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Cash crunch: Capital projects on hold in states

By Our Reporters
LAGOS — CAPITAL projects are on hold in many states due to disagreements between the Federal and state governments over remittance of financial allocation due the states.

Lagos State Governor, Babatunde Fashola, yesterday, lamented the cash crunch in the state saying the delay in remittances by the Federal Account Allocation Committee, FAAC, has continued to take its toll on completion of some major projects in the state. Though a few state governments have struggled to pay salaries ostensibly to avoid conflict with organised labour, the same cannot be said of local governments where employees are being owed salaries.

Even states which have paid have not been able to to pay when due. Consequently, salaries have been delayed. The disagreement between the state governors and the Federal Government cut across party lines, as governors of the President’s party, the  Peoples Democratic Party, PDP, have also been loud in their objection to the financial allocation from the Federal Government.


Vanguard investigations showed that although some state governments have been able to pay employees, they are indebted to contractors.

Lagos: Governor Babatunde Fashola whose state is the commercial nerve centre of the country said though his government has recorded 70 per cent in the third quarter’s performance of its 2013 budget, “there is a lot of work that have been completed that we have not paid for. The core reason for that is the revenue shortfall we have been experiencing and delay in revenue that is coming from the Federal Government”.


while briefing the media on the quarterly review of budget performance at Alausa, Ikeja, yesterday said, the performance represented a slight dip in the overall aggregate of 72 per cent mid-year to 71 per cent. He said, “I think over two months now (between August and September), the FAAC payment did not come on time. The augmentation also did not come on time. As far as I am aware, not all of it has probably come from last report that I got. So, it distorts our plans.

Is 400,000 barrels of oil stolen every month?

“We hope that things will look upward and positive in the final quarter. We expect that as a country, we cannot continue to have this distortion in revenue collection and projection where the largest source of revenue comes from a single item. If we are reporting some of the excuses that we heard, 400,000 barrels of oil is being stolen. The story does not change. Some of the questions really are: Is it a fixed amount of oil being stolen every month? Even if oil thieves do not change, is it still the same amount? We need to look at this thing more rigorously.

“I am happy to report that most of the infrastructure projects are making progress. Roads are being completed in Epe, Ajah, Agege and Ajao. The Ajao link bridge has been completed now. We have completed the Iju road by-pass from Capitol Road. Road works are going inside Ikeja GRA, already approaching completion. Drainage works, primary health centre, cardiac and renal centre in Gbagada as well as new schools have been completed.

“There is a lot of progress in terms of capital works, and service efficiency is improving. Today, we are going to commission our power plant in Alausa. We are going to hand over a primary healthcare centre in Oregun. These are the projects completed in the third quarter. In delivery terms, I am satisfied. In number terms, revenue shortfalls do not enable us to pay. As the payment comes now, they may have grown into the fourth payment.

“Budget is expenditure and revenue. If you do not earn it, you cannot spend it. It affects everybody, but of course in varying degree. If you look at it, our dependence on statutory allocation as a state is not as high as the dependence of other states. Even then, what it simply means is that if the commissioners of finance, who go to Abuja, do not agree to accounts and remittances, it means money can not be transferred.

“During that period, we did not have strike here in Lagos that salaries were not paid. What it simply means is that we use revenue from our IGR that we should have used to pay contractors to keep the public service going. And of course, when the payment comes back, we will come and pay later. So, that distorts so many things. In some cases, we had to go for short borrowing if we did not have cash. We do not keep cash really in reserve. Everything is planned against expectation and commitment that we have made. It creates distortion and sometimes increases our deficit, because if we borrow, we pay some interest.

Allegation of theft of crude oil doesnt make sense

“The question really to ask is where are these shortfalls coming from? Where is this theft coming from? Is it the local crude oil that we should refine for consumption that is being stolen? If that is it, interestingly there has been no fuel queue in the country recently. It does not make sense to me. If it is what we sell for exports, I am not aware also that we have breached any of our agreements with our major buyers. There is no reported incident because those are things that should be reported at the FAAC meeting. They should be able to tell at the FAAC meeting that because we did not sell this, that is why we did not have this money. There are questions we will be taking up at the appropriate forum. It is just important that we get our hands off this and take ourselves as serious.”

Abia: In Abia State, government sources confirmed that “the failure of FAAC to fulfill its financial obligations to the federating units is actually affecting the state. As a result, the state has been experiencing some financial hiccups. It has led to salaries of the state workers being delayed. Also, government activities have generally slowed down with Governor Theodore Orji  and his officials limiting themselves to running the government with internally generated revenue.

In Delta where the state has also paid its civil servants up to date as confirmed by state Commissioner for Information, Mr. Chike Ogeah, the state governor,  Dr. Emmanuel Uduaghan  had complained loudly about the financial allocation.

In his address at a lecture marking the second anniversary of the fifth Assembly of the Delta State House of Assembly, tagged ‘Legislative Issues in Fiscal Federalism in Nigeria’,  Governor Uduaghan lamented that “States have to go to Abuja and struggle and beg for what is due to them. I am sure many of you know my thought on the issue of fiscal federalism especially as somebody from the oil producing area.”

Senator Liyel Imoke of Cross River State at Government House.
Senator Liyel Imoke of Cross River State at Government House.

Cross River: Governor Liyel Imoke in a letter to the state House of Assembly stated that “arising from shortages in projected revenue, certain revisions have been proposed for some capital projects and programmes to enhance the completion of some critical projects as some of these projects/programmes have been for upward/downward adjustments. Expenditure on infrastructure was slashed from N800m to N700m while the rural electrification projects were also slashed from N3bn to N750m.”

