Excess Crude Account: States Offer New Settlement Terms

States are demanding a sweeping change in the way the Federal Government has been handling monies accruing to the central purse as part of their condition to drop their suit challenging the legality of the Excess Crude Account (ECA).

They have proposed new conditions to resolve the lingering dispute between them and the Federal Government over illegal deductions from the Federation Account.

Counsel to the Federal Government, Mr. Austin Aleghe, Tuesday informed the Supreme Court of the new development when hearing resumed in the suit filed by the states seeking, among others, an order of the court to stop further deductions from the ECA to fund payment for fuel subsidy pending the determination of the suit.

According to the proposed new terms of agreement, the Federal Government will undertake and agree that upon the execution of the terms of settlement, it shall cause all sums standing to the credit of the ECA to be transferred to the Federation Account and distributed within 10 days from the execution of the terms of settlement to the three tiers of government—federal, state and local governments.

Under the new terms, the states are demanding that a limited liability company be established to take over the operations of the National Integrated Power Projects (NIPP) and the $8.425 billion invested in it.

They are also demanding that the shares be allotted to the Federal Government, the states and the 774 local government areas with the rights and obligation of each shareholder spelt out.

Similarly, the states are demanding that the $250 million invested in the railway modernisation projects be transferred to a limited liability company, to be formed, in which the Federal Government, the states and the local government areas shall be the shareholders.

Both the $8.425 billion invested in the NIPP and the $250 million invested in the railway modernisation project were illegally deducted from the Federation Account and were monies that should have been shared among the three tiers of government.

Under the new terms, the Federal Government is being requested to allocate shares to all the states and the local government councils in the country under the Ibom Power Project since the money ($80 million) that was used to fund it was illegally deducted from the Federation Account.


They asked the Federal Government to stop the payment of signature bonuses accruing from oil block tenders into other accounts other than the Federation Account, in accordance with Section 162 of the 1999 Constitution.

Within 30 days after the execution of the terms of settlement, the states are asking the Federal Government to submit two amendments bill to the National Assembly to amend the Petroleum Trust Development Act and Petroleum Act to bring their provisions in conformity with the constitution, a demand that might be deemed curious given that the Petroleum Industry Bill (PIB), when passed into law, would abrogate both Acts.


They also demanded that dividends accruing to the Nigerian National Petroleum Corporations (NNPC) through the Nigerian Liquefied Natural Gas (NLNG) Limited should henceforth be paid into the Federation Account as against the illegal practice by the Federal Government of holding on to the money.

On proceeds realised from the sale of government property, the states agreed to continue to negotiate with the Federal Government to reach an amicable settlement.
They, however, added a clause that if within six months they cannot reach any agreement, the dispute would be submitted to the Supreme Court for adjudication.


Meanwhile, the case instituted at the Supreme Court by the 36 states of the federation challenging the legality of the ECA and the decision of the Federal Government to transfer $1 billion from the account as take-off grant to the newly created Sovereign Wealth Funds (SWF), was yesterday further stalled following a passionate appeal by the Federal Government that it is genuinely committed to settling the matter out of court.

When the case was called Tuesday, Aleghe, who represented the Attorney General of the Federation (AGF) and Minister of Justice in the matter, told a seven-man panel of the court, led by Justice Chukwuma Eneh, that the series of attempts being made by the Federal Government aimed at resolving the dispute amicably, had started yielding fruits.


He said: “We are happy to report that the settlement moves have started yielding results. We received only last week, new proposed terms of settlement by the plaintiffs and the Attorney General is currently studying the new terms of settlement and we believe now, more than ever before, that the settlement is yielding very useful results.”

He therefore pleaded with the court to further extend the time for the parties to reach an amicable resolution of the dispute and to adjourn the matter to enable them reach a settlement.


The case as instituted by the states is aimed at resolving the dispute over the retention of the ECA and the transfer of $1 billion to the recently created SWF.

The states had approached the apex court for an order compelling the government of the Federation to pay into the Federation Account, N5.51 trillion, being the balance of the money that accrued to the central purse between 2004 and 2007 from the proceeds of crude oil sales, petroleum profit tax and oil royalties.


The Federal Government had classified such earnings as “excess crude proceeds” and “excess PPT and royalties” which were paid into an account termed the “Excess Crude Account.”

The states also want the apex court to order the Federal Government to transfer to the Federation Account all sums standing to the credit of the ECA.


Responding to Aleghe’s plead for an adjournment, Chief Adegboyega Awomolo who represented the plaintiffs, reminded the court that the plaintiffs had approached the court since 2008 over the issue and that there had been discussions, offers, counter offers and moves to resolve the matter.
He expressed satisfaction with the genuine commitment by the Federal Government to resolve the matter and promised that his team would embrace such moves.

Awomolo, however, reminded the court that the case was adjourned until yesterday for either the report of settlement or definite hearing of the matter on its merit, adding that he was ready to go on.


The court declined to commence hearing into the matter and observed that such a move would undermine the current attempts towards settling the matter amicably.
The court also noted that delving into the substance of the case would cast doubts on the preparedness of the AGF, Mr. Mohammed Bello Adoke’s commitment to settle the matter.

Subsequently, the court adjourned the matter till

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