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Foreign Loans: Govs to Approach N’Assembly, Finance Ministry

12 Dec 2012

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Vice-President Namadi Sambo

Chuks Okocha, Tobi Soniyi and Muhammad Bello

The governors of the 36 states are planning to hold talks with the National Assembly and the Federal Ministry of Finance to resolve any misconception that has impeded their ability to take foreign loans for critical projects.

The governors took the decision to meet with the legislature and officials of the ministry at a meeting in Abuja on Monday night under the auspices of the Nigeria Governors’ Forum (NGF).

This is just as the National Economic Council (NEC), chaired by Vice-President Namadi Sambo, with the governors as members, Tuesdayinitiated discussions on the withdrawal of $1 billion from the Excess Crude Account (ECA) to enable them to meet their respective contractual obligations next year.

The states also opened another flank in their battle with the Federal Government over the management of funds accruing to the Federation Account as they urged the Supreme Court to compel the central authorities to account for the management of the fuel subsidy scheme, whose funds are drawn from the central purse.

The governors, in a communiqué issued after their meeting, which ended in the wee hours of yesterday, said there was the need to meet with the legislature and the ministry to clear misconceptions that have deterred some states from obtaining foreign loans.

The communiqué was read by the forum’s Chairman and Rivers State Governor, Mr. Chibuike Amaechi.

The National Assembly last week had expressed concern over the rush by some states to obtain foreign loans, with the Senate Committee on Local and Foreign Debts querying requests by state governments to secure loans totalling over $3.059 billion.

The committee chairman, Senator Ehigie Uzamere, raised the issue at a meeting in Abuja with finance commissioners of some of the borrowing states.

He had warned state governments against obtaining loans that would mortgage the future of Nigerian children.

Among the borrowing states are Lagos ($600 million), Ondo ($77.9 million), Enugu ($148 million), Niger ($124 million) and Anambra ($75 million).

But the Federal Government, which is statutorily required to guarantee such loans, is hesitant about guaranteeing the facilities.

It was for this reason that the governors are seeking negotiations with the Ministry of Finance and the National Assembly to facilitate approval for the  $3.059 billion loans, being part of the $7.9 billion foreign loan being sought by the federal and state governments from international credit agencies.

However, NGF Vice-Chairman, Mr. Peter Obi of Anambra State, justified the quest for foreign loans by the governors, explaining that they would be used for development projects.

Meanwhile, the governors, who are locked in a legal battle with the Federal Government over the Sovereign Wealth Fund (SWF), yesterday filed another suit at the Supreme Court in which they are seeking an order compelling the Federal Government to account for all monies deducted from the Federation Account to fund the fuel subsidy scheme from 2007 to date.

In the suit filed on behalf of the states by six lawyers, including Chief Joseph Daudu (SAN) and Lateef Fagbemi  (SAN), the states argued that the Federal Government lacked the statutory authority to make deductions from the nation’s revenue unilaterally.

The Attorney General of Federation (AGF) and the National Assembly were named as the first and second defendants respectively in the suit.

According to the states, the deductions from the Federation Account to fund fuel subsidies amounted to a usurpation of the powers of the Petroleum Products Pricing and Regulatory Agency (PPPRA) by giving the agency “illegal directives which make PPPRA honour unverified vouchers from importers of petroleum products to the detriment of all the plaintiffs”.

They also asked the court to direct the Federal Government to pay back into the Federation Account all the deductions made for the payments of fuel subsidy.

In addition, the plaintiffs want the Supreme Court to declare that the Federal Government’s act of charging on the Federation Account deductions and expenses incurred by it or any of its agencies before distributing the revenue among the three tiers of government, breached Section 162 of the 1999 Constitution, and therefore such actions are illegal, unconstitutional, unlawful, null and void.


The plaintiffs also want the court to declare that the Federal Government lacks constitutional or statutory powers to make deductions from the revenue accruing to the nation as a whole, whether generated from petroleum taxes or any other form of revenue, without such revenue being paid first into the Federation Account for appropriate sharing among the three tiers of government.

It therefore wants the court to hold that any deduction so made under the guise of fuel subsidy from such revenue between 2007 to date before being paid into the Federation Account was illegal, unconstitutional, and null and void.

The states also asked the court for an order of perpetual injunction restraining the Federal Government and its agents from making any further deductions from the Federation Account for funding the payment of the fuel subsidy claims or any other purpose whatsoever, except those authorised by Section 162 of the 1999 Constitution.

They also prayed for a restitutionary order of the court directing the Federal Government to pay to the plaintiffs their 24 per cent share of the total amount of money wrongly deducted by it from the Federation Account from 2007 to date.

Alternatively, they asked the court to direct the Federal Government to grant them or a firm of accountants engaged by them, full and unconditional access to all accounts, books, records or other documents relating to accruals to and disbursement from the Federation Account from 2007 to date.

In their estimation, there have been inaccuracies in the crude oil and gas revenues remitted to the Federation Account by the Nigerian National Petroleum Corporation (NNPC) caused by wrongful deductions at source by the corporation to fund its operations.

Despite their lawsuit against the Federal Government, the governors yesterday under the auspices of NEC opened up discussions on the withdrawal of $1 billion from the ECA to enable them to meet their respective contractual obligations next year.

Governors Fayemi, Ibrahim Hassan Dankwambo, Martin Elechi and Deputy Governor of Sokoto State, Muktar Shagari, told State House correspondents about the decision at the end of the NEC meeting.

According to Shagari, although a decision had not been reached on the matter, he said the states were desirous of getting the money so that they could settle contract claims on the many ongoing projects in their domains.

“We want the Attorney General of the Federation (AGF) to look into the matter and advise on what should be done. But we really need the money to be released to enable us to take care of this matter,” Shagari explained.

On the pending court case regarding the constitutionality of the ECA or SWF, the deputy governor stated that it would still continue, as dialogue on an amicable resolution too would not be discarded until a solution is reached.

“The governors have agreed that the matter should be settled in court. We are also still discussing with the Federal Government,” Shagari said.
Fayemi also disclosed that the council was briefed by the National Security Adviser (NSA), Col. Sambo Dasuki, on complementary security services usually provided by local vigilante groups.

He said the NSA had explained that considering the level of insecurity across the country, it was necessary to establish the service whenever and wherever it becomes necessary to do so.

He pointed out that the NSA said whenever there was a need for their establishment, his office, in conjunction with the other security agencies, would work on the modalities required and provide guidelines on their formation.

Other issues on the agenda of the NEC included an update on the stakeholders’ committee on the NEEDS assessment on education in Nigeria, rehabilitation of federal roads, the issue of grazing lands and the building of a national broadband and ICT infrastructure.

The council set up a committee to look into broadband matter headed by the Governor of Gombe State, Alhaji Dankwambo. Other members of the committee include the governors of Kwara, Kebbi, Oyo, Abia and Edo States.

Others are the Executive Vice-Chairman of the Nigerian Communications Commission (NCC), the Minister of Communications Technology, Ms. Omobolaji Johnson, the Federal Inland Revenue Service (FIRS) and four representatives each of the telecoms operators.

The committee is expected to submit its report during NEC’s second meeting next year.

Tags: Featured, Nigeria, News, NEC, Foreign Loans, N’Assembly, Finance Ministry

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