The Nigerian Economic Summit Group has revealed how the Excess Crude Account containing $50 billion was exhausted by state governors in 2010.
According to the CEO of NESG, Dr. Tayo Aduloju, “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.”
Aduloju explained that the subsidy was paid directly from the ECA, which had accumulated significant reserves, particularly by the end of President Olusegun Obasanjo’s tenure when the account held over $60 billion. However, this financial prudence was not sustained.
Aduloju noted that the depletion of the ECA left Nigeria without adequate savings by the time President Goodluck Jonathan’s administration experienced an oil boom.
He recalled that “Okonjo Iweala once told us we were broke. And her argument at that time was that a country cannot call spending all its money progress.”
Aduloju emphasized that the shift from a savings-based subsidy model to a revenue-based approach left Nigeria in a precarious financial position, forcing the government to finance the subsidy through crude oil sales at a loss, plunging the country into a deficit that lasted throughout President Muhammadu Buhari’s administration.
“We maintained this deficit position for eight years,” he added.
Aduloju stressed that the core issue facing the current administration is not just the removal of the fuel subsidy but a lack of transparency in the government’s financial dealings.
He argued that without transparency, policy choices like subsidy removal will be superficial and won’t address the underlying issues.
He stated, “When President Tinubu took over, I insisted that what we needed was transparency before choices. Somebody should have first turned on the light and answered the simple question: what are we looking at? What is the size of the fiscal deficit? What were the commitments made in selling crude forward into the future? How much was committed? How much do we owe? How much of our reserves are encumbered?”
Aduloju also emphasized the deep trust gap between the government and the public, arguing that transparency is key to bridging this divide.
He said, “Subsidy itself is not the problem. The challenge is that the lack of transparency does not allow for choices. Historically, Nigerians have agreed that subsidy is fraudulent. Where they disagree is whether what they would receive after the government removes the subsidy would be of commensurate or greater value.”
