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Controversy Rages Over Bailout Funds

Posted: Jul 24, 2015 at 1:21 am   /   by   /   comments (0)

By Chesa Chesa, Abuja


While most of Nigeria’s state governments continue to groan under a heavy burden of default in the payment of workers’ salaries, widespread controversies have been trailing the huge bail out funds recently authorised by the Federal Government.

There have been conflicting claims in respect of the actual profile of the fund, from the federal and state governments, the major political parties, labour unions and civil society groups. The source of the funds and actual details of how much was paid to each beneficiary comprising the federal government, the 36 state governments and the local governments have remained shrouded in secrecy, generating conflicting remarks, while people continue to trade claims on how the funds are being applied.

It is not clear if the Federal Government has released the funds to the states, as most of the governors, in response to agitations from the distraught workers and concerned members of the public, denied collecting the money. In cases where some of the governors have acknowledged receipt of the bail out fund, much was involved remains a subject of debate between the public and the state governments.

No fewer than 18 of the 36 state governments owed workers’ salaries as at May 29, 2015, when the current administrations at the state and federal levels were inaugurated. The crises had virtually grounded the defaulting states even as the new administration of President Muhammadu Buhari was still struggling to find its feet. The defaulting states had been in areas of salaries for between three to seven months, a situation that is now taking a serious toll on the wellbeing of the workers and their families.

Amidst public outcries, however, the Federal Government had to bend backwards and facilitate the release of the special support funds to the states, mainly to enable the governors offset the backlog of workers’ salaries.


Cap in Hand Again

Amidst these controversies, the governors on Thursday returned to The Presidency cap in hand asking for more money to meet their outstanding financial commitments.

Acting under the auspices of the Nigerian Governors Forum (NGF), they had requested for additional bailout fund from the Excess Crude Account, but they however returned to their various states disappointed.

Although they went to the Aso Rock Villa on Thursday hoping to get more, the state governors left empty-handed, except with admonition to go home and reduce  their expenditure even as a panel was raised to follow up on the ECA earnings.

The governors made their request for additional bail out during the meeting of the National Economic Council (NEC) chaired by Vice-President Yemi Osinbajo at the Presidential Villa, Abuja.

They were briefed by the Central Bank of Nigeria (CBN), Godwin Emefiele, on their quest to restructure loans obtained from banks.

The NEC also raised a four-man committee to liaise with the CBN on streamlining the ECA earnings, now put at $2.07 billion, from which the governors had sought a bailout.

According to a resolution of the meeting issued to journalists at the end of the meeting: “Council received a presentation from the CBN governor on the update of restructuring of bank loans for the states and payment of salary arrears.

“The Governor informed the Council that following meetings with banks, it was agreed that existing loans should be restructured for the minimum of 20 years while salary arrears should also be restructured for the minimum of 15 years and not exceed more than 20 years.

“He added that States could opt for two options – the bond option which will attract market rate; and the dent restructuring option which will attract single digit rate.

“Council resolved that a four-man team made up of of the governors of Bauchi, Rivers, Ondo and Osun states are to follow up with the CBN to ensure that the issues of Excess Crude Collateral for the States are sorted out by next week Tuesday.

“Council received a presentation from the Permanent Secretary, Federal Ministry of Finance on the Excess Crude Proceeds.

“He took the Council through the summary of inflow and outflow of Excess Crude Savings account from January 2011 to 21 July 2015. According to the Permanent Secretary, the ECA currently stands at $2.078 billion.”

Addressing State House correspondents after the meeting, Lagos State governor, Akinwumi Ambode, explained that in the face of current financial difficulties, the NEC found it unacceptable that states were still running huge recurrent expenditure.

The Council, therefore, agreed that states needed to cut down on their running costs according to their own respective peculiarities, since there was no specific template for all states.

According to him: “We resolved that all states should find ways to reduce their cost of governance.

“We do not have a  uniform template on how to reduce the cost of governance but it’s very clear that states in the specific situations will find different ways and means of ensuring the cost of running governance is not as huge as it has always been.

