ROTIMI AMAECHI’S ISSUES
Posted by andybriggsreport ⋅ September 8, 2011 ⋅ Leave a Comment
Filed Under  chamberlain peterside, chibuike rotimi amaechi, rivers connect, skye bank

Q&A WITH CHAMBERLAIN PETERSIDE,
RIVERS STATE COMMISSIONER FOR FINANCE

Excerpts:
ABR: Tell me about your work at Merril Lynch.
PETERSIDE: My work at Merril was as a financial advisor and certified financial manager. I worked in the Global Private Clients Group in New York City. Merrill as you know is the pre-eminent investment bank and asset manager. Its private clients group was made up of key associates and staff, building relationships and attracting institutional and private assets, helping clients design investment portfolio. That’s where I spent time and got a good grounding in the financial industry before I set up my own shop New Era Capital Corporation in 2003.
ABR: Why did you come to work with Gov. Amaechi ?
PETERSIDE: I came on his invitation. Prior to now, he inaugurated an economic advisory council in 2007 and I became a member of that council from inception and I was quite active. We had truly debated a lot of key policy issues which have helped shape his vision. Though I was based abroad, I regularly made effort to attend our plenary sessions, once a month and some of the other extra-ordinary meetings. I also was very active on some of the task force and committees that drafted key and pivotal documents. My role in both the advisory council and credit rating program was a precursor to his nominating me as the finance commissioner. He said, ‘you come to the table and bring your ideas and let’s discuss it’.
ABR: Why does Gov. Amaechi need N250 billion ?
PETERSIDE: The governor does not need N250 billion. It is the system that demands of us that we should plan our finances differently. In my life as a financial manager, I understand pretty well the need for long term financial planning, treasury management. We have identified that long term projects, key infrastructural investments need long term money as opposed to short term financing that you can get from a bank or as opposed to relying exclusively on your federal allocation which doesn’t actually depend on any one factor. That is not the way to run a successful government. So, his excellency with all good intentions that he has to build up on the infrastructure investment and keep the momentum going, thought it fit to begin to look a little long term and see how we can attract long term money to fund capital projects for the long haul. Apart from building a precedence of long term financial planning, going to the bond market helps you to entrench some level of transparency. Before you get the money, you have to prepare the prospectus, you have to file it with the SEC and the regulatory agencies, to potential investors, you must keep track, you must document and report on the progress of the project. You must indicate which projects you are looking to fund with this bond. You must develop a good functional debt management desk whereby all government debts and liabilities are well managed in real terms. You must have a strengthened and modern financial public accounting system. In so doing, you are able to build institutions; you are able to build a solid financial policy framework.
ABR: At the end of the day, they put you in debt.
PETERSIDE: Debt per se is not a bad thing. The averseness to debt is not something we should live with everyday of our lives. In fact, you can’t fund development on the long run as a country or government without some level of debt. The kind of debt you carry is what matters and what you use the debt to do is also what matters.
ABR: How do you pay back the debt ? Is it not still based on what you refer to as the short term funding which Rivers State gets from the federal allocation ?
PETERSIDE: A hundred billion naira bond at 12% would amount to a monthly debt service of N1.9 billion a month for five years. So you are not in debt as if you can’t climb out of the hole. In fact you have eased your life because N1.9 billion we can easily afford. We earn about N4 billion-N5 billion from IGR, N15 billion-N18 billion from the federal allocation; if you add these it gives N19 billion-N23 billion monthly. Andy, realistically, it will take us ten months to earn N250 billion or eight months to earn N100 billion. But if you go to the market, you have that money in your hands and you can use it to pay contractors, finance long term projects and repay with debt servicing of N1.9 billion a month.
ABR: So we have another scenario where another administration is going to be burdened with paying off the debt?
PETERSIDE: We have a scenario as follows; if we go to the market and raise N100 billion for five years, by the end of this administration, we would have paid off 80% of that. And with 20% of that left, we have a choice of making a balloon payment of that money. It is allowed in the bond agreement.
