Lagos State will receive the lion’s share of the N369 billion approved by the National Assembly to 19 states of the Federation for the settlement of outstanding claims and liabilities for executing Federal Government projects.
The approval followed a request by President Muhammadu Buhari in March to the National Assembly for the issuance of promissory notes and bonds to settle inherited local debts and contractual obligations worth N2.698 trillion.
Documents obtained by BusinessDay revealed that the states will be refunded for rehabilitating or constructing federal roads and bridges.
While Lagos State receives the highest reimbursement of N114.6 billion, Niger gets the lowest of N333.8 million.
The approval followed adoption of the interim report of the Ad-hoc Committee on Issuance of Promissory Note and Bond Issuance in the Senate and that of the House Committee on Aids, Loans and Debt Management in the House of Representatives.
Although both legislative chambers approved the President’s request on their last day of sitting on June 7, 2018 before embarking on Sallah break, BusinessDay obtained the report of the ad-hoc committee this week.
Other states and the refunds approved for them include: Akwa-Ibom N78.7 billion, Zamfara N39.9 billion, Anambra N37.9 billion, Ebonyi N15.4 billion, Osun N13.2 billion, Plateau N12.1 billion, Ekiti N11.6 billion and Kwara N11.2 billion.
Others are: Jigawa N10.7 billion, Edo N10.4 billion, Gombe N6.9 billion, Kano N4.4 billion, Ondo N4.3 billion, Adamawa N4.2 billion, Benue N3.02 billion and Imo N2.8 billion.
States across the Federation have been demanding for immediate reimbursement of funds spent on Federal roads on behalf of the Federal Government.
It was gathered that many of the states had to intervene in the pitiable condition of federal roads and bridges between 2010 and 2015 when they were abandoned by contractors mainly due to lack of funds.
However, the upper legislative chamber gave the number of states with outstanding claims and liabilities for executing federal highways on behalf of Federal Government at 25, with a debt of N584.983 billion.
In a letter dated March 8, 2018, President Buhari had requested for approval to commence a promissory note and bonds issuance programme to clear long-standing obligations inherited by the present administration.
The obligations, according to the President, include: unpaid obligations to pensioners, salaries and promotional arrears to civil servants; subsidy arrears, interest accrued and foreign exchange differentials; contractors and supplier debts; unpaid power bills and obligations from tariff reversal in 2014; Export Expansion Grant (EEG) scheme debts; judgement debts and refund to State Governments for projects undertaken on behalf of the Federal Government.
Chairman of the Senate ad-hoc committee and Deputy Senate Chief Whip, Francis Alimikhena (APC, Edo State), submitted that while the obligations would stimulate the economy, approving all the obligations in one swoop would lead to inflation.
“It is important to approve the obligations in order to stimulate the economy, however to avoid inflation, all of the obligations cannot be approved at once,” Alimikhena said.
Breakdown of the N2.698 trillion for the settlement of obligations and liabilities submitted by the Executive include: N1.957 trillion for capital projects and N741 billion recurrent expenditure.
The committee, however, noted that for the National Assembly to approve borrowing for recurrent expenditure as requested by the President, there was need to amend Section 41(1)(a) and 44(2)(b) of the Fiscal Responsibility Act (FRA), 2007.
The sections stipulate that proceeds of borrowing by Government at all tiers, shall be applied solely towards capital expenditure.
In an exclusive interview with BusinessDay, a member of the ad-hoc committee, Samuel Anyanwu (PDP, Imo State), said the committee would hold interactive sessions with relevant Ministries, Departments and Agencies and other stakeholders relevant to its assignment upon resumption by July 3, 2018.
“We are currently on break for the Sallah celebrations. After the holidays and of course APC Convention, we will be able to commence consideration of the other requests,” he said.
Speaking after the interim report was approved, Senate President, Bukola Saraki, said the move would enable states to meet up with execution of more projects and meet up with other financial commitments in their respective states.
He, however, urged the committee to do a thorough job by ascertaining the projects before approval.
“A lot of state governors over the years have carried out a lot of Federal Government roads with this understanding and unfortunately over the years they have just been empty promises. We must commend the government for finding a way to meet this promise.
“Secondly, it is important that the process and the procedures by which there is clear understanding on what roads qualify for such refunds and how the process is carried out is clearly stated out so that going forward state governments and Ministry of Works know clearly what the terms of engagements are.
“I see that in this case the committee has depended largely on the reports from the Ministry of Works and the Ministry of Finance. There are three areas, issues of export, grants and contractor debts, the committee will have to do a thorough job to ensure that some of those requests are actually real.
“We need to be sure that they are not just paper entries but they are real commitments. I’ll like the committee to look into that to see whether whatever you need, I don’t think we should rush you, but you must do a thorough job. Once again let me commend the committee on a job well done,” Saraki had said.