“So it is left for the states in their respective situations to find the different ways of cutting cost but what is important is that we cannot continue with the kind of huge burden or huge cost we are apply to run our government.

“A situation where you are having a huge percentage of your budget as recurrent  expenditure is obviously not acceptable. And you must look for ways in reducing the cost of administration in the various states.”

Ambode also disclosed that a similar four-man committee of governors earlier raised by NEC to tackle the issue of NNPC earnings and excess crude account, failed to submit it’s report at Thursday’s meeting.

“The Committee is yet to submit it’s report, it is still working on it and we believe very strongly we will get that report in the next meeting”, he stated.


Conflicting Claims

Before Thursday’s meeting, there were conflicting claims, which began with the Federal Government dispelling the widespread belief that the N713 billion shared may have come from the Federation and the Excess Crude Accounts, contrary to earlier claims that it inherited an almost empty treasury from the Goodluck Jonathan administration.

Presidency and the national leadership of the Peoples Democratic Party (PDP) had engaged in war of words over the source of the money shared as bail out funds.

While the PDP in a statement issued on Tuesday, July 7, said the money was from  savings left behind by the Goodluck Jonathan-led government, the Presidency said the sum was from tax remittances by the Nigeria Liquefied Natural Gas (NLNG).

The Federal Government insisted that the Excess Crude Account was intact, a claim that some of the opposition PDP governors have tainted.

Governor Ayodele Fayose of Ekiti State, for example, argued that the N2.1 billion his state got was not a bailout.

Speaking in Ado Ekiti, Fayose insisted that the sum was not enough to offset the accumulated N2.6 billion salary areas up to the month of June.

The controversy continued on Wednesday when the Kwara chapter of PDP accused the state government of diverting the bailout to other purposes than paying workers who had been on strike for six weeks in protest against their unpaid salaries for an upward of seven months.

The party also accused the government of lying over the amount collected. Whereas the state government claimed it only got N2.1 billion, the opposition party put the money at N3 billion.

The PDP in a statement signed by its publicity secretary, Rex Olawoye, asserted that the government allegedly received the money but pretended not to have, even as it raised the alarm on the presence of Senate President Bukola Saraki in the state around the time the money was believed to have been released to the state.

Olawoye said the senate president may have rushed back to the state from Abuja just to preside over the sharing of the bail out fund.

He called on workers’ unions and pensioners in the state to prevail on the government to use the money judiciously, but the state government refuted all the allegations.

It noted: “Our party is alarmed by this curious conduct and we dare say that the diversion is criminal, insensitive and a total negation of the spirit behind the funds’ release.

“Our party reliably learnt that the Kwara State share of the bailout funds was paid on Wednesday, 8th July, 2015. But till this very moment, over 5 months salaries being owed some categories of workers in the state are yet to be paid.

“Even more curious is the fact that the Kwara State Government has kept mute about the exact amount it got from the Consolidated Revenue Account in bailout.

“Whereas, virtually all states of the federation, particularly Abia, Akwa Ibom, Edo, Ebonyi, Ekiti, Osun, Ogun, Oyo, Kano, Kastina and Kaduna States have publicly declared how much they got in bailout from the Federal Government, the APC-led government of Kwara State has kept a dangerous silence over the funds.”

The state government in a statement signed by Senior Special Assistant to the governor, Muhideen Akorede denied the allegation, “stressing that it had only received its share of NLNG dividend recently distributed to all tiers of government.”

Confusion also trailed the bail out fund in Imo State, where the workers accused the government of attempts to divert the money and threatened to embark on indefinite strike.

Governor Rochas Okorocha had claimed in the days following the release of the fund that he had yet to receive the money. He also claimed that no state government had been given the bail out fund since the Presidency authorized the payment.

In a statement in Owerri penultimate Tuesday by his Chief Press Secretary, Sam Onwuemeodo, the governor accused blackmailers of inciting the workers, using the bailout as basis.

He declared: “The truth is that it has not got to the state and to the best of our knowledge, no state is known or heard to have got the bailout fund. The release of the money to states, including Imo, will not be a secrete exercise. When it comes, we shall also duly inform then.”