ABR: So, what about N250 billion ?
PETERSIDE: Two-fifty, Andy is our proposed bond program. What a bond program means, Andy, is that you file a shelf registration, you prepare a bond package and you submit to SEC that you are willing and looking to raising N250 billion. Now are you going to raise the N250 billion in one year or in one quarter? Not at all. But it is a program that’s there. If you want to go to the market subsequently, you do. If you don’t want to, you don’t. Fashola’s government has a shelf program of N275 billion. It has gone to the market twice, for N50 billion and N75 billion. It has not gone back again. If it wants it will go. Over that period, Andy, Lagos State has built up its IGR to a good level, whereby it might not need to go to the market and besides, what helps you build your IGR, Andy ? It is the infrastructure and the business that you use your bond money to finance.
ABR: Can you specifically itemize the projects that will be financed by this money ? You should have a comprehensive list of priorities before taking a loan.
PETERSIDE: Andy, top of our projects to finance are the Greater Port Harcourt City program, the M10 Highway and the Ring Road.
ABR: The Chinese walked away from the ring road project.
PETERSIDE: They didn’t walk away from the deal. The arrangement with the partner was such that the partner had his own political problems… And of course you have the new UST. It is top on the radar. We believe that if we are able to build a new campus, it would be a brain thrust for science and technology and for academia.
ABR: It won’t make any money. Instead it would guzzle up more.
PETERSIDE: It would guzzle money at the first instance while you are building. When you finish building, under PPP model, university campuses, hostels and other ancillary facilities can be money spinners. Ultimately, you are investing, not wasting funds. You are investing to grow the economy. Science and technology is an investment that will pay dividends in the long run.
ABR: Early this year, the governor borrowed N30 billion from Zenith Bank. Rivers State gets more money from the federation account than probably any other state. The governor has even admitted that his administration has received more than a trillion naira from the federation account. Last month, the administration got N45 billion. According to the governor, the state gets N4-5 billion monthly from IGR. He also claims that he has been saving NI billion every month from the allocation. Most states do not have this kind of money and they manage to live within their means. Why not Rivers?
PETERSIDE: Rivers State is a metropolitan state…a growth driver, potentially, in this country. Rivers State is the second largest economy in this country. Probably has the single most important industrial city in W. Africa, Bonny LNG plant is the single largest and most expensive industrial entity in Africa. We are not talking about some banana state here. You could come and say, why not live within your means? Why not just do it like somebody else out there? Fine. But you could also say we travel around the world, we see things happening, all the infrastructure, how societies transformed in the last twenty years, Shanghai, Dubai, why not here? What is it that we do not have that we can acquire to make us the Dubai of Sub-Saharan Africa? Why sit back and watch Lagos blaze the trail of advancement into the next decade and say we’ll just be satisfied? His excellency has asked himself these questions and did not feel he should sit back and just enjoy his tenure and not get these things done. Besides, Andy, let’s take specific data; in terms of life expectancy, maternal mortality, unemployment, in terms of the critical indices, we are way behind compared with even some African countries. Now why would we sit back and expect that the pace we are going will lead us to the Promised Land… No well meaning leader should sit back and let that happen. That is why he (Amaechi) decided to make a conscious effort to go on a progressive trajectory and that demands money, planning… six states of this country have already gone to the bond market.
ABR: People distrust the state government, the same way that state governors distrust the federal government.
