Taraba, A’Ibom, Enugu, Nine Other States Restructure N252bn Loans to Bonds

Abiola Ajimobi 

FG RELIEF PACKAGE

•   18 states access CBN special intervention fund, over N535.5bn owed by FG for road repairs

Tobi Soniyi in Abuja  

Twelve more states have applied to the Debt Management Office (DMO) for their commercial loans with 12 banks valued at N252 billion to be restructured into Federal Government of Nigeria (FGN) Bonds as part of the relief package approved by the federal government for fiscally-challenged states of the federation, the National Economic Council (NEC) has disclosed.

The 12 states bring to 23 that will issue N574.78 billion in bonds under a debt-restructuring programme aimed at reducing their debt service obligations. Last month, 11 states had restructured N322.78 billion of their commercial loans with five banks to FGN Bonds.
A presidency source said the    12 states are: Abia, Adamawa, Akwa Ibom, Bayelsa, Cross River, Enugu, Gombe, Ondo, Plateau, Rivers, Taraba and Zamfara.

While 11 states that restructured their loans last month are: Bauchi, Benue, Delta, Edo, Ekiti, Imo, Kogi, Kwara, Ogun, Osun and Oyo.

Similarly, the Central Bank of Nigeria (CBN) has disbursed loans to 18 states from the N338 billion special intervention fund approved by the federal government solely for the purpose of paying the outstanding salaries of workers in their states.

Briefing journalists after the meeting held thursday in Abuja, the Governor of Oyo State, Abiola Ajimobi said the number of states that applied for the government loans has risen from 22 to 23 states.

Also in attendance at the briefing with Ajimobi were Delta State Governor Ifeanyi Okowa and their Kano and Benue State counterparts, Umar Ganduje and Samuel Ortom.

Ajimobi said: “One major item that was discussed had to do with the restructuring of bank loans by state governments, and the restructuring of those loans into FGN bonds.

“The DG of DMO reported as follows: that 23 states applied for the loans, that 11 states have concluded and submitted all relevant documents, that 12 states are involved in the second phase to commence immediately. And the total money involved in the restructuring stood at over N500 billion.”

The governor said that the meeting centred on five areas.

He said: “The first was on the report of the excess crude proceeds that we discussed earlier; the Accountant General of the Federation (AGF) reported to us that the ECA as at 15 September stood at $2.257 billion. This was established and he confirmed the position.

“Secondly, we discussed the issue of NEC’s Ad hoc Committee on the management of the ECA and the Federation Account. The main point raised which we discussed extensively was divided into six.

“First, committee informed us that it interacted with revenue generating agencies of the federal government and it was established among others that there was lack of transparency and accountability in the operation of the Federation Account, and they also noted that there were no checks and balances in its operation.

“Secondly, it also told the council that the work of the committee was ongoing, so we still have so many reports to receive from them.
“That in its interaction with the revenue generating agencies, it was revealed that a number of issues with regard to accruals into the Federation Account and the management of it necessitated the forensic audit.

“That the engagement of the audit firms was essential and the terms of reference have already been finalised with the audit firms.”
Ajimobi said the topic on the refund of expenses incurred by the states for the repair of federal roads was also discussed.

According to him, 13 states had fully complied with the reimbursement requirements, eight states had partially complied, while 21 states were yet to comply.

He said: “The total claims to be reimbursed is exactly N535.5 billion. Then we have N13 billion that has been disbursed to the states already as at 2013. The challenges they faced had to do with inadequate funding in the works ministry.

“And lastly, we discussed the issues of the current and future agricultural policy direction. The permanent secretary made a very lucid presentation and it was extensively discussed and he gave us information on the data base of farmers and he told us specifically that fertiliser used by farmers increased by over 271 per cent which was commendable.

“But the conclusion was that there was the need for more interaction with the states and local governments and their approach in agriculture should be a bottom-up approach.

“The council was also briefed about the planned agricultural training programme that the Ministry of Agriculture intends to pursue, and 12 states and the FCT have been selected for the first phase.

“The second phase would include non-educated youths and spread across the states by geopolitical zones.”

Providing further clarification  on the outcome of the NEC meeting, a press statement by the media aide to the vice-president, Mr. Laolu Akande, said more states had started benefiting from the special intervention fund aspect of the presidential relief package approved in July by President Muhammadu Buhari.

The statement said the CBN Governor, Mr. Godwin Emefiele, told the council that 18 states had been able to draw from the fund as at yesterday while nine more states were being processed for the soft loan.

“In a similar vein, the Director General of the Debt Management Office (DMO), Mr. Abraham Nwankwo, also informed NEC that the second phase of the debt restructuring offered to the states is now in effect with 12 new states now being considered and 12 banks involved.

“This is in addition to 11 states whose debts were restructured last month, according to Nwankwo who also told the council that 23 states are now involved in the restructuring.

“While a total of over N322.78 billion commercial loans were restructured last month, about N252 billion have been restructured this month,” the statement said.

The statement recalled that the presidential relief package had three core elements: “The sharing of about $2.1 billion between the local governments, states and the federal government funds sourced from recent NLNG proceeds paid into the Federation Account, leading to the sharing of federal allocation twice for the month of June.

“A central bank-packaged special intervention fund that will offer financing to the states in the form of a soft loan for the purpose of paying the backlog of salaries.

“A debt relief programme designed by the Debt Management Office, which is now helping the states to restructure their commercial loans put at over N500 billion, and extend the tenors of such loans while reducing their debt service obligations.”

The statement added that NEC also received a report from its Ad Hoc Committee of five governors on the management of the Excess Crude Account and related Federation Account issues.

The committee, the statement said, informed the council that it discovered a lack of transparency and accountability in the operation of the Federation Account, adding that there were no checks and balances in the running of the ECA in the recent past.

The five governors on the Ad Hoc Committee are that of Edo State, Mr. Adams Oshiomhole; Gombe State, Alhaji Ibrahim Dankwambo; Kaduna State, Mallam el-Rufai (who presented the report to council yesterday); Akwa Ibom State, Mr. Emmanuel Udom; and Lagos State, Mr. Akinwunmi Ambode.

The council also received a report on the request by states for refunds of monies spent of the repair of federal roads under the past administration.

“A briefing by both the Federal Ministry of Works and the Office of the Accountant General of the Federation disclosed that 13 states had fully complied with the reimbursement requirements, eight states partially complied, and 21 states have not complied with federal reimbursement requirements,” the statement added.

The statement said Buhari's administration would be exploring options to address the problem.

The Federal Ministry of Agriculture also briefed the council on its policy direction so far.

The council which meets monthly was attended by state governors and several top officials from the federal and state governments.