Mr. Udom Emmanuel, Akwa Ibom State Governor.
Abasifreke Effiong
The Akwa Ibom state government on Monday 28th November released official figures on how much it collected as 13 percent derivation arrears.
Despite the Governor’s denial early this year that the 13 percent derivation arrears was not yet implemented, the state government admitted that it received the refunds.
When asked on Saturday, February 12, 2022 during his quarterly performance briefing called ‘Governor Speaks’ broadcast live on the official Facebook page of the State government and radio stations in the state, Governor Udom Emmanuel, said there were refunds from the federal government since 2018.
“From 2018, there has not been any further refund from the federal government. I don’t know if people are counting the court judgment on the 13 percent derivation arrears which has not yet been implemented…”
The Dune had previously reported that the Akwa Ibom State Governor refuted a report by a non-governmental organisation stating that the state has received the derivation arrears. SEE REPORT : Derivation arrears: Akwa Ibom Governor refutes receiving N171.2bn
However, the Governor admitted on Tuesday November 22, 2022, during the reception of two additional aircraft by the state-government owned airline, Ibom Air, after Rivers State Governor, Mr. Nyesom Wike, blew the whistle on the 13 percent derivation refunds.
Governor Emmanuel’s responses at different times on the question of refund of 13 percent derivation.
Mr. Emmanuel said the money collected so far was not enough to construct from Etinan junction to East West Road, a distance of about 21kms.
According to him: “I had a paper which I wanted to show but on a second thought I said let me leave it. I would have shown to the whole world the so called what they are writing on the social media, our governor collected money. We never collected money nicodemously, House of Assembly members they are here, they will tell you. When we got the so called money last year, the money we got cannot do from Etinan junction to East West Road. You can check the records, nothing to hide.”
At a press conference on Monday 28th November, jointly addressed by the Commissioners for Information and Strategy, Works and Fire Service, the Commissioner for Finance, Mr. Nkan said the State received N160 billion as 13 percent derivation arrears in 2021 adding that N26 billion has so far been received in 2022 under the sub-head. This brings that State’s receipts on the item to N186 billion.
However, Commissioner for Works and Fire Service in the State, Prof. Eno Ibanga, says cost between N350 – N400 million to construct a kilometre of road with drains in the State.
Mr. Linus Nkan, Commissioner for Finance (left) and Mr. Ini Ememobong, Commissioner for Information and Strategy, at a press conference on Monday.
Meanwhile, the official figures given by the Commissioner for Finance do not tally with what is contained in the State’s Financial statements for the year 2021, it has been observed.
Policy Alert, a non-governmental organisation working on fiscal and environmental justice in the Niger Delta region on Friday 25th November said the State posted in its 2021 budget performance report that it collected N184.04 billion as 13 percent derivation arrears.
The organisation in a press release signed by its Executive Director, Mr. Tijah Akpan said, “we wish to reiterate that the 2021 Full Year Budget Performance Report of the Government of Akwa Ibom State has without ambiguity noted the amount of money received as “Other Exceptional Income: 13% Derivation Revenue Arrears” in 2021. The report notes that in the 3rd Quarter of 2021, the State Government got N171.24bn and in the 4th Quarter of 2021 it received N12.81bn, coming to N184.04bn in 2021 alone.”
“Surprisingly, however, the Government of Akwa Ibom State in its IPSAS financial Statements (Accountant General’s Report) 2021 noted that N135.61bn was received as ‘Refunds, Donations and Other Exceptional Income’. This was N48.44bn less than what was reported in the 2021 Budget Performance Report.”
“This claim in the 2021 financial statements leaves a gap when read alongside the Governor’s 2022 budget speech where he reviewed 2021 budget performance. He said: “As at September 2021, the total recurrent revenue collected was N138.338 billion representing 71% of the pro-rated approved provision for the period (January- September). The sum of N207.083bn was realized from other capital receipts excluding recurrent surplus.”.
“Although the Governor noted that the government’s capital receipts between January and September was N207.083bn, it is surprising that in the financial statement, the total capital receipts was reduced to N136.289bn. Within this total capital receipts, is the “Refunds, Donations and Other Exceptional Income” which takes N135.61bn.”
“It appears that within the 2021 fiscal year, the State Government had acquired loans that were never heard about, and our suspicion is that the government went into adhoc financing arrangements with commercial banks through the so-called Direct Credit Substitute form. In the 2021 financial statements, these loans amount to N35.92bn. But looking at the total Financial Charges for the year (interest on Internal Bank Loans) which amounted to N16.01bn brings the loans to a total of N51.93bn. When you add N135.61bn reported in the financial statements with N51.93 it give N187.54 which is close to the N184.04bn reported earlier in 2021 full year Budget Performance Report. ”
Policy Alert said the 2021 Financial statements of the State also shows that the state government quietly took eight different loans amounting N35.92 billion.
The loans are, Polaris Bank – Akwa GIS loan – N500 million, Zenith – Flashpoint Loan – N700 million, Polaris – Dakkada Global Oil Palm loan – N500 million, Zenith – Akwa Savings Loan – N1.5 billion, Zenith Bank – UBE Loan -N715.07 million, Globus Bank VKS Loan – N5 billion, Zenith – AKIRS Crystallised Loan – N24 billion, FGN Bridging Facility -N3 billion.
The organisation added that state government was using the cover of the 13 percent refund to get loans.
Mr. Tijah Akpan, Executive Director, Policy Alert, addressing a media and CSO forum recently.
“We can deduce that the government is receiving the 13 percent derivation refund and also using the cover of these refunds to get loans through what it calls Direct Credit Substitute/Receivable Discounting Facility.”
“We must note that using the refund as a cover to acquire loans is in contravention of section 45 of the Fiscal Responsibility Law which requires the State Government to present cost benefit analysis detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied.”
“Section 46 (1) also requires financial institutions to request proof of compliance with the above provisions before lending to any government. We must note that using the refund as a cover to acquire loans is in contravention of section 45 of the Fiscal Responsibility Law which requires the State Government to present cost benefit analysis detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied”, Policy Alert stated.
Meanwhile, the Commissioner for Finance, Mr. Nkan told journalists at the press conference that the Udom Emmanuel administration will pay up all the loans it has collected before the end of the administration on May 29 next year.