PETERSIDE: Just to take a step back before I answer that. The state got its first loan facility from Zenith bank at the end of last year. I have papers in front of me here to confirm that we took N30 billion, we are repaying N2.6 billion every month. We have N26 billion and more already paid up. We are going to liquidate that debt by end of September or early October. If you look at the debt service of N2.6 billion, that’s nearly 8% of the total debt. People take loans for three, four years and pay pea-nuts. We pay down heavily. Second facility we’ve taken is N20 billion in June and N20 billion in July. We are also paying down heavily. We’ve paid N2 billion in the last two months. At that pace, at the average of 8-10 months we should have paid down these debts. Recently, there was news making the rounds that we are going back to GTB for N100 billion. It is not N100 billion. The facility is for N40 billion for 8% three year tenure.
ABR: What is the sum effect of all these borrowing? Are you getting more money for work or are you being weighed down by these debt burdens?
PETERSIDE: When I took office, over several months ago, given the large volume of projects we had and given the issues we had from 2007-2009, when even at the federal level, the excess crude account was depleted, our monthly allocation declined drastically. Rivers State lost significant amount of its oil wells to Akwa Ibom State. We have won that lawsuit. We have also an issue with Bayelsa. Some months earlier in this year, we were getting N9 billion. It was that bad. Bear in mind that our monthly wage bill is N5.5 billion and our overhead is N1.5 billion. So we were somewhere around N7 billion monthly just to keep government running…you are left with N2 billion. You can hardly pay for Azikiwe Road…or Ikwerre Road or any of the fly-overs or even rural roads or power. Those are heavy investments we made. That put a bit of pressure. Hence the need to tap bank loans and bridge those gaps. As we speak now, Andy, we are back to square one, not in a negative term but back to where we usually are in terms of robust sound financial footing. Our FAAC is coming up well, our IGR is growing and we have paid down a lot of the capital projects you see around. From here on, we should be looking at a very positive growth trend. As soon as issues have to do with money, there is always a tendency for distrust especially if you can not demonstrate to the public – with the kind of institutions and policies you have in place – that you can manage money well. That is a key thing that worries his excellency.
ABR: Can you show documented evidence that Rivers State has been saving N1 billion every month ? The governor has been saying so for over 3 years so we should have at least N36 billion in the kitty.
PETERSIDE: If I can lay my hands on a report from IBTC Assets Managers who are managing the fund.
ABR: We would like to see it to publish it for Rivers people.
PETERSIDE: The total funds that have accumulated in that account is N27 billion.
ABR: He told us middle of last year N28 billion.
PETERSIDE: It would not be the middle of last year…towards the end of last year.
ABR: So several months later ?
PETERSIDE: Several months later, Andy, I have to tell you that there was a period where the contributions were suspended because of emergent financial needs we had in the state. We had to decide whether we are going to pay the pensioners, over N600 million every month because of backlog of pensions or contribute N1 billion in reserve. (Shows paper) This is a presentation by IBTC Assets Managers. Current value of fund…
ABR: We need a copy to publish.
PETERSIDE: You can’t publish. This is a presentation made to me as finance commissioner. We should be able to provide access to this information when our financial portal begins to operate.
ABR: After I have asked you, if people can’t see it, it is going to look dodgy.
PETERSIDE: I’ll make you a commitment to the people of the state that in a couple of months, we are going to have an e-portal, a web site that will have up to date information on our finances.
ABR: Let’s move on. Government does not want to show us.
PETERSIDE: No, it is not that Government does not want to show it.
ABR: What did the administration hope to achieve by bringing the globally known credit rating agency Standard and Poors to Rivers State ? P.R ?
PETERSIDE: Whether it is P.R or not Andy, it is not for me to judge. The state has an ongoing relationship with two international credit-rating agencies, Standard and Poors and Fitch. Since 2008, every year, right about summer August-October, the agencies come into the state for an annual review. We gather all our financial team from the Finance ministry, budget and planning and Inland Revenue service. We sit down on a one day intensive review session where we open our books, all the facts and they take a look. It happened to have fallen in August 15th or thereabout, around the time they had downgraded the U.S.
ABR: So the purpose is to assure our creditors?
PETERSIDE: The purpose is to assure the general public and the people of the state. First and foremost, that we are financially sound-
ABR: How do you assure a poor people that you are financially sound ?