Although the state has been able to pay salaries regularly, it has been unable to to meet its financial obligations in the last three months. Consequently, the Cross River State government  has been compelled to review the 2013 annual budget and also requested the State House of Assembly to release N800 million from the State Emergency Reserve funds.

Cross River not broke, though facing cash challenges

A source at the state  treasury told Vanguard, yesterday, that though the State may not be said to be “broke in the sense of the word, but we are experiencing very severe cash challenges and many obligations are not being fulfilled by the state because of the short fall in allocation from the Federal Government.”

Governor Imoke in his letter to the state House of Assembly noted that, printing of revised secondary education textbooks was slashed from N300m to N200m. He said, while “comprehensive renovation of 40 primary schools was also reviewed downwards from N900m to N650m and comprehensive renovation of 60 secondary schools was slashed from N750m to N250m. The governor also urged the State Assembly to approve a request for the release of N800 million from the State Emergency Reserve Funds to expedite work at the State Polytechnic under construction at Ugep, in the central senatorial district of the state.

Yobe: The state commissioner for finance, Alhaji Kaigama Umar has said that despite delay by the Federation Allocation Accounts Committee, FAAC, in meeting up its obligation to states of the federation, the state government has been meeting up its financial obligation to the people.

Plateau: Core civil servants who do not have any problem during the recently concluded biometric staff audit have been paid their salaries up to September. The state Commissioner for Information and Communication,Yiljap Abraham, said, “Naturally, the non disbursement of federal funds affects all aspects of cashflow such as salaries and wages, contractual obligations, handling of security problems and the smooth running of government at all levels.”

Sad as the situation may be, Yiljap added, “Governor Jonah Jang has always ensured prudent management of state resources. However, the situation is not the same in all the local governments as  four local governments have defaulted in staff salaries. A source said, “Jos North is owing us, I think Bokkos, Mangu and one other which I’m not so sure are also owing.”

Another civil servant said, “Some people have not collected from August till now. We don’t know if it has anything to do with allocation since we are used to not getting our salary monthly. We are believing God will touch their hearts to remember us.” Meanwhile, one of the sole administrators in a local government area who spoke on condition of anonymity said, “we are going for a meeting today. I don’t want to preempt the outcome of the meeting but I believe the issue of salaries at the local government will soon be resolved.”

Kogi: The failure of FAAC to fulfill its financial obligations to the federating units caused delay in the September salary payment in the State. Unlike before when civil servants receive their salaries between 26th and 28th of the month; this time the State workers had to wait till the second week of October before receiving alerts.

Osun: The state government has paid its workers their salaries and other emoluments till date despite the short fall in the allocation from the federation account. State Commissioner for Finance, Budget and Economic Planning, Dr. Wale Bolorunduro, told our correspondent in Osogbo, yesterday, that the state government was able to pay its workers till date because it had made contigency arrangement for it.

Bolorunduro said the Aregbesola administration on assumption of office had been setting aside certain percentage of revenue accruable to the state on a monthly basis to take care of the ‘raining days’. The Special Saving tagged: ‘Omoluwa Trust Fund,’ he said, was part of what the government was using to augment whatever the state collected from the federation account and the internally generated revenue.

Next week’s FEC to address cash shortfalls

The commissioner, however, warned that if the situation did not improve, the state might run into crisis as the Special Fund was being depleted on monthly basis because of the shortfall on the revenue allocation to the state. He said that one of the major issues to be discussed at next week’s Federal Economic Council, FEC, meeting in Abuja would centre on the issue of these short falls.

Anambra: Salaries of workers in AnambraState up to date and workers in the state have received their September salary, though it came later than the usual end of the month.

Gov Obi
Gov Obi

However, officials of the state ministry of finance say it was not as a result of non availability funds, but due to internal logistics. The state governor, Mr. Peter Obi, said recently that the state government had saved enough money to pay its workers even if the Federation Allocation did not come in three months.

Benue: Findings by Vanguard in Makurdi showed that the state government had been up to date with the payment of salaries and wages of its workforce despite the inability of the Federal Allocation Account Committee, FAAC, to credit the state government with its full mandatory monthly allocation. However, despite the payment of workers salaries, civil servants in the state were faced with an unusual delayed payment of their salaries in the last two months unlike what obtained in the past when salaries were paid before a month ran out.

Wage bill offset from unusual sources

A source at the Benue State Ministry of Finance who preferred anonymity told Vanguard that the state government sourced funds from unusual sources to be able to offset the wage bill of it workers in the last few months. The source said, “You know that Benue is a civil service state and the government could not afford to delay the payment of worker salaries beyond a particular period. That prompted the decision of the state government to source funds elsewhere to ensure the payment of salaries which gulps over eighty percent of whatever comes in.”

Vanguard recalls that at last month’s ministerial press briefing, organised by the Benue State council of the Nigeria Union of Journalists, NUJ, in Makurdi, the Benue Commissioner for Finance and Economic Planning, Mr. Omadachi Oklobia, had revealed that commissioners of finance from states of the Federation were compelled to walk out of that month’s FAAC meeting because the committee failed to meet the financial allocation to states.

 Oyo: It has been really difficult to pay workers’salaries since the FAAC has failed to give states the required funds.

Gov Ajimobi
Gov Ajimobi

Though Governor Abiola Ajimobi has dissolved his cabinet, one of his aides who said he did not get the nod of the governor admitted that paying workers’ salaries has been a tug of war.

He said: “We have not been finding it easy to pay our workers. You know, workers would not just understand. We have to get money by any means to settle them.”

Speaking on the incident, the Oyo State Chairman, Nigeria Labour Congress, Comrade Bashir Olanrewaju, said it was unfortunate that something like this was happening.


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