FAAC: States reel under debt yoke •36 states lost N122.1bn to debt deductions between Jan and April

Heavy loan deductions are combining forces with low oil prices and Niger Delta militants in compounding financial woes of states as a total sum of N122,107,296,517.57 was deducted at source by the Federal Government from revenue allocation to the 36 states between January and April 2016.

Oil sold for $26.5, $28.7, $34.6 and $37.6 in January, February, March and April 2016 respectively while production was also lower than the 2.2 million barrels per day projection due to activities of militants in the Niger Delta region.

There are 12 different categories under which direct debt deductions are being made by Federal Government from federation account allocations to states.

These include AMCON loan, commercial agric credit scheme, bond issuance programme 1 & 2, contractual obligation, deduction for excess crude account loan and under/over payment 13 per cent derivation.

Others are refund/payment arrears of derivation, states’ foreign loans, other special intervention/flood management project, National Fadama Project, reconstructing of commercial bank loans into FGN bonds and bailout loans to state governments.

From analysis of excusive documents in possession of Nigerian Tribune, Lagos and Cross River states only went home with their share of N75.579 billion revenues from value added tax for the month of November 2016.

Lagos State, for instance, forfeited its total net statutory and mineral revenue of N1,754,156,015.75 to debt deductions while only its VAT allocation of N5,538,015,647.28 was remitted into its account.

The constitutionally recognised 20 local government councils of Lagos were jointly allocated N4.067 billion for the month out of which nothing was deducted.

The case of Osun was, however, worse as it lost both its share of mineral and statutory revenue and VAT to debt deductions.

In addition, N304.136 million was deducted from the total allocations to its local councils thus reducing their net allocations to N1,856,751,128.72.

For Cross River, total amount paid into its joint state/local government for the month was N1,923,510,583.19 after its N1,316,742,977.35 gross statutory plus mineral revenues were wiped off by debt deductions.

The state government was paid N617,555,455.78 for VAT while all its local governments shared N1.305 billion, following a deduction of N38.551 for debt payment.

In November, Federation Accounts Allocation Committee (FAAC) disbursed a total N429,321,832,496.12 made up of revenues from statutory, mineral, VAT, and exchange gain difference.

Closer scrutiny of the documents revealed that Osun topped the list of indebted state in terms of percentage of federation accounts allocations.

As a result of this, the state lost 97.32 per cent of its N2.471 billion January 2016 allocations to debt service as its account was credited with only N66.278 million.

In February, N2.416 billion was deducted from N2.422 billion total allocations; It got a negative allocation of -N131.555 million or 105.82 percent deduction in March and another negative net allocation of N361.397 million or 117.80 percent deduction in April.

In terms of absolute numbers however, Bayelsa paid the highest debt in the first four months of 2016 with N12.635 billion followed by Delta with N9.802 billion then Osun with N9.605 billion.

Lagos was next on the list with N9.464 billion, Rivers was on number five with N7.122 billion and Cross River with N5.845 billion forfeited to debt deductions.

Speaking with Nigerian Tribune, a member of Federation Account Allocation Committee (FAAC), who pleaded not to be named, said this heavy indebtedness by states and consequent deductions were the reasons that state governments were seizing allocations meant for local governments.

According to him, 1999 Constitution (as amended) stipulated that at least 10 per cent of states’ internally generated revenue were to be added to local government allocations from the federation account.

“Unfortunately, rather than add that 10 per cent, governors have seized everything, which now serves as their comfort fund.

“That is why most of them refuse to conduct local government elections but instead appoint caretakers who will not dare question their authority.”

Speaker of the House of Representatives, Yakubu Dogara, has also promised that the Constitution would be amended in such a way that local government allocations will now be paid directly to them.

When contacted on the zero allocation to Osun State for the month of November, the director, Bureau of Communication and Strategy to Governor Rauf Aregbesola, Mr Semiu Okanlawon, said he needed to contact the Accountant General of the state before he could react on the development.

He, however, maintained that the receipt of zero allocation was not strange, saying Osun had received minus allocation in the past and such development did not slow down the infrastructural development in the state nor halted the payment of salaries.

According to the Lagos State spokesperson, Steve Ayorinde, “No it’s not true. For statutory allocation and VAT combined, Lagos State got N6.4billion for November after deduction of loan payment and ISPO.”