PETERSIDE: You can see it in the projects we are building. You can accuse anybody of anything but it is not possible to accuse anybody in this government or the governor himself of taking any penny from the coffers.
ABR: If the governor ever agrees to give me an interview, if I have anything to say about that, I’ll say it to him.
ABR: How much did Rivers State get in the sale of Pabod Breweries to SAB Miller ?
PETERSIDE: Andy, I wish I had those numbers. That happened before I came on board. That transaction was a landmark, one of the few turn-around in this country, carried out by the state government.
ABR: That is why we want to know how much Rivers got. We know what SAB Miller got.
PETERSIDE: Does it not matter to you that at least the place is functional, producing, employing people and paying taxes ?
ABR: It has not had any impact on the job market, really.
PETERSIDE: One tree can not make a forest. SAB Miller is a multi-national, the second largest brewer in the world.
ABR: That’s why we have our eye on the money.
PETERSIDE: It was lying fallow for twenty five years. Give some credit, my friend.
ABR: Without a doubt. But we feel it was a serious oversight that the Rivers public has been kept in the dark regarding the financial details.
PETERSIDE: You may be right. It was a private transaction. There might have been more disclosures but again that’s left to the officers who anchored.
ABR: The Pabod PRO refused to say.
PETERSIDE: He would not even know.
ABR: He categorically said, I can’t tell you.
PETERSIDE: If he gives you that information they will fire him.
ABR: According to the governor and the statistics we have, Skye Bank has failed every month for the past near three years to pay the N8 billion which it guaranteed to take over the collection of all IGR in Rivers. We commend the governor for putting this on record at so many fora.
PETERSIDE: IGR was N5.7 billion last month.
ABR: What bothers many people however is that the governor who signed the MOA on behalf of Rivers State has not insisted that Skye Bank should respect the terms of the MOA and pay the state about a N100 billion which is what it is with-holding from the state by reneging on their bond. Why have both the governor and Skye Bank abandoned the rule of law as stipulated in the MOA ? Why do the MOA if one won’t be bound by it ?
PETERSIDE: Andy, you have some point in that question. It is a very valid question. Those are the discussions we had with the credit rating agencies in 2009. They were very enthused to know that there was a deal that would actually guarantee a certain amount of inflow in IGR. That is the question they have continued to ask. Where is the money that was supposed to flow in?
ABR: When you say ‘guarantee’, it means you can take it to the bank.
PETERSIDE: Again it’s the verb-age that matters. I don’t know whether they guaranteed.
ABR: Guaranteed Monthly Target.
PETERSIDE: That happened before my coming to office. It is not my call as to who guaranteed what, who should answer for what, who should be taken to court. That agreement would expire by the end of the year.
ABR: It would probably be renewed.
PETERSIDE: Andy, don’t jump the gun. We have to sit down and negotiate. Remember that government is not static. It is not like a marriage where you agree till death makes you part. Just to give some insight, the N8 billion target was reduced on mutual agreement to N6 billion.
ABR: What of money owed the state, the shortfall ?
PETERSIDE: Again you leave it to the partners concerned. Whether it is the A.G’s office, the governor, Skye Bank… I can not actually discuss that because it is not under my watch. I wish I could go back and carry a hammer and push and ask anybody where is my backlog of money but I can’t even do that.
ABR: All the PPPs embarked on by the administration have been largely unsuccessful. Most are no longer PPPs including Monorail, KBW Specialist Hospital and Airport Hotel. Silver-bird Galleria is only a shadow of what it was meant to be, Skye taxis have disappeared from the roads and the Skye buses are now an eyesore. All these did not happen under your watch but what new hopes do you bring?
PETERSIDE: It’s been quite a learning curve in a lot of governments. For a concept that we know is proven in the advanced world…we haven’t really hit the right tone in how we structure the deal and conduct due diligence.
ABR: Most of the PPPs took off lawless, long before the House passed the enabling law.
PETERSIDE: It is a learning curve. Every government has tenure. If it takes six months or a year to draft the PPP law, it does not mean you should not be working.
ABR: I don’t think fraud is involved but PPPs are as unsuccessful in this state as the BPE.
PETERSIDE: Well, you might say that.
ABR: People have no confidence in PPP in this state. Is the government going ahead ?
