Oil-Producing States Borrow N1.3trn Amid N6.4trn Windfall

The sub-national debt reports of the Debt Management Office has disclosed that the  total debts of nine oil-producing states in Nigeria rose from N2.04 trillion in December 2015 to N3.35 trillion as at June 2022.
The implication of this is that a total of N1.31trillion was borrowed within a period of about seven years by the states.
The nine states are Rivers, Akwa Ibom, Delta, Edo, Abia, Ondo, Imo, Bayelsa and Lagos.
This is sequel to findings by The Tide source, which show that the oil-producing states received the sum of N6.4 trillion in federal allocation and 13 per cent derivation fund.
The Federal Government disbursed a total of N1.98 trillion 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.
Ahmed stated that the amount was paid in seven years despite some of the funds preceding the current administration.
“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”, she said.
The source recalls that the 13 per cent derivation fund has been a controversial issue after comments by Rivers State Governor, Nyesom Wike, alleging that the oil-producing states had refused to disclose their own shares paid by the Federal Government from 1999 to all the Niger Delta States.
Ahmed further said the government had supported states of the federation N5.03tn and an additional $3.4bn since 2015.
“With respect to sub-national governments, the ministry goes over and above its statutory role to provide financial support to States:
“A total of N5.03 tillion plus an additional $3.4 billion 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-19 intervention amongst others”, she said.
Details of the amount, Ahmed said, include: N445 billion given as salary bailout to states, except Akwa Ibom, Anambra, Jigawa, Lagos and Yobe in September 2015, while N340 billion was disbursed to states except Lagos and Osun as excess crude loan.
Also, N610 billion was allocated to all states, except Lagos, as a budget support facility.
Other support included: $2.67 trillion as an outright Paris Club refund; N750 millio disbursed in 2021 as an SFTAS reward; and N600bn paid as withdrawal from payment of subsidy in April 2022.