Oil-producing states squander N4 trillion in 7 years

BY EMEKA EJERE

Analysis of statistics emanating from the Debt Management Office (DMO), the Federal Ministry of Finance and the National Bureau of Statistics (NBS) suggests that oil-producing states across the country cannot account for about N4 trillion in their transactions over a period of seven years.

Oil-producing states in Nigeria which include Delta, Akwa Ibom, Cross River, Bayelsa, Rivers, Edo, Ondo, Imo, Abia, Lagos, and Anambra, statutorily earn a special 13 percent derivation from proceeds of oil revenues from the federation account suggesting they earn more than most other states.

According to sub-national debt reports of the DMO, the total debts of nine of the oil-producing states rose from N2.04tn in December 2015 to N3.35tn as of June 2022, implying that a total of N1.31tn was borrowed within a period of about seven years by the states.

On Thursday, the Minister of Finance, Budget, and National Planning, Zainab Ahmed, disclosed that the Federal Government disbursed a total of N1.98tn as a share of the 13 percent derivation fund to oil-producing states.

Ahmed, who spoke at the sixth edition of the President Mohammaadu Buhari Administration Scorecard, stated that the amount was paid in seven years despite some of the funds preceding the current administration.

According to data from the NBS, oil-producing states got N4.46tn from Federation Account Allocation Committee (FAAC) between 2016 and 2020. When combined with the N1.98tn allocated to oil-producing states as a share of the 13 percent derivation, the amount moves to N6.4tn.

Within the period under review, Delta got the highest allocation of N804.27bn while Cross River got the least, N147.86bn. The allocation of other states were as follows: Akwa Ibom, N769.19bn; Lagos, N523.63bn; Rivers, N675.54bn; Edo, N255.32bn; Abia, N225.47bn; Ondo, N250.86bn; Imo, N234.37bn; and Bayelsa, N575.39bn.

Meanwhile, the total debts of 10 oil-producing states rose from N2.04tn in December 2015 to N3.35tn as of June 2022, according to sub-national debt reports of the DMO.

A further breakdown showed that in 2015, a total of N1.22tn was from domestic creditors while $1.84bn (or N817.27bn at the Central Bank of Nigeria’s exchange rate of N444.17 per dollar as of November 1, 2022) was from external sources.

By June 2022, N2.42tn was borrowed from domestic sources while $2.31bn was from foreign sources such as the World Bank and African Development Bank.

For sub-national domestic debts, Lagos leads with the most debt, from N218.54bn domestic debt in 2015 to N797.31bn by June 2022. It is followed by Delta, whose debt rose from N320.61bn domestic debt in 2015 to N378.88bn by June 2022, and then Rivers, from N134.97bn domestic debt in 2015 to N225.51bn by June 2022.

For foreign debt, Lagos leads with the most debt, from $1.21bn in 2015 to $1.27bn by June 2022, followed by Edo, whose external debt increased from $168.19m to $268.31m.  Cross River is third, from $136.4m to $215.74m within the period under review.

Bursting the bubble

The 13 percent derivation fund has been a controversial issue following allegation by Rivers State Governor, Nyesom Wike that the oil-producing states had refused to disclose their own shares paid by the Federal Government from 1999 to all the Niger Delta States.

Governor Wike had over a week ago, during a project commissioning, revealed that President Buhar had paid the arrears of the derivation fund owed since 1999 to all the Niger Delta States.

Reactions generated by the revelation across the Niger Delta States prompted immediate attempt by benefiting states, such as Delta, Edo and Bayelsa to explain the amount received from Federal Government and how it was expended.

Delta State claimed that it had only received the sum of N14.7 billion as refund from the 13 percent oil derivation in three quarterly installments of N4.9 billion each. It added that the actual shortfall due to the state was N250 billion, which the Federal Government agreed to pay in quarterly installments for a period of five years.

“Senator (Dr) Ifeanyi Okowa said he would not want to leave the next administration with a huge debt burden. He resorted to discounting only N150 billion out of the N240 billion expected receivables but later pruned it down to N100 billion,” The state noted.
Similarly, Edo State said it received N2.1bn refund out of N28 billion expected, which was paid in three installments of N700 million per quarter.

However, the delay by the Akwa Ibom State Government to come out with the amount of money received as arrears and how it was expended gave room to speculations and brandishing of figures from different quarters.

For instance, the governorship candidate of the Young Progressives Party (YPP), in Akwa Ibom State, Senator Bassey Akpan during a ward campaign tour alleged that Governor Udom Emmanuel had received a sum of $1.1 billion (N600 billion), outside the normal Federal Allocation, regretting that nothing could be shown for that in the State.

“Governor Udom Emmanuel has received $1.1 billion (N600 billion) He has received over N3 trillion. But there is nothing to show for it,” he alleged.

Also, a non-governmental organisation working to promote economic and financial transparency in the Niger Delta, Policy Alert expressed reservations over the delay by the State government to address the burning issue, asking it to come out clear on the amount received as the 13 percent derivation and separate it from the loans they have received tagged, “Credit Substitute.”

The Executive Director of the organisation, Tijah Bolton-Akpan in a press conference in Uyo last week, recalled how the organisation issued a statement on November 1, though countered by the State government on how it had received N171.2 billion under the subhead “13 percent Derivation Revenue arrears during the third quarter of 2021.”

Not out of place

In an obvious move to see that governors of oil-producing states account for the 13 percent derivation money disbursed to them, the Presidency on Friday revealed that the nine states in the club received N625.43 billion from derivation, subsidy, and SURE-P refunds, from the Federation Account in the last two years.

A statement signed by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu, and titled, “Oil derivation, subsidy and SURE-P refunds: Nine oil producing states received N625.43 billion in two years; N1.1trn still outstanding,” noted that the Buhari-led regime would continue to render equal service to all the states regardless of affiliation.

It stated that an acknowledgment of the payments by Wike and the others “is not out of place.” According to the statement, “data obtained from the Federation Account Department, Office of the Accountant General of the Federation, shows that a total of N477.2 billion was released to the nine states as refund of the 13 percent derivation fund on withdrawal from Excess Crude Account (ECA) without deducting derivation from 2004 to 2019, leaving an outstanding balance of N287.04 billion.

“The states also got N64.8 billion as refund of the 13 percent derivation fund on deductions made by NNPC without payment of derivation to oil producing states from 1999 to December, 2021. The benefitting states still have an outstanding balance of N860.59 billion windfall from the refunds, which was approved by President Muhammadu Buhari.”

The Presidency stated further: “Under withdrawal from ECA without deducting 13 percent derivation from 2004 to 2019, Abia State received N4.8 billion with outstanding sum of N2.8 billion; Akwa-Ibom received N128 billion with outstanding sum of N77 billion; Bayelsa with N92.2 billion, leaving an outstanding of N55 billion.

“Cross River got a refund N1.3 billion with a balance N792 million; Delta State received N110 billion, leaving a balance of N66.2 billion; Edo State received N11.3 billion, with a balance of N6.8 billion; Imo State, N5.5 billion, with an outstanding sum of N3.3 billion; Ondo State, N19.4 billion with an outstanding sum of N11.7 billion while Rivers State was paid N103.6 billion, with an outstanding balance of N62.3 billion.”