PETERSIDE: Andy, PPP is a viable option. If you need to…
ABR: All things being equal ?
PETERSIDE: Yes, all things being equal. It’s been successful in the U.S and several European countries. The point where we are, that people take those concepts, jump the gun and say, we can help you and unless you conduct proper due diligence you just might not be sure of their capability and the outcome will surprise you.
ABR: Yes. At crunch time they say they do not have the money.
PETERSIDE: Yes. If your partner fails, it is not an indictment of you. You just run ahead… If you wait, you might not move. If you move, you might be seen to have made the wrong decision. It is a balancing act. ROTIMI AMAECHI’S ISSUES: THE CONCLUSION: Chamberlain Peterside, Rivers State commissioner for Finance was right about one thing; it may not be an act of recklessness to borrow to fund ambitious development. Unfortunately, the projects he listed as those to be funded by the bond market loan of a hundred billion are among those regarded by many as probably the white elephant projects of the Amaechi administration, including; Greater Port Harcourt City and the PH Ring Road. There are also other projects for which many people think the state should not go into debt such as the proposed M10 (copying British motorway terminology) and Amaechi’s new university which he insists on naming as the new UST. Two years ago when the governor of Rivers State assembled stake holders to be bamboozled at power point at what was said to be the presentation of the masterplan of Greater Port Harcourt City, it was discernible from the nebulous blue prints that the masterplan was not yet ready. At that gathering Amaechi declared that he would set aside a hundred billion yearly to build Greater Port Harcourt. It was assumed that he had the money. Was he thinking of the bond market then ? Two things happened at Greater Port Harcourt to cause people to suspect that the presentation of the masterplan could have been a ruse. A year later, a team was carrying out soil survey at a site for some bulk infrastructure and those breaking ground for the sport city had run into some pipe lines and had to relocate somewhat. Would there have been a need for another soil survey or the possibility of being blind-sided by oil pipe lines if the men at work were in possession of the masterplan ? As for the ring road, perhaps the commissioner was unaware that the governor had announced to a meeting of stake-holders last year that the ring road project was dead. Before that the Chinese who were considering investing on the project had backed off when the state government could not deliver an aerial survey of acceptable standard. It was really noteworthy to have Commissioner Peterside listing these wonky projects as the priorities for which Governor Amaechi was borrowing N100 billion. Secondly, it was noted from the debt profile presented by the commissioner that the state debt profile was rather unsettling. The next administration will certainly inherit a debt burden. It is the size of the debt that is left to be settled. It is also now authoritative that Gov. Amaechi has not been saving a billion a month. He got the Rivers House of Assembly to make that law which made it mandatory for the governor to put aside a billion from the state revenue into a reserve fund every month and then he broke the law. At a point, he decided to suspend the deduction even as he continued telling that he was saving a billion every month in his state. He even made those claims in his campaign against the federal government’s sovereign wealth fund. The secrecy behind the sale of Pabod brewery was also highlighted by the commissioner’s lack of information on the deal. Obviously it was not in his hand-over notes. Other issues of concern included the lack of transparency over the RVSG-Skye Bank IGR which the commissioner confessed as being above his station and the failing of all PPPs entered into by the administration. These issues need to be addressed directly by Gov. Rotimi Amaechi. Andy Briggs Report upholds the right of fair hearing.

http://andybriggsreport./2011/09/08/rotimi-amaechi%E2%80%99s-issues/


Even though i think andy briggs is the "michael moore" of portharcourt city,  ,he still raises some valid points and questions that many indigenes and non-indigenes have been asking, for instance How much did the RSG get from the sale of pabodwhy has the PPP model in this state turned out to be a colossal failure?   
Is the IGR of this state grossly under declared

The floor is open, no insults please,

How do we get the governor to provide more info? Seems he favors mafia style of silence.

darkhand:

How do we get the governor to provide more info? Seems he favors mafia style of silence.

dont they all my brother, its sad!