- Labour, experts disagree on bailout for states
There was confusion yesterday as the Presidency denied statements by the Accountant-General of the Federation, AGF, Alhaji Ahmed Idris, that the Federal Government had resolved to clear the funds in the Excess Crude Account, ECA, to help state governments clear their salary arrears to workers.
Presidential Adviser on Media and Publicity, Mr. Femi Adesina, said President Muhammadu Buhari had no plans to empty the ECA as reported.
Adesina’s statement read in part: “Reports in sections of the media today (yesterday) that funds will be drawn from the Excess Crude Account for the relief package approved by President Muhammadu Buhari for states and local governments, are incorrect.
“For the purpose of greater clarity on the matter, the measures approved by President Buhari to deal with the problem of unpaid public sector salaries in many states are as follows:
*The sharing of the $2.1billion dividends paid to the Federation Account by the Nigeria Liquefied Natural Gas Company, NLNG;
* A Central Bank-packaged special intervention fund that will offer financing to the states, ranging from N250billion to N300billion. This will be a soft loan available to states for the purposes of paying backlog of salaries; and
*A debt relief programme designed by the Debt Management Office, DMO, which will help states restructure their commercial loans currently put at over N660billion, and extend the lifespan of such loans while reducing their debt-servicing expenditures.”
Amid the President’s denial, the ruling All Progressives Congress, APC, said the multi-pronged package approved by President Buhari includes: the sharing by the Federal and State Governments of $1.7billion out of the $2billion remaining in the ECA; the sharing of about $2.1billion sourced from the LNG’s payment to the Federation Account and a CBN-packaged special intervention fund that will offer financing to the states, ranging between N250 billion to N300 billion, as a soft loan available to states to access for the purposes of paying backlog of salaries.
Adesina claimed that the media houses which reported on the “liquidation” of the ECA carried false reports, adding that the last National Economic Council, NEC, meeting decided to leave the account intact for now.
“The measures approved by President Buhari definitely do not include drawing down the balance in the Excess Crude Account or the “liquidation” of the account as some media outlets have wrongly reported.
“No such decision has been taken or approved by President Buhari, and last week’s meeting of the National Economic Council clearly concluded that the Excess Crude Account should be left untouched at this time,” the statement concluded.
Adesina’s statement is however in sharp contrast to what Idris told State House Correspondents after a meeting with the President on Monday.
Asked to explain the situation of the ECA funds, the AGF said the money was hovering between $1.6billion and $1.7billion and that the money would be shared among the three tiers of government during Federal Account Allocation Committee, FAAC meeting.
He had added that the decision to share the ECA funds was in line with what the President told NEC members last week.
“On Excess Crude Account, it is hovering between $1.6 and $1.7 billion, and that is what we are going to distribute among all the three tiers of governments, the federal, states and local governments based on the approved formula.
“Even today (on Monday) we are going to meet. The FAAC is going to meet, and we are going to distribute as agreed and directed during the NEC meeting last week, and the position is very clear, what we met on ground is what we are going to distribute,” he said.
Apparently unaware that the Presidency had recanted on the ECA liquidation, the Managing Director of Cowry Asset Management, Lagos, Mr. Johnson Chukwu, told Nigerian Pilot that bailout funds, should not have been extended to the NLNG funds and the CBN soft loan.
Mr. Chukwu said the exercise should have been limited to the ECA because the release of such funds could lead to inflation in the country.
He argued that instead of the CBN giving soft loans to the states, which will force the apex bank to print more naira notes and inject it into circulation, the bond option is more realistic and economical.
The expert also raised posers over the post-bailout era for the states. He said since the states are not likely to generate revenue to march the Federal Government’s largesse, it is likely that the salary arrears syndrome may arise again.
Chukwu said that payment of the salary arrears will be a temporary relief to the workers as the huge funds in circulation will lead to inflation and a fall in the purchasing power of the workers.
