July 30, 2015 | Filed under: Exclusive,main story | Author: PATRICK ATUANYA


Nigeria’s oil rich Delta State is deep in debt, as N773 billion in outstanding liabilities from the previous administration, along with monthly expenditure which far outstrips earnings, leave the state with prospects of perpetual deficits.

The 40 percent slump in oil prices has reduced the state’s monthly revenue from the Federation Account to an average of N10 billion a month.

When states and local governments irrevocable bond servicing expenses are stripped out, net receipts from the Federal Accounts Allocation Committee (FAAC) and Internally Generated Revenue (IGR) fall to an average of N7.2 billion per month, according to documents seen by BusinessDay.

Delta state’s total expenditure of N16.3 billion a month (comprising of personnel costs, statutory transfers and other recurrent expenditure) means the state currently runs a monthly deficit of N9.1 billion.

This is compounded by N773 billion in outstanding liabilities owed to contractors, bond creditors and banks.

The state’s precarious fiscal position is making it difficult for the newly elected governor, Ifeanyi Okowa to fulfil campaign promises or govern effectively, according to sources.

States like Delta should boost taxes to cushion the dwindling allocation from the centre, enact more market friendly policies and be run more like economic units as opposed to political appendages of the Federal Government, said analysts who spoke with BusinessDay.

“This calls for hard choices and politically unpopular decisions. These must be preceded by effective and urgent sensitisation of the citizenry,” members of the new Governors Finance Sub transition Committee, said in its report. Documents seen by BusinessDay show that Ministry of Finance Handover Notes indicate that Delta state earned total revenue of N1.75 trillion during the timeline of the last administration (2007 – 2014), while total expenditure was N1.96trillion, leaving a deficit of about N210bn.

On the average, the level of performance of recurrent expenditure was 93 percent while Capital Expenditure was 56 percent in the time period.

Furthermore, Internally Generated Revenue (IGR) in the period was N257.65billion or about 15 percent of total revenue collected.

Nigerian states governors are powerful by African standards, with some controlling annual budgets bigger than most Sub Sahara African countries’ budgets.


Most, like Delta, borrowed heavily during the boom years to finance often bogus infrastructure projects and on political patronage. Current liabilities include N534 billion in contractor debts, N4.7 billion in external debts, pension liabilities of N39 billion, a revolving overdraft facility of N19 billion and a 7-year bond of N50 billion raised in 2011. Out of this bond value, the total actual proceed received by the state was N46.60billion, meaning total fees paid to regulatory agencies and parties to the bond was N3.40billion, representing 6.8 percent of total bond value as cost of issue.

So far, N41.44bn is reported to have been spent from the bond proceeds on the planned projects, according to documents seen by BusinessDay.

There is supposed to be a balance of N5.16 billion yet to be drawn from the bond proceeds, however the report from the Hand-over Committee revealed that only a little over N3 billion is left in the account where the bond proceed is warehoused.

The whereabouts of the difference has yet to be explained by members of the former administration. Delta state, which was part of a bailout package for states by the FG, needs a concrete plan on structural reforms, according to analysts.

“All the problems can be fixed fairly easily, but the irony is that even if one wished to help them, it would be very difficult – they don’t actually understand “governance,” said the analyst speaking off the record.

Most ex-gorvernors should be cooling (heating) in maximum security prisons.

They have succeeded in crippling the states they governed.

And by the way, they didn't borrow to finance projects. If they did, Nigeria would be better than Dubai.
They borrowed to line the pockets of their cronies, wives, girlfriends, sycophants, political alies and theirs.

dapyd1:
Most ex-gorvernors should be cooling (heating) in maximum security prisons.

They have succeeded in crippling the states they governed.

And by the way, they didn't borrow to finance projects. If they did, Nigeria would be better than Dubai.
They borrowed to line the pockets of their cronies, wives, girlfriends, sycophants, political alies and theirs.

Could not have said it any better

Ok