allocates the funds.

Jonathan has said maintaining peace in the Niger Delta, where years of underinvestment have fuelled militant attacks on the oil industry, improving Nigeria’s power supply and fighting corruption are among his top priorities.

Nigeria saves any oil revenue above a benchmark price into the account, a pillar of IMF-backed reforms launched in 2003 meant to help insulate it from volatility in global oil prices.

The excess crude account stood at over $20 billion when Yar’Adua took over in 2007 but his administration regularly dipped into the account, raising concern about Nigeria’s commitment to fiscal discipline.Babalola said the latest disbursal would be credited to the accounts of the various tiers of government by March 16.

Last month, the Acting President asked Federal, States and Local governments to share $2 billion from the earlier balance of $6.2 billion. Governor of Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi told our reporter that using the excess crude funds at this particular time is in order, saying it will not fuel inflation. 
“At this particular time, the federal government actually needs to use the funds. This is something that CBN has no objection to. What needs be done is to fast track deregulation and ensure sufficient supply of petroleum products and unlock distribution bottleneck”, he said.
Accounts of the three tiers of government will be credited before the 16th of this month. The excess crude account has a balance of $20 billion as at January 2009. The revenue shared yesterday by the three tiers of government for the month February was N56.47 billion lower than what was distributed in January. They shared N273.23 billion in February as against N329.7 billion shared in the previous month. 
“The decrease was attributable to drastic decline in collection from Production Sharing Contract and Modified Carry Arrangement”, the Accountant-General of the Federation Ibrahim Hassan Dankwambo said in a communiqué. The amount shared was made up of statutory revenue of N228.659 billion and Value Added Tax of N44.480 billion.
From the statutory revenue, federal government got N108.756 billion, states N55.163 billion, local governments N42.528 billion, while N22.212 billion was meant for the mineral producing states, as 13 percent derivation. From VAT distributions, federal government received N6.687 billion, states N22.290 billion and local government N15.603 billion.

Jonathan took over as Nigeria’s acting head of state on Feb. 9 because of the ill-health of President Umaru Yar’Adua, who recently returned from three months treatment for a heart ailment in a Saudi hospital but remains too sick to govern.

Yar’Adua’s return raised fears of a power struggle at the top of Africa’s most populous nation if his closest aides tried to maintain their influence by trying to sideline Jonathan.

Jonathan’s previous disbursal a month ago of $2 billion from the windfall oil savings to the three tiers of government came days after he took on executive powers with the support of the powerful state governors, parliament and the cabinet.

His critics said the disbursal appeared to be an attempt to quieten those who might otherwise seek to undermine him, a charge government and presidency officials have strongly denied.