Following the Presidency insistence that all the states must account for the first tranche of the loan refunds – in line with the agreement it reached with the Nigerian Governors Forum (NGF), it has appeared that some states implicated in the mismanagement of the first tranche may not get the fresh N500bn funds.
Some of the 36 governors are being investigated by the Economic and Financial Crimes Commission(EFCC) for allegedly diverting the first tranche of the refund.
The governors (seven are involved in the scandal) engaged some curious consultants, who got part of their states’ share of the refund.
Part of the funds was allocated to some National Assembly leaders who had no business with the refund, it was learnt.
It was gathered that the Presidency was set to release fresh refund to states —in line with President Muhammadu Buhari’s determination to rescue the 36 states from economic collapse.
A source, who spoke in confidence, said: “The government is about to release another tranche of London-Paris Club loan refunds to states. It is about the same amount like the first tranche. Let us say about N500billion.
“The refund is entirely the initiative of the Federal Government to improve the socio-economic situation in the 36 states. President Buhari was disturbed that many states were finding it difficult to pay workers’ salaries and pensions.
“But the release of the second batch of refund will be based on some conditions as agreed upon by the Presidency and the Nigerian Governors Forum(NGF). President Buhari has said that he will not accept any excuse from any governor for diverting public funds.
“Before the first tranche was released, the NGF had an agreement with President Buhari that about 25 per cent to 50 per cent will be used to offset outstanding salaries and pensions.
“This time around, the Presidency has made up its mind that any state which breached the agreement will not be entitled to second tranche.”
Asked how the Presidency will know, the source added: “We have feedback from the states on how some of these governors have diverted and misused the first set of refunds. Some of them did not spend up to 15 per cent on salaries and pensions. The records are there to prove the breach.
“We also got reports from security agencies, labour, pensioners, concerned leaders in various states and many whistle-blowers on how the governors spent the first tranche.”
The source described security reports on some of the governors as “damning”.
Some governors were said to have converted the refund to personal use and the cash expended on “wasteful” projects.
“In some instances, some projects executed have no bearing with the needs of some states. It is quite sad,” the source said.
The investigation of the EFCC into the disbursement of the first refunds confirmed that some of the governors were involved in illegal deductions and remittances into NGF account. I think about seven of them were actively involved.
“The position of the Presidency is that governors implicated in London-Paris Club fraud may forfeit refunds to their states. We will reveal the outcome of investigation on some of the governors for the people of their states to know why such a punitive measure is necessary.”
Another top government source, who confirmed the moves to reimburse states, however, said: “The second tranche will be released based on the compliance of states with Fiscal Sustainability Plan(FSP), which was endorsed by all the governors at a meeting of the National Economic Council (NEC) on May 19.
“We have a benchmark which we mutually consented to. As a matter of fact, the governors agreed that further disbursements will be based on the states meeting agreed targets and will be subject to monitoring and evaluation by Independent Monitoring Agents. States which fail to meet the targets will be excluded from this refund.”
According to the plan by the Federal Ministry of Finance, states will be required to:
- set and meet targets to enhance Internally Generated Revenue (IGR);
- establish Efficiency Units to reduce overhead costs;
- privatise State Owned Enterprises;
- domesticate the Fiscal Responsibility Act; and
- limit bank loans.
“The Federal Government has agreed to develop IPSAS compliant software for States to use, and to develop new Bond Issuance guidelines to ease access to the Capital Market for states wishing to fund developmental projects,” the source said.
The Presidency has so far released N1, 266.44trillion to the states in the past one year including N713.70billion special intervention fund.
Following protests by states against over deductions for external debt service between 1995 and 2002, President Buhari approved the release of N522.74 billion(first tranche) to states as refunds pending reconciliation of records.
Each state was entitled to a cap of N14.5 billion, being 25 per cent of the amounts claimed.
Minister of Finance Mrs. Kemi Adeosun said the payment of the claims would enable states to offset outstanding salaries and pension, which had been “causing considerable hardship”.
The Presidency directed the states to devote a minimum of 50 per cent of any amount disbursed to address “challenges associated with salaries and pensions”.
Some governors are said to have failed to disclose the actual amount given to their states.
Some of the governors have devoted only 10 to 25 per cent of the funds to the payment of backlog of salaries.