The Nigeria Extractive Industries Transparency Initiative (NEITI) yesterday called on the federal government to immediately abolish the Excess Crude Account (ECA) and transfer the balance to the Nigerian Sovereign Investment Authority (NSIA).
The agency noted that one of the challenges towards Nigeria achieving and maintaining a healthy oil savings fund, was constitutional constraints, as well as the difficulty in achieving centralised savings in a regime of fiscal federalism as represented by the ECA.
NEITI made the call in its latest policy brief, titled: “Insulating Nigeria from Perennial Oil Price Volatility,” in which it urged the government to adopt sustainable strategies for robust fiscal cover for the Nigerian economy during periods of cyclical oil price shocks.
It recommended that Section 162 (1) of the 1999 Constitution should be amended to mandatorily allow for part of the oil earnings to be saved, adding that the 0.5 per cent stabilisation fund and the ECA should be terminated.
“The Oil Price-based Fiscal Rule (OPFR) where revenue in excess of oil price benchmark is saved should be abolished and replaced with mandatory savings of a percentage of daily oil production.
“This will remove the constant political jousting about oil benchmark price and quantity,” the policy brief said.
It added that when proceeds from the percentage of daily oil production are transferred to the NSIA, the funds should be invested in convertible instruments while the NSIA’s stabilisation fund should be increased from 20 per cent to 40 per cent and dividends from its earnings shared every year.