The National Economic Council has approved that 250 million dollars of the 400 million dollars dividend from the Nigerian Liquefied Natural Gas be invested in the Nigerian Sovereign Investment Authority (NSIA) to increase capital.
The balance of 150 million dollars will be shared among the states of the federation according to the prescribed formula at the federation account.
Briefing State House correspondents on the outcome of the council meeting presided over by the Vice President, Professor Yemi Osibanjo, the Governor of Osun State, Rauf Aregbesola, said that the decision was taken after reviewing the report of the 2014 status of the fund.
The Nigeria Sovereign Investment Authority is a Nigerian establishment which manages the Nigeria sovereign wealth fund, into which the surplus income produced from Nigeria’s excess oil reserves is deposited.
This sovereign wealth fund was founded for the purpose of managing and investing these funds on behalf of the government of Nigeria.
The wealth fund commenced operations in October 2012 and was set up by the Nigeria Sovereign Investment Authority Act, which was signed in May 2011.
It is intended to invest the savings gained on the difference between the budgeted and actual market prices for oil to earn returns that would benefit future generations of Nigerians. The fund was allocated an initial $1 billion USD in seed capital.
Excess oil reserves were previously allocated to the Excess Crude Account (ECA), which was set up in 2004 as a stabilization fund to meet the country’s yearly budget deficits and to contribute to the development of local infrastructure.The constitutionality of the ECA has been brought into question.
Nigeria’s SWF was brought into law in 2011 via the Nigeria Sovereign Investment Authority Act by President Goodluck Jonathan and is expected to replace the ECA.
The act authorized the establishment of the Nigeria Sovereign Investment Authority, giving it jurisdiction over the country’s excess petroleum reserves. The fund is intended as security against future economic instability, to contribute towards the development of the country’s infrastructure and as a savings mechanism for future generations, using the country’s excess oil revenues.
It is also expected that managing these reserve funds will help to protect Nigeria’s economy from external shocks.
With an initial financing of $1bn USD from the Nigerian government, Nigeria’s fund is the third largest in Sub-Saharan Africa, after Botswana and Angola.
Nigeria’s Sovereign Wealth Fund is composed of three distinct funds or windows, each with specific investment and development objectives
First there is The Stabilization Fund. This fund is intended to safeguard against budgetary deficits. It would be a last resort from which government may withdraw annually to meet shortfalls in the budget brought about by falls in oil prices or other budgetary constraints.
Then there is The Future Generation Fund. It is a savings fund that will seek investment in long-term investments and assets to provide savings for future generations of Nigerians.
Thirdly there is The Nigeria Infrastructure Fund which is expected to secure investments in the infrastructural development of the country in areas such as agriculture and other government directed projects.
The NEC has also directed the Minister of Finance to constitute an executive nomination committee and work in consultation with NEC to find appropriate persons to take over as board members of the NSIA when the current board is dissolved.
The Council was also told that the balance of Excess Crude Account (ECA) still stands at 2.257 billion USD indicating that there is not much change from the last report.
The council mandated the Ministry of Finance to also investigate the report that some government agencies collect revenue in foreign currency, but remit the Naira equivalence to the federation account.
Also the CBN has been directed to embark on sensitization and public enlightenment on the Forex policy and relevant laws and regulations to guide traders and some people who encounter challenges regarding the movement of foreign currency across Nigerian borders.
This is following a report that traders in the eastern part of the country encounter challenges at the airport when they intend to go about their normal businesses.
The NEC also deliberated on the need for the states to provide legal framework such as enactment of state pension laws for those who have not done so; establishment of state pension agencies, consistent remittance of both the employees and employers’ contributions and also full compliance with all the provisions of the pension scheme.
The council also agreed on the need to reconstitute the Niger Delta Power Holding Company governing board based on the six geopolitical zones