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Revenue crisis cripples states


Ngozi-Okonjo-Iweala-02The drop in the monthly revenue allocations by the Federal Government to the 36 states of the federation has affected the finances and smooth-running of various governments.

Investigations by Saturday Punch showed that the shortfall in revenue allocation to states by the Federation Accounts Allocation Committee which started three months ago, had disrupted payment of salaries, pensions and financing of government projects in many states.

A cross-section of states that spoke with Saturday PUNCH on Thursday, lamented that the shortfall in the allocations and non-disbursement of full allocations as at when due, had reduced the financial capacity of their governments, thus making it impossible for them to execute some vital projects.


While blaming the Nigerian National Petroleum Corporation for not remitting enough revenue to the coffers of the Federal Government, the states urged government to ensure adequate, transparent and accountable revenue remittance by the NNPC.

But as the states lament the toll of the shortage on their administrative efforts, President Goodluck Jonathan has intervened with a view to finding a quick solution to the problem.

Saturday Punch learnt on Thursday that the President had approved a sum of N75bn to be immediately made available to the FAAC to augment revenue shortfall for July.

This development was confirmed on Thursday by the Chairman, Forum of Commissioners of FAAC, Mr Timothy Odaah, during a telephone interview with one of our correspondents in Abuja.

He said the amount would be added to the N45bn already provided by the Ministry of Finance to make up the N115bn arrears for the Month of July.

About N336bn is being owed the three tiers of government as arrears of revenue shortfall owing to persistent decline in oil production and revenue.

Odaah said though the timely intervention of the President would help cushion the impact of the problem, state governments still believed the President was not well briefed on what was happening.

In Plateau State, the Commissioner for Information and Communication, Mr. Yiljap Abraham, told Saturday PUNCH that the shortage had affected all cash-flow of salaries, wages, contractual obligations, security and the smooth running of government at all levels.

Abraham, who spoke with one of our correspondents, however, assured civil servants that the state government would ensure payment of salaries immediately the shortfalls were released.

He said, “Naturally, the non-disbursement of funds and shortfalls in federal allocations from the Federal Government affects all aspects of cash-flow such as salaries and wages, contractual obligations, handling of security problems and the smooth running of government at all levels.”

He, however, said, “Sad as the situation may be, Governor Jonah Jang has always ensured prudent management of state resources.”

Akwa Ibom

In Akwa Ibom State, the Commissioner for Finance, Mr. Bassey Akpan, said that the state government got a loan of N80bn from the Standard Chartered Bank of London, not for the purpose of financing new projects, but to offset the previously acquired credit facility of N50bn from the United Bank for Africa Plc.

He explained that the state government had already met with the state House of Assembly on the need to write off the UBA loan facility which attracted an interest rate of 18.5 per cent per annum.

He stated that the UBA facility was a bridge to support the state government to fulfil its financial obligations as at the time the loan was taken.

Inquiries by our correspondent, however, showed that the state government was not owing workers’ salaries.

He said, “When we consummated the UBA facility, we were also working with international financial institutions. The essence of this loan is to enable us to bring down the cost of governance for the people. We have to do this based on the interest that has been shown by the international financial community based on the performance of the governor.”

Kwara State

In Kwara State, the governor, Alhaji Abdulfatah Ahmed, said the dwindling revenue from the federal coffers had impacted negatively on the state government as it had prevented the state from embarking on projects that required huge funding.

He attributed the dwindling revenue to a shortfall in the state’s allocation from the federation account which he said arose because of the non-augmentation of shortfalls of revenue by either the FAAC or the Ministry of Finance.

“The state government has been suffering as a result of the unwillingness of the appropriate agencies to augment the shortfalls of the Federal Government revenue.

“The problem has lasted for about three months now, FAAC just explained the reasons for the non-augmentation of shortfalls of revenue to us in September.”

He stated that the state was still pressuring the relevant agency of the Federal Government to augment the revenue shortfall, expressing the hope that the state would soon succeed.

According to him, the shortfalls may not be unconnected with the low remittances from the revenue collecting agencies of the Federal Government.

Ahmed called for more transparency in collecting and accounting for revenue from the Federal Government collecting agencies, especially the Nigerian National Petroleum Corporation.

The state Commissioner for Finance, Mr. Demola Banu, told Saturday PUNCH that the state was only meeting its monthly financial obligations on payment of salaries, pensions, interests and other recurrent expenditures that could not be differed.

Banu said, “We are facing challenges. But workers’ salaries are being paid. There is never a time that we did not pay salaries. But there could be other expenses that we need to make that could be deferred. But generally it has not affected us drastically.”

Both Ahmed and Banu declined to provide information on the state’s total loan obligations to its creditors.

