Lamido Sanusi, governor of Nigeria's central bank, speaks during the 9th World Islamic Economic Forum (WIEF) in London, U.K., on Wednesday, Oct. 30, 2013. Islamic financial assets are growing 17 percent a year and are set to reach $2.67 trillion by 2017, up from $1.21 trillion now, PricewaterhouseCoopers LLP said in a July report. Photographer: Chris Ratcliffe/Bloomberg *** Local Caption *** Lamido Sanusi

Chris Kay Abuja

Nigeria’s state oil company had no right to retain $10.8 billion (R117bn) in income, which had contributed to a drop in savings that had left the nation exposed to possible price shocks, central bank governor Lamido Sanusi said last week.

“Given where the oil price is, we should have more in terms of reserves and savings, and because we don’t have that we are susceptible to shocks in the event of a decline in the oil price,” Sanusi said.

A letter Sanusi wrote to President Goodluck Jonathan alleging the Nigerian National Petroleum Corporation (NNPC) had withheld $49.8bn in revenue sparked a public outcry when it was leaked to local newspapers last month. Finance Minister Ngozi Okonjo-Iweala said last month a reconciliation of the accounts showed unaccounted oil receipts stood at $10.8bn.

“No one has the right to retain money that should have gone to the federation account, so the fact that you’ve admitted retaining, or withholding, $10bn is itself bad enough,” said Sanusi. “This money was supposed to come in and if it came in, it would be part of our reserves and part of our excess crude savings.”

Bernard Otti, the group’s executive director of finance and accounts, said this month that the $10.8bn was spent on pipeline repairs, fuel subsidies, crude losses and reserve fuel.

The lack of accounting in oil revenues has increased pressure on Jonathan as he faces defections from the ruling Peoples Democratic Party (PDP) and former president Olusegun Obasanjo criticised him for failing to tackle corruption. Lagos-based ThisDay newspaper reported earlier this month that Jonathan told Sanusi to resign because he allegedly leaked his letter about the NNPC to Obasanjo.

Sanusi, who does not plan to renew his contract as governor when it expires in June, said there was no request from Jonathan to resign and “it’s back to business as usual”.

Sanusi said his letter to Jonathan was never meant to be made public.

“What was in fact an invitation to investigate somehow became read as the end of an investigation, the conclusion from an investigation and that wasn’t it,” he said. “This was an initial report given that, for me, raises sufficient concern to ask the president to have an investigation so we can know exactly where the money is.”

Jonathan’s PDP may face its sternest electoral challenge next year. That is adding to risks that government spending may increase and inflation will accelerate from 8 percent last month.

Expenditure climbed 17 percent before the 2011 presidential vote. The Finance Ministry would probably be able to keep spending under control in the run-up to the vote, Sanusi said.

“I have had a number of discussions with the finance minister and I get a sense she is very, very committed to keeping a tight leash on spending especially as we come towards elections,” he said.

Jonathan has not given any indication yet of who will be the next central bank governor. Lagos-based Vetiva Capital Management said in October that potential candidates included Sanusi’s four deputies and Aigboje Aig-Imoukhuede, the chief executive of Access Bank. Sanusi declined to comment on who he thought would be the best candidate. Drawing criticism from members of parliament opposed to his push for spending curbs on salaries, Sanusi fought off plans by legislators in 2012 to amend rules that would curtail the governor’s powers over the central bank. – Bloomberg