In a recent report by the Nigerian Economic Summit Group (NESG), it was revealed how Nigerian state governors spent $50 billion from the Excess Crude Account (ECA) back in 2010. This significant amount of money, which could have alleviated fuel subsidy problems, was used after a Supreme Court ruling deemed the ECA illegal.

Dr. Tayo Aduloju, the CEO of NESG, explained that the ECA had served as a financial cushion for Nigeria during the global financial crisis of 2007-2008. Thanks to this fund, Nigeria was somewhat shielded from economic shocks. However, in 2010, state governors successfully petitioned the Supreme Court to allow them to share the funds, leading to substantial withdrawals during the transition between President Umaru Musa Yar’Adua’s death and President Goodluck Jonathan’s takeover.

Aduloju noted that Nigeria’s approach to fuel subsidies changed from being savings-based to revenue-based, which has contributed to ongoing issues. Before 2010, the country used savings from the ECA to cover subsidy costs, avoiding the need for borrowing. By the time former President Obasanjo left office, the ECA had amassed over $60 billion.

The mismanagement of these resources by successive governments has exacerbated Nigeria’s fuel subsidy challenges. Each administration faced different subsidy issues, but poor fiscal management has consistently worsened the situation.

Today, Nigerians are feeling the impact of recent fuel price hikes, with petrol prices increasing from N617 to N897. The Tinubu administration’s removal of the fuel subsidy in May 2023 also led to a sharp rise in petrol prices.

This NESG report underscores the importance of understanding Nigeria’s historical financial decisions and their effects on current fuel subsidy issues. The past mismanagement of the Excess Crude Account has had long-lasting consequences on Nigeria’s economy and fuel prices.