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Despite increased derivation fund, oil producing states owe N1.6trn

The nine major oil producing states of Delta, Akwa Ibom, Rivers, Bayelsa, Edo, Ondo, Imo, Abia and Anambra are owing N1.56 trillion, Daily Trust’s investigation…

The nine major oil producing states of Delta, Akwa Ibom, Rivers, Bayelsa, Edo, Ondo, Imo, Abia and Anambra are owing N1.56 trillion, Daily Trust’s investigation has shown.

This is despite the increase of N405 billion revenue derivation fund they received from June last year to January this year, in addition to their earnings from the Federation Account Allocation Committee (FAAC).

Their debts increased by over N26 billion from June last year and January this year.

The derivation fund is the revenue paid by FAAC to states that produce oil and other minerals that are used to earn foreign exchange for the country.

Since the federal government removed the petrol subsidy mid last year, states of the federation have seen huge increases in their monthly allocations, which have now exceeded the N1 trillion.

The Domestic Debt Data Report of the Debt Management Office showed that the nine oil-producing states had a total combined debt of N1.56 trillion representing about 25 per cent of the entire debts of the 36 state states and the FCT which stood at N5. 7 trillion as of the end of December 2023.

The Domestic Debt Data Report is generated from the signed off submissions received from the 36 states and the Federal Capital Territory.

A breakdown of the 13 per cent derivation revenue accrued to the nine oil-producing states showed that in the month of June, they shared a total sum of N47.478 billion as 13 percent derivation fund.

They received N51.545 billion in July, N35.822 in August, N60.733 billion in September, N50.674 billion in October, N44.286 billion in November, N33.406 in December and N85.101 billion in January 2024.

 

Rising debts

The Domestic Debt Data Report of the DMO put the debt of Abia State at N138.6 billion; Akwa Ibom, N190.4 billion as of last December.

Anambra’s debt, according to the report, moved up from N73.7 billion in September 2023 to N74.1 billion in December 2023.

Bayelsa’s debt moved from N129.3 billion in September 2023 to N151.1 billion by the end of December 2023.  Delta State saw its debt moved up from N371.4 billion in September up to N373.4 billion in December; while Edo State’s combined debt was put at N123.8 billion at the end of 2023.

Imo State had its debt had its debt increased from N217 billion in September to N218.8 in December 2023; while Rivers had N232 billion debt. Ondo State’s debt increased from N71.5 billion in September to N72.7 billion in December.

 

Expert speaks

A development expert, Joseph Momoh, in an interview with Daily Trust, said it is unfortunate that most states are borrowing for consumption rather than investments

“If we must borrow, it should be for something that is self-liquidating which can support real productivity in the economy, but we should be looking at more structural issues.

“You are dealing with an infrastructure deficit and a problem of logistics, these things make productivity to be extremely low, thereby affecting the competitiveness of our economy. So, they are much more fundamental,” he said

He alleged that states were borrowing to fund their luxurious lifestyles and other frivolities which, he said, had added to the debt burden of the country.

“When you look at the debts of states, it is almost N6 trillion and many people keep blaming the federal government for borrowing without beaming their searchlight on the states.

“If you go to states, many of the workers are not paid salaries, poverty levels are high. So, you ask what governors are doing with the huge allocations they collect?

“Many of them leave their states and just stay in Abuja without doing anything and it is high time it stopped,” he said.

On how to reduce debts, Momoh advised both federal and state governments to identify critical areas in states where investments could thrive.

 

Account for FAAC allocations, SERAP tells govs, FCT minister

The Socio-Economic Rights and Accountability Project (SERAP) has urged Nigeria’s 36 state governors and the Minister of the FCT, Nyesom Wike, to provide it with documents on the spending of trillions of FAAC allocations received since 1999.

SERAP also urged them to invite the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC) to jointly track and monitor the spending of their FAAC allocations and probe any allegations of corruption linked the allocations.

“Trillions of FAAC allocations received by Nigeria’s 36 states and the FCT have allegedly gone down the drain. The resulting human costs directly threaten the human rights of socially and economically vulnerable Nigerians,” SERAP said.

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