Details have emerged on how state governors led the federal government into borrowing to fund fuel subsidy.
The Nigerian Economic Summit Group (NESG) has exposed how governors spent the country’s $50 billion Excess Crude Account in 2010, which would have served as a buffer for petrol subsidy challenges.
According to NESG’s CEO, Dr. Tayo Aduloju, the governors’ actions led to the depletion of the Excess Crude Account, leaving the country vulnerable to external economic shocks.
He said the governors, in 2010 approached the Supreme Court to declare the ECA illegal, paving the way for them to share the funds.
The federal government disbursed the $50 billion fund to the 36 state governors between late President Umaru Musa Yar’Adua’s death and former President Goodluck Jonathan’s takeover.
This ‘reckless’ spending, he said led to Nigeria’s fuel subsidy problem, as the country moved from a savings-based subsidy model to a revenue-based model.
“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 said.
The disclosure comes as the recent hike in petrol prices to N897 has worsened the pains of Nigerians, highlighting the need for responsible management of the country’s resources. It can be recalled that under the administration of Bola Ahmed Tinubu, fuel subsidy removal has increased petrol prices to over N500 per litre from N238.
