Finance minister Olusegun Aganga says the incumbent administration in March 2011 revealed plans to abolish the excess crude account and it’s still in progress
The senate on Wednesday, passed the Nigeria Sovereign Investment Authority bill, with an approval that it be jump started with the Naira equivalence of $1 billion.
The start-up capital is to be contributed by the three tiers of government including the federal capital territory, each contributing a percentage of the initial fund equal to such government's share of the federation revenue in accordance with the subsisting formula.
Subsequent funding for the fund will be derived from residual funds from the federation account which shall be transferred to the authority. The derivation portion of the revenue allocation formula is excluded from the subsequent funding source.
60 percent of both the start-up capital and subsequent funds will be allocated equally to the authorities' three main investment options: The Future Generation Funds, the Infrastructure fund and the Stabilization Fund.
The fund, when established, would replace the country's excess crude account (ECA) that banks Nigeria oil revenue above a benchmark oil price.
Critics of the excess crude account, created by the administration of Olusegun Obasanjo, says it lacks a legal framework. The account was set-up in 2004 following a fiscal policy decision to check the negative impact of the swings in crude oil prices at the international oil market on government expenditure, and to help create savings from excess crude earnings for the country.
The incumbent administration in March 2011, revealed plans to abolish the excess crude account as the minister of finance Olusegun Aganga, told NEXT in an interview that the government resolved to abolish the account not only because its existence was illegal and unconstitutional, but also that management of the ECA has in recent times been subjected to abuses that tend to defeat the objective for which it was established.
He noted that the process for accessing the ECA is not transparent and clear to the Nigerians, therefore there is a general perception that there is some level of mismanagement.
"The intention is that the (sovereign wealth) fund will be funded by what we have in the excess crude oil account," Olusegun Aganga told reporters after the economic council meeting last month.
"The present arrangement is just an administrative arrangement, it has no legal basis", he said. "What we have to begin now is to give it a legal basis so the excess crude account will be replaced by a legal arrangement."
The authority is expected to invest the funds in a diversified portfolio of medium and long term investments for the benefit of future generation of Nigerian citizens.
Mr Aganga said the fund adds to fiscal discipline of government and is capable of attracting investment in infrastructure development from sovereign wealth funds of other countries. According to him, accruals to the fund would be put to work to intervene in critical sectors of the economy.
"The fund will have the ability to attract both local and international investors. So even if they have $1 billion, it will be capable of attracting more than $5 or $6 billion from other funds. Already we have had interest from other sovereign wealth funds. It will be managed in a very transparent way because we will have better control."
The finance minister said the setting up of the sovereign wealth fund will improve Nigeria's rating in the international financial market. The estimated value of global sovereign wealth funds is currently put at $2.5 trillion.
"Creation of the fund will ensure that the present and future generations of Nigeria will still have a country to call their own," Teslim Folarin, leader of the senate said in his lead debate.
In exceptional circumstances set out in the act, the authority will utilize certain liquid assets in the stabilization fund to supplement other available fiscal stabilization funds to temporarily sustain duly budgeted public expenditure in the interest of macroeconomic stability in Nigeria.
Bribery allegation denied
The Senate also denied media allegations that its members demanded N25 million in bribes to hasten the passage of the Sovereign Wealth Fund and Petroleum Industry bills.
The Senate President, David Mark, described the allegations as "sheer blackmail." The denial followed complaints by Dahiru Kuta, a member of the committee that reviewed the bills, about a Monday publication in Punch Newspaper claiming the senators demanded bribes to pass the bills.
"This blackmail is totally unnecessary and uncalled for. It is not a very good thing by Punch Newspapers. I think they owe this hallowed chamber an apology," the senate president said.
"We will investigate this and the ethics committee should take it up live on TV. No senator has demanded for anything. It is totally uncalled."
Click to signup for FREE news updates, latest information and hottest gists everydayAdvertise on NigerianEye.com to reach thousands of our daily users
No comments
Post a Comment
Kindly drop a comment below.
(Comments are moderated. Clean comments will be approved immediately)
Advert Enquires - Reach out to us at NigerianEye@gmail.com