The Trade Union Congress, TUC President, Comrade Bobboi Bala Kaigama, who lauded the government’s measure, challenged the critics of the President’s order to visit the affected states to see the level of suffering that the innocent workers have been subjected to.
“Where were the critics when workers were subjected to untold hardship by no fault of theirs, but rather the state governors who used public funds to prosecute the just-concluded 2015 general elections, leaving innocent workers to suffer for what they knew nothing about.
“We had earlier made our stand known that we will support any move by the government to offset the salary debt including going for loans,” he said.
Bobboi expressed hope that the huge funds released by the government will trickle down to the right people in a matter of days.
“Labour unions will keenly follow the process to ensure that the state governors do not hijack the money for their selfish use, thus starving workers their due salaries and allowances”
Amid attack by the Peoples Democratic Party, PDP on Buhari over his empty treasury claim, the APC, yesterday said the President deserved commendation for releasing N413.7bn to settle the salaries of workers’ in the country.
The party also said that it was quite commendable that the special intervention fund approved by President Buhari was packaged without any external borrowing, despite the paucity of funds occasioned by the fall in the price of crude oil.
In a statement, the party’s National Publicity Secretary, Alhaji Lai Mohammed, hailed Buhari for coming to the aid of the longsuffering Nigerian workers with the package, adding that it would not only ensure that all arrears of salaries owed by many states across the country were immediately paid, it would make it easier for the states to meet their monthly salary obligations henceforth.
Mohammed noted that the party was particularly delighted that the President had shown that he was truly the father of the nation by eschewing partisanship in approving the intervention fund for all the states, irrespective of which parties they belong.
He said by his action, the President had practicalised his deep understanding of the essence of governance which was about the well being of the citizenry.
“We say this because when states were financially handicapped during the tenure of the last federal government, opposition states were hung out to dry, while states belonging to the then ruling PDP got generous bailouts.
“The President has approved a debt relief programme that will help states restructure their commercial loans currently put at over N680billion. The implication is that the lifespan of such loans will be extended, while reducing the states’ debt-servicing expenditures, thus leaving the states with enough resources – which otherwise would have been removed at source by the banks – to meet their monthly salary obligations, among others.
“History is repeating itself before our very eyes. Some 31 years ago, Buhari, then as a military head of state, also inherited a huge national rot similar to what has been bequeathed to it by the NPN government and had to approve 480 million Naira for the payment of arrears of workers’ salaries.
PDP chides APC for recanting on ECA
In its reaction, the national leadership of the PDP berated the APC for making desperate attempt to deny credit to former President Goodluck Jonathan for the money used in bailing out distressed states.
Commenting on the retraction of a statement issued by APC, where the party commended Buhari for approving bailout for states from savings in the Excess Crude Account, PDP said they are shocked that APC will go to any length to deny some of the achievements of the former PDP administration.
“We are indeed shocked that in their spirited effort to ensure that no credit went to the PDP-led administration for saving the money in the ECA, the Presidency and the APC had to make a dramatic U-turn even after the APC had in a release signed by its National Publicity Secretary, Alhaji Lai Mohammed, earlier on Tuesday July 7, 2015) commended the President for approving spending from that account.
“The APC had in the release acknowledged that the “multi-pronged approval by President Buhari includes the sharing of the Federal and State
Governments of $1.7 billion out of the $2 billion remaining in the ECA; the sharing of about $2.1 billion sourced from the LNG’s payment to the Federation Account; and a CBN-packaged special intervention fund that will offer financing to the states, ranging between N250 billion to N300 billion, as soft loan available to states to access for the purposes of paying backlog of salaries”.
“Nigerians were stunned that the APC had to alter its statement soon after PDP’s press release demanding that credit should be given to its past administration for saving the money in the ECA.
“When we urged Nigerians to pray for President Buhari, it is because in our estimation, the government was finding it difficult to locate a bearing due to the confusion in his party, consequence of which are these embarrassing flip-flops.”