Oil-producing states borrow N1.3tn amid N6.4tn windfall


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 Debt Management Office.

This means that a total of N1.31tn was borrowed within a period of about seven years by the states.

The 10 states are: Rivers, Akwa Ibom, Delta, Edo, Abia, Ondo, Imo, Cross River, Bayelsa and Lagos.

The Federal Government disbursed a total of N1.98tn as a share of the 13 per cent derivation fund to oil-producing states, the Minister of Finance, Budget, and National budget, Zainab Ahmed, disclosed on Thursday, at the sixth edition of the PMB Administration Scorecard.

She stated that the amount was paid in seven years despite some of the funds preceding the current administration.

She said, “One of the key functions of the Ministry of Finance Budget and National Planning is in support of states. The President understands very clearly that this economy wouldn’t have been growing consecutively or wouldn’t have been able to pull ourselves out of recession twice.

“We wouldn’t have been able to grow consistently without enabling the states to grow because it is a federation.

“Mr. President has been very uniquely generous in his support to states. I can say no president has provided the level of support provided to the states of the Federation.

“He understands that the federating units need to work together as one to achieve the targets that he has set for the country. So, everybody goes to support sub-national governments.

“In seven years, we have disbursed N1.98 trillion in funds to oil-producing states.”

Ahmed further said that the government had supported states of the federation N5.03tn and an additional $3.4bn since 2015.

She said, “With respect to sub-national governments, the ministry goes over and above its statutory role to provide financial support to States:

“A total of N5.03tn plus an additional $3.4bn has been released to states by the Federal Government over the life of this administration.

“Each of these payments has distinct repayment terms with some given as grants and others as loans with favourable repayment terms, including a long amortisation period.

“The support covers the 13 per cent Derivation refund to oil-producing states, refunds for construction of federal roads, ecological support, support from the Development of Natural Resources Fund, Paris Club refunds, support from the Stabilisation Fund, COVID intervention amongst others.”

Reeling out the details, Ahmed said N445bn was given as salary bailout to states except Akwa Ibom, Anambra, Jigawa, Lagos and Yobe in September 2015, while N340bn was disbursed to states except Lagos and Osun as excess crude loan. Also, N610bn was allocated to all states, except Lagos, as a budget support facility.

Other support included: $2.67tn as an outright Paris Club refund; N750m disbursed in 2021 as an SFTAS reward; and N600bn paid as withdrawal from payment of subsidy in April 2022.

Speaking further, the minister revealed that the non-oil sector had continued to maintain high-level performance in terms of revenue generated, adding that it was currently the mainstay of the nation’s economy.

She said that the sector contributed N1.71trn out of the total revenue of N4.19trn, an outturn of 100.7 per cent compared to the budget projection.

“Today, I call your attention to the very high performance of the non-oil sector of our economy. As of September 2022, the Federal Government’s share of oil revenues to fund the budget was N535.5bn representing 32.6 per cent performance), while non-oil tax revenues totalled N1.71tn an outturn of 100.7 per cent compared to the budget projection.

“The non-oil revenue share of funding the Federal Government has improved. We have been able to move from contributing 35 per cent to the federal budget to contributing 73 per cent to the financing of the federal budget.”

N6.4tn windfall

Oil-producing states got N4.46tn from Federation Account Allocation Committee between 2016 and 2020, according to data from the National Bureau of Statistics collated When combined with the N1.98tn allocated to oil-producing states as a share of the 13 per cent derivation, the amount moves to N6.4tn.

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