Israel Umoh
As the war on 13 per cent derivation backlog is raging, Akwa Ibom State government and others are yet to agree on the exact amount collected so far by the state government.tre
In stoking the fire, Senator Bassey Albert Akpan, the Akwa Ibom governorship candidate of the Young Progressives Party (YPP), during a ward campaign tour alleged that the governor Udom Emmanuel administration had received $1.1 billion (N600 billion).
Also, the former aide to President Muhammadu Buhari on Niger Delta Affairs said that while Akwa Ibom State had collected a total sum of N133.5 billion, it had an outstanding of N277 billion to collect but had already discounted the fund at low rate in banks for ridiculous loans.
Nkan’s receipt of 13% derivation backlog
Addressing a press conference in Uyo on Monday, November 28, the State commissioner for finance, Dr Linus Nkan urged the people to ignore those brandishing figures on social media on the 13 per cent derivation refund, saying that the figures were mere fiction.
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Nkan said the State government had received a total of N186 billion in tranches of N160 billion, while N41,434 billion was projected for 2022, out of which N26 billion as at third quarter of 2022 had been received.
He added that with the implementation of the International Public Sector Accounting System (IPSAS) it is impossible for any unaccounted expenditure to occur.
According to him “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.
“The agitation for the refund of the arrears which were deducted from the earnings due to the oil-bearing states was undertaken by the affected Governors, directly and through their officers at the Federation Accounts Allocation Committee which agreed with the very detailed submission and calculated the sums accruing to the states.
“However, due to the large amount involved and the inability of the Federal Government to pay all at once, it was agreed that the payments be made in tranches quarterly, over a period of five years.
“In 2021, the sum of 160,000,000,000 billion was remitted to the State account. In 2022, the projected income from this source was 41,434,000,000, but as at Q3, the sum of 26,000,000,000 has been received.
“In line with proper financial records keeping and public finance transparency, the refund was reflected in the 2021 budget as “Other Exceptional income: 13% derivation revenue arrears, which was revised to the tune of 193,000,000,000; in 2022 the revised provision was 41,434,000,000; in the 2023 budget, the estimate for this line item is 100,000,000,000. A simple calculation of these figures will reveal the sustainability thinking disposition that guides the governance of our state.
“We, therefore, urge the entire public to ignore the various figures bandied around on various media platforms, as those are nothing more than fiction.
“This is the reason why knowledgeable stakeholders in the national public finance space have greatly commended the Government of our State under Governor Udom Emmanuel for deepening financial transparency in the financial administration of the State.”
Nkan said that 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,” adding that 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 judgement of history and posterity and is doing everything to earn a copious mention on its golden pages.”
On the discounted loan, Enang said that while Akwa Ibom State had collected a total sum of N133.5 billion, it had an outstanding of N277 billion to collect but had already discounted the fund at low rate in banks for ridiculous loans.
However, Mr. Nkan told journalists that the Udom Emmanuel administration had discounted the remaining 13 per cent arrears and paid the monies to different contracting companies, meaning that the banks would be collecting such henceforth.
At a press conference, Commissioner for Works and Fire Service in the State, Prof. Eno Ibanga, says a kilometre of road with drains costs between N350 and N400 million in the state.
He also announced that payment compensation for house owners along Uyo-Etinan Road was to cost N8 billion, but government halted the payment when it discovered that one storey building would cost N4 billion, thus leaving other landlords with paltry sums.
Emmanuel’s flip flop
But, when an interviewer asked him on Saturday, February 12, 2022 during his quarterly performance briefing called ‘Governor Speaks’ broadcast live on the official Facebook page of the State government and radio stations in the state, Governor Udom Emmanuel said there were refunds from the federal government since 2018.
“From 2018, there has not been any further refund from the federal government. I don’t know if people are counting the court judgment on the 13 percent derivation arrears which has not yet been implemented…”
However, the Governor admitted on Tuesday, November 22, 2022, during the reception of two additional aircraft by the state-government owned airline, Ibom Air, after Rivers State Governor, Mr. Nyesom Wike, blew the lid open on the 13 percent derivation refunds.
Mr. Emmanuel said the money collected so far was not enough to construct from Etinan junction to East West Road, a distance of about 21kms.
