The controversy that resulted from Governor Nyesom Wike’s admission that the federal government owes Niger Delta States 13% derivation fund arrears has not yet subsided.
During a project commissioning more than a week ago, Rivers State Governor Wike disclosed that President Muhammadu Buhari had paid all Niger Delta States the 13% derivation fund that had been owed to them since 1999.
A lot of people in the Niger Delta States, including Akwa Ibom, had reacted to the revelation, which some people thought was politically motivated.
Immediately, some benefiting states, including Delta, Edo, and Bayelsa, came out to explain how the money from FG was spent.
Delta State guaranteed that it had just gotten the amount of N14.7 billion as discount from the 13% oil deduction in three quarterly portions of N4.9 billion each.
In addition, it stated that the actual state deficit was N250 billion, which the Federal Government agreed to pay in five-year installments of quarterly payments.
“Senator (Dr.) Ifeanyi Okowa stated that he would not wish to leave the subsequent administration with a significant amount of debt.He tried discounting only N150 billion out of the expected 240 billion in receivables, but later reduced it to N100 billion,” the state said.
In a similar vein, Edo State reported receiving a refund of N2.1 billion out of the expected N28 billion, which was distributed in three quarterly installments of N700 million.
However, due to the Akwa Ibom State government’s failure to disclose the amount of money received in arrears and how it was spent, rumors and figures from various sources surfaced.
Right off the bat, the governorship competitor of the Youthful Reformists Party, YPP, in Akwa Ibom State, Representative Bassey Akpan during a ward crusade visit claimed that lead representative Udom Emmanuel had gotten an amount of $1.1 billion (N600 billion), outside the ordinary Government Portion, lamenting that nothing could be displayed for that in the State.
“Governor Udom Emmanuel has received over N3 trillion, or $1.1 billion (N600 billion).But nothing has come of it,” he stated.
In addition, Senator Ita Enang, a governorship candidate for the All Progressives Congress (APC) in the state and former aide to President Mohammadu Buhari on Niger Delta Affairs, alleged that the six governors in the region misappropriated N950 billion that accrued to their States as proceeds from excess crude oil sales and 13% derivation. Enang urged the House of Assemblies of the respective States to begin investigations and the process of impeaching the governors who may be
While Akwa Ibom State had collected a total of N133.5 billion, it had an outstanding amount of N277 billion to collect, according to Enang. However, the state had already discounted the fund at low rate in banks for ridiculous loans, so the governors had cheated their people.
Enang asserted that the Delta State government had collected N125 billion but had an outstanding balance of N253 billion, while the Rivers State government had collected N116 billion from oil arrears and N229 billion.Similarly, the state governor of Bayelsa State is discounting the state’s collection of N104 billion for irrational loans, despite the state’s outstanding balance of N209 billion.
He claims that Edo State has collected N13 billion thus far and owes N37 billion, which some banks are also deducting from through loans.
Policy Alert, a non-governmental organization that works to promote economic and financial transparency in the Niger Delta, also expressed reservations about the State government’s delay in addressing the pressing issue. It asked the government to clearly identify the amount that was received as the 13 percent derivation and to distinguish it from the loans that were tagged “Credit Substitute.”
In a press conference held over the weekend in Uyo, the organization’s Executive Director, Tijah Bolton-Akpan, recalled how the organization had issued a statement on November 1, despite being countered by the State government with the claim that it had received N171.2 billion under the heading “13 percent Derivation Revenue arrears during the third quarter of 2021.”
“From FAAC Reports for October through December 2020, N71bn was paid to all the Oil Producing States as Refund,” Akpan stated. The organization had traced the refund back to October 2020.The state of Akwa Ibom was reported to have received N2.4 billion in “Refunds, Donations, and Other Exceptional Income.” We recall that the COVID-19 outbreak prompted donations from individuals, organizations, and the federal government during this fiscal year.As a result, we doubt this receipt.
“All Oil-Producing States received a total refund of N287.04 billion in 2021.”Between January and July of 2022, the entire group of oil-producing states received N181.68 billion.
According to the report, the State Government received N171.24 billion in the third quarter of 2021 and N12.81 billion in the fourth quarter of 2021, totaling N184.04 billion in 2021 alone.
