$2bn To States: ‘There Is Nothing Like Bailout’

President Buhari

Ebonyi State Governor Dave Umahi says the widely reported bailout from President Muhammadu Buhari was not a gift from the federal government but what was due to the states.

“There is nothing like bailout,” said Umahi in an interview with Vanguard. “The very significant thing Mr. President did was one; he recognises the fact that the money coming  into the Federation Account belongs to the three tiers of government; the Federal Government (52.67 per cent), state governments (26.76) and  local governments (20.06 per cent). That is what the president has recognised.”

“Mr. President has also recognised that RMAFC ought to review the sharing formula between these three tiers of government every five years. And I think it is over 10 to 15 years  since it was reviewed last. And so when the governors went to the president, they told him about the need to review the sharing formula and Mr. President encouraged it. And I see a man of honesty in that sense of encouragement. He recognises the fact that the states should get more because of the challenges.

“So, what Mr. President simply did was to say, ‘NNPC, don’t spend money that was never appropriated. The old system of making money for the nation and keeping half of it and spending it  the way you like; without having a budget; without appropriation’ – Mr. President had to stop that and that is a major bailout. And then he said, ‘you have so many accounts that you have even lost account of bank accounts you had’ – I think he directed them not to have more than two or three.

“That is a major bailout for the entire citizens of this country because oil is the mainstay of our economy, so if the NNPC that manages our earnings should make money and keep half of it and say it is their running cost, that is a very terrible trend. So, that is the bailout I can understand.

“But when you talk about the tax that was paid by the LNG to the Federal Government; that is one of the earnings – there are a couple of income that come to the basket of the Federal Government that stand for sharing – that’s the Federation Account. We get funds from taxes, oil, Customs and DPR. So, LNG pays taxes and I think one other paid. It came to $2.1bn and, when we met with Mr. President, we said, ‘Mr. President, we are told there is $2bn in Excess Crude Account (ECA). The states are in trouble – not caused by anybody.”

Speaking further, Umahi noted: “The second thing they did genuinely was to say let us make available loan of between N250bn to N300bn so that states that are in trouble will be able to borrow money from there and pay salaries and, when you do that, it is a task; you have to repay whatever you are borrowing from there from the FAAC, which means if you are earning XYZ and you borrowed, then when they are sharing you have to reduce by the percentage of what you borrowed and it goes on until you have fully paid. So, there is no bailout there because if you borrow, you have to pay for it.

“Then the third one is: all the debts that we have in the banks; the Ffederal Government and the CBN said we can make it to look like bond money. So, instead of one year to two years, we can make it last for 25 years. If you call that one bailout, I would say yes, but he didn’t dash anybody money,” Umahi said.

The issue of the bailout came to fore in the first place because some states in the country were not able to pay workers’ salaries. Ebonyi is one of such states. The inability of the state to pay its workers, according to Umahi is due to the state of the economy occasioned by slump in oil prices, since oil is Nigeria’s major revenue source.

“When you talk about bailout and talk about owing workers’ salary, it is not actually the doing of any of the state governors because, until the oil price went down, nobody in the states would say he or she was owed salary. It is because of the situation in the country and so there is a need to adjust to the realities of our challenges. And that is what is happening,” the Ebonyi governor said.