According to him: “I had a paper which I wanted to show but on a second thought I said let me leave it. I would have shown to the whole world the so called what they are writing on the social media, our governor collected money. We never collected money nicodemously. House of Assembly members they are here. They will tell you. When we got the so-called money last year, the money we got cannot do from Etinan junction to East-West Road. You can check the records, nothing to hide.”
Policy Alert’s angle on 13% derivation
Policy Alert, a non-governmental organisation working to promote economic and financial transparency in the Niger Delta, had 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% 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 over the weekend, recalled how the organisation issued a statement on November 1, though the State government countered it on the receipt of N171.2 billion under the subhead “13 percent Derivation Revenue arrears during the third quarter of 2021.”
Akpan said that the organisation had traced the refund to October 2020, saying “from FAAC Reports for October through December 2020, N71 billion was paid to all the Oil Producing States as Refund. What Akwa Ibom State recorded to have received is N2.4 billion as “Refunds, Donations and Other Exceptional Income” we recall that there were donations from Federal Government, individuals and organisations during this fiscal year due to COVID-19 outbreak. Thus, we question this receipt.
“In 2021, a total of N287.04 billion was received as refund for the entire oil-producing states. From January and July, 2022, N181.68 billion was received for the entire oil-producing states.
“The report notes that in the 3rd Quarter of 2021, the State Government got N171.24 billion and in the 4th Quarter of 2021 it received N12.81 billion, coming to N184.04 billion in 2021 alone.
“It appears that within the 2021 fiscal year, the State Government had acquired loans that were never heard about, and our suspicion is that the government went into ad hoc financing arrangements with commercial banks through the so-called Direct Credit Substitute form.
“In the 2021 financial statements, these loans amount to N35.92 billion. But looking at the total Financial Charges for the year (interest on Internal Bank Loans) which amounted to N16.01 billion brings the loans to a total of N51.93 billion. When you add N135.61 billion reported in the financial statements with N51.93 it gives N187.54 which is close to the N184.04 billion reported earlier in the 2021 full year Budget Performance Report.”
He also highlighted some loans (which amounted to N35.92 billion) collected by the State government.
According to him, these include Polaris Bank – Akwa GIS loan – N500 millio, Zenith – Flashpoint Loan – N700 million; Polaris – Dakkada Global Oil Palm loan – N500 million; Zenith – Akwa Savings Loan – N1.5 billion, Zenith Bank – UBE Loan -N715.07 million, Globus Bank VKS Loan – N5 billion Zenith – AKIRS Crystalised Loan – N24 billion, FGN Bridging Facility -N3 billion.
The organisation added that state government was using the cover of the 13 percent refund to get loans.
“We can deduce that the government is receiving the 13 percent derivation refund and also using the cover of these refunds to get loans through what it calls Direct Credit Substitute/Receivable Discounting Facility.”
“We must note that using the refund as a cover to acquire loans is in contravention of section 45 of the Fiscal Responsibility Law which requires the State Government to present cost benefit analysis detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied.”
“Section 46 (1) also requires financial institutions to request proof of compliance with the above provisions before lending to any government. We must note that using the refund as a cover to acquire loans is in contravention of section 45 of the Fiscal Responsibility Law which requires the State Government to present cost benefit analysis detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied,” Policy Alert stated.
Akpan added, “you can also recall that in our infographics, we noted that in 2022, 1st, 2nd and 3rd Quarters, the State Government received N83.26 billion as refund tagged as extraordinary items. How do we know that this relates to the refund?
“In the 2022 budget speech, the Governor noted that for capital receipts expected in 2022, Other Exceptional Income will be N15 billi0n while Direct Credit Substitute/Receivable Discounting Facility will be N60 billion. This amounted to N75 billion. Checks into the 2022 Revised Budget shows these two revenue sources were joined together to call ‘Extraordinary Items’.”
He said from available records it would be deduced that the government is receiving the 13 per cent derivation refund and also using the cover of these refunds to get loans through what it calls Direct Credit Substitute/Receivable Discounting Facility.
The organisation, therefore, called on the Akwa Ibom State House of Assembly to hold an investigative hearing on the issue.
Other states came clean
Some benefiting States, such as Delta, Edo and Bayelsa immediately came out to explain the amount gotten from FG 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 instalments 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 instalments 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 instalments of N700 million per quarter.