“Our suspicion is that the government entered into ad hoc financing arrangements with commercial banks through the so-called Direct Credit Substitute form. It appears that the State Government had acquired loans within the 2021 fiscal year that were never heard of.
These loans total N35.92 billion in the financial statements for 2021.Yet, taking a gander at the all out Monetary Charges for the year (premium on Inner Bank Credits) which added up to N16.01bn carries the advances to a sum of N51.93bn.Add N51.93 to the N135.61 billion reported in the financial statements, and you get N187.54, which is close to the N184.04 billion reported in the full-year Budget Performance Report for 2021.
He also talked about some loans that the state government took out, totaling N35.92 billion, such as:Zenith’s Flashpoint Loan, N700 million, and Polaris Bank’s Akwa GIS loan, N500 million;N500 million loan from Polaris to Dakkada Global Oil Palm;Globus Bank VKS Loan: N5 billion, Zenith – AKIRS Crystalised Loan: N24 billion, and FGN Bridging Facility: N3 billion. Zenith – Akwa Savings Loan: N1.5 billion. Zenith Bank: UBE Loan: N715.07 million.
Akpan continued, “You can also recall that in our infographics, we noted that the State Government received N83.26 billion as refund tagged as extraordinary items in the first, second, and third quarters of 2022.”How do we have any idea that this connects with the discount?
“In the budget speech for 2022, the governor stated that the Direct Credit Substitute/Receivable Discounting Facility will be N60 billion and Other Exceptional Income will be N15 billion for the anticipated capital receipts in 2022.This added up to N75bn.The 2022 Revised Budget reveals that these two sources of revenue were combined to form “Extraordinary Items.”
He stated that the government is using the so-called Direct Credit Substitute/Receivable Discounting Facility to obtain loans and is receiving the 13 percent derivation refund, as can be deduced from available records.
As a result, the organization requested that the Akwa Ibom State House of Assembly hold an investigational hearing regarding the matter.
Dr. Linus Nkan, the State commissioner for finance, addressed a press conference in Uyo on Monday and reacted by stating that the figures circulating on social media regarding the 13% derivation refund were nothing more than lies.
Nkan stated that the State government had received N186 billion in N160 billion installments, while N41,434 billion was anticipated for 2022, of which N26 billion had been received as of the third quarter of that year.
He added that with the execution of the Worldwide Public Area Bookkeeping Framework (IPSAS) it is unimaginable for any unaccounted consumption to happen.
He says, “It has become pertinent to respond to issues relating to the refund of the 13 percent derivation arrears to oil producing States, of which Akwa Ibom is one.” He is referring to the state’s oil production.
“The affected Governors directly and through their officers at the Federation Accounts Allocation Committee, which agreed with the extremely detailed submission and calculated the sums accruing to the States, initiated the agitation for the refund of the arrears that were deducted from the earnings due to the Oil-bearing States.
“However, it was agreed that the payments would be made in tranches quarterly for a period of five years due to the large amount involved and the Federal Government’s inability to pay it all at once.
“A total of 160,000,000,000 was deposited into the State account in 2021.The anticipated revenue from this source was 41,434,000,000 in 2022, but as of the third quarter, 26,000,000,000 had been received.
The refund was listed as “Other Exceptional income:” in accordance with proper financial record keeping and public finance transparency.13 percent in derivation revenue behind, which was revised to 193,000,000,000;The revised amount was 41,434,000,000 in 2022;The estimate for this line item in the budget for 2023 is 100,000,000,000.The sustainability mindset that guides our state’s governance can be easily quantified using these figures.
“We, therefore, urge the general public to disregard the various figures that are presented on a variety of media platforms because they are merely fiction.
“This is why knowledgeable stakeholders in the national public finance space have given Governor Udom Emmanuel’s government a lot of credit for increasing financial transparency in the State’s financial administration,” the statement reads.
According to Nkan, there is no cause for the “activation of alarmist tendencies on the State of finances of the State, because the Governor is conscious of the judgment of history and posterity and is doing everything to earn a copious mention on its golden pages,” and the report of judicious application of the income and other incomes to the State “are captured in the statutory Accountant General’s audited report for 2021 and same will be reflected this year.”