Nigerian parliament passes wealth fund bill

Tue May 17, 2011 3:19pm GMT
 

By Camillus Eboh

ABUJA (Reuters) - Nigeria's House of Representatives passed a bill to create a sovereign wealth fund on Tuesday, paving the way for Africa's biggest oil exporter to improve its management of often-squandered crude oil earnings.

The bill now needs to be signed by President Goodluck Jonathan to be enacted, after Nigeria's Senate passed the legislation last week. Lawmakers said the process should be straightforward as the lower house of parliament made no major amendments.

"The bill originated from Jonathan's office so there shouldn't be any further obstacles and I'm sure he will sign it very soon," said Jide Solanke, Nigerian investment analyst at Lagos-based FSDH Securities.

The fund is meant to replace Nigeria's excess crude account (ECA), a pillar of IMF-backed reforms launched in 2003 into which the OPEC member nation currently saves any oil revenue above a benchmark price set each year in the budget.

Critics of the ECA say there is no clear legal basis on which to determine how the windfall oil savings in the account should be shared between the tiers of government -- federal, state and local -- leading to constant political wrangling.

The account contained more than $20 billion when late President Umaru Yar'Adua came to power in 2007 but by the end of last year it held less than $1 billion. The savings recovered again to around $6.9 billion by April due to high oil prices.

NEW CABINET

Nigeria is one of only three OPEC member states not to have a sovereign wealth fund. Finance Minister Olusegun Aganga has said the wealth fund will provide a firmer legal basis to ringfence Nigeria's savings.   Continued...

<p>Members of the Nigerian House of Representatives argue during a legislative session at the parliament chamber in Abuja, June 22, 2010. REUTERS/Stringer</p>
 
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