* Cash for military raises worries over graft
Sign Nigeria is dropping narrative Boko Haram "defeated"
* 2018 humanitarian crisis response needs $1.1 bln - UN
* Nigeria accused of spending too little on humanitarian aid (Adds context)
By Felix Onuah
ABUJA, Dec 14 (Reuters) - Nigerian state governors on Thursday approved the release of $1 billion from the country's excess oil account to the government to help fight the Boko Haram Islamist insurgency.
The account holds foreign reserves from excess earnings from sales of crude. It currently totals $2.3 billion, according to Nigeria's accountant general.
"We are pleased with the federal government achievements in the insurgency war and in that vein state governors have approved that the sum of $1 billion be taken from the excess crude account by the federal government to fight the insurgency war to its conclusion," said Godwin Obaseki, Edo state governor.
"The money will cover the whole array of needs which includes purchase of equipments, training for military personnel and logistics," he told reporters after a meeting of Nigeria's national economic council.
The release of such a large sum could raise concerns over corruption, endemic in Nigeria.
The next presidential and gubernatorial national elections are scheduled for February and March 2019. Historically, the run-up to elections has seen rampant graft and theft of public funds as politicians build war chests to contest the vote.
The insurgency in the northeast is in its ninth year. Deadly attacks on the military and civilians continue, and large areas are out of government control.
Officials have siphoned off funds meant for aid for 8.5 million people in the region.
In October, President Muhammadu Buhari sacked the country's top civil servant, accused of having inflated the value of contracts for aid projects, part of a suspected kickback scheme.
The United Nations appealed to donors for $1.05 billion to fund humanitarian aid in the northeast in 2017, and says it will require another $1.1 billion in 2018.
Nigeria, which has Africa's largest economy, has come under fire for devoting little of its own resources to humanitarian aid.
Military officials, speaking on condition of anonymity, have said troops are undersupplied and underpaid, with weapons, vehicles and other basic equipment often in disrepair or lacking. Some have alleged their own officers are skimming from already-meagre supplies.
The release of the funds is a further sign the Nigerian government and military may be abandoning their two-year narrative that Boko Haram has been all but defeated.
Nigeria's long-term plan is now to corral civilians inside fortified garrison towns - effectively ceding the countryside to Boko Haram.
Earlier this month, Nigeria replaced the military commander of the campaign against Boko Haram after half a year in the post. Military sources told Reuters that came after a series of "embarrassing" attacks by the Islamists. (Reporting by Felix Onuah; Writing by Paul Carsten; Editing by Andrew Roche)