Cash-strapped states will soon clear their huge backlog of workers’ salaries.
The Federal Government has approved the restructuring of the loans holding down their financial capacity.
Of the 22 states which applied for the rescheduling of their loans, 11 have been cleared.
Federal Government Bonds have been issued to 14 banks for the loans being owed by the 11 states.
The news was broken yesterday as part of the briefing on the outcome of the 60th National Economic Council (NEC) meeting presided over by Vice President Yemi Osinbajo in Abuja.
Kwara State Governor Abdulfatah Ahmed, one of the four governors who spoke to reporters after the meeting, said the remaining states would be cleared after the verification of their documents. He did not name the 11 states.
Ahmed said: “Discussions were looked at in terms of restructuring of states’ indebtedness to commercial banks. The Central Bank of Nigeria (CBN) and the Debt Management Office (DMO) told the Council that based on the approval of Mr. President of the plans to restructure the bank loans of states into Federal Government bonds to address fiscal imbalance, 22 states have submitted reports and applied for restructuring as at August 19, 2015.
“The DMO has requested states to reconcile figures with banks where disparities have been noticed and have been jointly authenticated with the banks as at June 30, 2015. As at August 14 2015, of the 22 states that applied for the federal government bond, 11 states have so far scaled through with respect to submission of necessary documentation to support disbursement.
“Others have been urged to quickly put their documentation in place to see that they fit into the time schedule. The DMO is reviewing the additional submissions by other states so that it comes as phase two of their programme.”
The governor added that the Permanent Secretary in the Ministry of Finance reported to the Council that the Excess Crude Proceeds stands at US$2.207 billion as at this month.
Anambra State Governor Willie Obiano said CBN Governor Godwin Emefiele briefed the Council on the state of the economy and the exchange rate of the Naira.
According to him, the CBN governor attributed the situation to some of the following: “Declining oil price, which put a drag on the foreign reserves; Exchange rate movements and pressure on the domestic currency; Inflation and tight monetary policy.
He said the CBN governor told the Council that the apex bank had come up with some policies to address the situation. They include:
- specific intervention in the foreign exchange market to stabilise rates;
- cessation of foreign currency cash deposits in banks;
- closure of CBN official foreign window; and
- reclassification of eligible goods and services to the window.
Obiano noted that the naira had appreciated as a result of the CBN’s stoppage of dollar cash deposit.
Ogun State Governor Ibikunle Amosun said Edo State Governor Adams Oshiomhole presented a provisional report of the five governors ad-hoc committee set up by NEC to review the operations and management of the ECA/Federation Account.
He said: “He told the Council that the Committee invited all the relevant revenue generating agencies that contribute to the Federation Account in the course of its assignment.
“The Ad-hoc Committee recommended to the Council that in order to have a comprehensive report on the operations of the ECA/Federation Account, two International Audit Firms have been appointed to carry out Forensic Audit of the ECA/Federation Account between January 2010 and June 30, 2015.
“Regarding the above, Council will in the near future receive a more comprehensive report.” He added that there is no law that bars NEC through the committee from appointing the audit firms.
Amosun explained that NNPC Group Managing Director Ibe Kachikwu briefed the Council on the ongoing reforms in the petroleum industry.
“He told the Council that the reforms will cover aspects of performance management, transparency and accountability, proper focus in investment attraction, zero tolerance for corruption, cost auditing improved stakeholders management and relationship and image rebranding among others.”
The GMD, he said, also urged the governors to assist in protecting oil and gas infrastructure in their states.
Jigawa State Governor Mohammed Badero spoke on the meeting’s decision in respect of the power sector.
He said the Council was briefed that there was overall increase in power supply by 29 per cent as at the first six-weeks of the new Administration, compared to the last weeks of the previous administration.
The Federal Government is targeting generation and distribution of 5,000 megawatts of electricity by December.
According to him, power generation reached 4.662MW by July 29.
He said that the Council has urged state governments to pay electricity bills by their vendors’ MDA, stressing that the Council was informed that at the moment, there is a 45 per cent default rate.
The governors, Badero said, were also urged to assist with security to reduce vandalization of power distribution assets.
He said they were also urged to encourage embedded generation for state-owned facilities.
According to him, the TCN management contract has been extended for one year.
Badero said that the Council was also informed that the top priorities in the next two months included repair of stranded hydro capacity, reduced load rejection by Discos, stopping hemorrhage of gas from power plants to industrial off-takers and fixing major transmission and transformation constraints.