Osun State

In Osun State, the Commissioner for Finance, Dr. Wale Bolorunduro, could not be reached to say how much the state was being owed by the Federal Government.

Also, calls put across to his telephone indicated that it was out of network coverage area.

However, a top civil servant, who pleaded not to be named, because he was not authorised to speak on the issue, said that the state government had been paying salaries despite the shortfall in federal allocations.

He said that the government had been using the state’s reserve to pay workers’ salaries, adding that the reserve would soon be empty.

He said, “The allocation shortfall is biting harder and I know that all the states are feeling the heat. The Federal Government is owing all the states N261bn. There was N121bn deficit in June and N140bn deficit in July.”

“Look around, you will see that some states have not been paying their workers since the shortfall started in June. Many will join the league of such states if the shortfall continues.”

He said that the other two tiers of government would soon be prostrate if the shortfall continued.

He said that Nigerians should appeal to the Federal Government to pay the money, saying otherwise many states would no longer be able to pay workers’ salaries.

Enugu State

In Enugu State, government kept mum on how the state was coping with the non-payment of arrears of allocations and financial commitments to banks, contractors, among other financial issues affecting the state.

The state Commissioner for Finance, Mr. Godson Nnadi, on Thursday said, “I am not permitted to speak on any of such matters without the approval of my principal.”

Nnadi pleaded with our correspondent to call the Commissioner for Information, Mr. Chucks Ugwoke, “as he is the only one empowered by the State Executive Council to speak to journalists on any matter.”

However, SATURDAY PUNCH could not get the comments of Ugwoke as he did not pick several calls to his mobile phone. He also did not respond to text messages sent to his phone.

At the Enugu State Budget Office, the Permanent Secretary, Mr. Casmir Ugwu, was unavailable to speak to our correspondent.

Rivers State

In Rivers State, the Commissioner for Finance, Mr. Chamberlain Peterside, said the state had yet to receive allocation for September 2013.

Peterside also lamented that the state was short-paid for the month of August.

According to him, while the state was expecting N19bn, the Revenue Mobilisation and Fiscal Commission allocated only N14bn to it last month.

Peterside, however, explained that the state was finding a way out of the problem through its internally generated revenue.

“It (non-payment of monthly allocation) is the reality we are facing. We are even in a better shape than most other states.

“We have been able to fall back on our internally- generated revenue and that is why our situation is different from that of other states,” the commissioner said.

Describing the challenge as a national problem, Peterside pointed out that Rivers State had been able to pay contractors, adding that workers’ salaries had been processed and will soon be paid.

He said, “We have been able to pay contractors and that is why you can see them working at different locations in the state. The September salaries of civil servants have been processed and they will soon be paid.”

He, however, expressed the need to embrace transparency in the developments within the oil and gas sector.

Bayelsa State

In Bayelsa State, the Commissioner for Information, Mr. Markson Fefegha, declined to comment on the inquiries by our correspondent. He said, “Those are questions reserved for those who attend Federal Allocation Committee meeting or officials of the Federal Ministry of Finance.”

Odaah said FAAC was owing states N336bn. This amount, according to him, is made up of N128bn for June; 115bn for July while shortfall for the month of August was put at N93bn.

Going by the payment of the N115bn, the arrears have now dropped to N221bn

Odaah said the inability of the Federal Government to pay the N115bn arrears which was already approved in the committee’s July meeting was the major bone of contention at its September meeting.

This, he explained, led to a walkout of the commissioners at both the committee’s meeting held on September 13 and 23 respectively.

The Federal Government had during the meeting provided the sum of N548.393bn as statutory revenue for the three tiers of government for the month of September. This was rejected by the members of the committee.

Odaah told our correspondent that the major reason for the rejection was that the approved N115bn July shortfall was not provided for.

He said, “In July, we approved that the arrears of N115bn be paid to us. We met in August and nothing was done about it. In September when the meeting was held again, they still haven’t paid.

“So when we met in September, instead of paying us the arrears, they told us that from September, what we will be sharing is actual instead of budgeted revenue. This made us to demand the clearing of all our backlog of N336bn and this was what caused the stalemate.

“But now the President has approved the release of N75bn to complement the N45bn already released by the Ministry of finance to make up the July shortfall of N115bn. We are grateful to him for his prompt intervention.”

Odaah dismissed reports that the action of the states was political and insisted that the states needed to get their allocation to carry out developmental projects.

“Our position is not political. We are a patriotic forum and we are doing this to help in developing our states. We are representatives of our respective governors.

In recent times, there had been persistent decline in gross federally collected revenue accruing to the federation account.

The Federal Government had projected monthly earnings of N702.54bn in the 2013 budget, but it only surpassed that target once during the first seven months of this year, earning N651.26bn in January; N571.7bn in February; and N595.71bn in March.

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