$6.9b Paris Club loan refund sparks row
Questions over local govts’ $2.6b share
There is disquiet among governors over a plan to pay some consultants $138 million (about N42.2b at the official N306 to $1) of the $6.9 billion Paris-London Club loan refund.
Besides, The Nation learnt at the weekend that:
- the Presidency is unhappy that local governments did not get their right share of the hefty refund; and
- some states are still owing local government workers as many as 10 months’ salaries; others are owing six months.
Non-payment of salaries and pensions is considered a breach of the agreement between the Presidency and the governors.
The Presidency has released N1,266.44 trillion to the 36 states in the past one and a half years. The cash includes N713.70billion special intervention funds.
Some governors are displeased that the Nigeria Governors Forum (NGF) plans to pay 2% of the $6.9billion refund to consultants.
The 2% is $138,000,000 (N42.228billion at the official rate of N306 to $1).
According to a governor, who spoke in confidence, NGF Chairman Abdulaziz Yari, who is also the governor of Zamfara State, conveyed the agreement to pay 2% to some consultants in a July 29, 2016 letter to the Minister of Finance, Mrs Kemi Adeosun.
The letter reads: “Please recall that the Nigeria Governors Forum had at its meeting of May 2016 appointed a Consortium of Financial Consultants to reconcile and recover over-deductions from the Paris and London Club loans due to states and local governments.
“Also, Mr. President in a meeting with members of the Forum had graciously agreed to pay 50% of the monies due and the balance of 50% paid after due and diligent reconciliation of the accounts.
“At the last meeting of the Nigeria Governors Forum held in July 2016, the Forum unanimously resolved to pay a fee of 2% to the consultants as their professional fees for the services rendered.
“Pursuant to the Forum’s resolution therefore, I am requesting that the payment of the consultant fees should be deducted at source from each state’s entitlement and paid directly to the account details of the consultants as attached with.
“Consequently, we crave the indulgence of the Honourable Minister to effect the wishes of the governors when implementing Mr. President’s directives.”
But the aggrieved governors said they were not happy realising that “one or two governors” brought the lead consultants after each state had engaged its own consultants. “Our colleagues can also not be offering consultancy services to us through some proxies”, he said, pleading not to be named because of “the sensitivity” of the matter.
The governor went on: “At the end of it all, states are expected to part with N42.2billion to consultants who are not primary sources of the loan records. We were shocked that out of the N19billion consultancy/legal fees paid into the NGF accounts, most consultants hired by states have not been paid a farthing.
“The bulk of the job of the reconciliation of loan refunds is being done by officials and consultants or financial advisers from each state, the Debt Management Office (DMO), the Ministry of Finance, the Office of the Accountant-General of the Federation (OAGF).
“Some of us will resist further deductions from our loan refund. The N42.2billion is outrageous.”
Following protests by states against over deductions for external debt service between 1995 and 2002, President Muhammadu Buhari approved the release of N522.74 billion (first tranche) refund to states pending reconciliation of records.
Each state was entitled to N14.5 billion or 25% of the amount claimed.
Mrs. Adeosun said the payment of the claims would enable states to offset outstanding salaries and pension, which had been “causing considerable hardship”.
Governors had sought for the refund to states and local government areas at a meeting with President Buhari on May 24, last year.
The President directed that:
- a thorough reconciliation be carried out between the states and the Federal Government; and that
- 50% of the claims submitted by the states be released prior to completion of the reconciliation to support states, most of which are financially distressed.
Based on the intervention by the President, the NGF, in a letter to the Presidency, said “the total refund claim submitted by states was $6.9billion of which $2.6billion belongs to local governments.”
The NGF, in the letter through Yari, added that “the data was obtained from the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC).”
“The $2.6billion deducted from the local governments is not disputable as the local governments have the powers or capacity to take foreign loans for which the disputed deductions relate to,” the letter said.
The Presidency released N522.74 billion (first tranche) to states.
The release of the cash triggered a huge controversy, including payment of N19billion consultancy fees and $86million into the accounts of the NGF.
The Economic and Financial Crimes Commission (EFCC) is investigating the alleged diversion of N19billion of which it has traced N3.5billion, allegedly to a consultant and some aides of the Senate President, Dr Bukola Saraki.
The latest dimension is non-remittance or “partial remittance” of the share of the 774 local government areas by some governors.
It was learnt that some governors hid under the Joint Account System to utilise local government refund for other purposes.
Local governments are entitled to $2.6billion of the refund. It is surprising that in some states, local government employees are still being owed about six to 10 months salary arrears, contrary to the spirit of the refund approved by the President,” a source said.
“Some states got the refund and diverted it to other uses. Others transferred to Joint Account and gave local governments paltry sums.
“We have the list of states where local government staff have been subjected to untold hardship by governors who have withheld the share of the third tier.
“What the government expected was that since each local government paid for the loans, its refund should be directly remitted to it to pay outstanding salaries.
“In a few states, the governors outrightly denied local governments their refund, as if the Federal Government did not release any cash.
“But we have one or three states where the governors declared the actual refund collected and remitted local governments’ share.
“We are looking at the activities of the governors and the government may be forced to name them at the appropriate time.
“Such governors may also be investigated by anti-corruption agencies and they will account for the refund after their tenure.”
A government source spoke about how the “abuse” of the refund accounted for the strict conditions attached to the release of the more than N500billion in the second tranche.
“The Presidency will be strict this time around. The good thing is that the disbursement of the second tranche is subject to cash flow or availability of cash for the Federal Government,” the source said.
