- As Lagos plans to inject N1bn into mortgage bank
There is disquiet among governors over a plan to pay some consultants $138 million (about N42.2b at the official N306 to $1) of the $6.9 billion Paris-London Club loan refund.
Besides, The Nation learnt at the weekend that:
- the Presidency is unhappy that local governments did not get their right share of the hefty refund; and
- some states are still owing local government workers as many as 10 months’ salaries; others are owing six months.
Non-payment of salaries and pensions is considered a breach of the agreement between the Presidency and the governors.
The Presidency has released N1,266.44 trillion to the 36 states in the past one and a half years. The cash includes N713.70billion special intervention funds.
Some governors are displeased that the Nigeria Governors Forum (NGF) plans to pay 2% of the $6.9billion refund to consultants.
The 2% is $138,000,000 (N42.228billion at the official rate of N306 to $1).
According to a governor, who spoke in confidence, NGF Chairman Abdulaziz Yari, who is also the governor of Zamfara State, conveyed the agreement to pay 2% to some consultants in a July 29, 2016 letter to the Minister of Finance, Mrs Kemi Adeosun.
The letter reads: “Please recall that the Nigeria Governors Forum had at its meeting of May 2016 appointed a Consortium of Financial Consultants to reconcile and recover over-deductions from the Paris and London Club loans due to states and local governments.
“Also, Mr. President in a meeting with members of the Forum had graciously agreed to pay 50% of the monies due and the balance of 50% paid after due and diligent reconciliation of the accounts.
“At the last meeting of the Nigeria Governors Forum held in July 2016, the Forum unanimously resolved to pay a fee of 2% to the consultants as their professional fees for the services rendered.
“Pursuant to the Forum’s resolution therefore, I am requesting that the payment of the consultant fees should be deducted at source from each state’s entitlement and paid directly to the account details of the consultants as attached with.
“Consequently, we crave the indulgence of the Honourable Minister to effect the wishes of the governors when implementing Mr. President’s directives.”
But the aggrieved governors said they were not happy realising that “one or two governors” brought the lead consultants after each state had engaged its own consultants. “Our colleagues can also not be offering consultancy services to us through some proxies”, he said, pleading not to be named because of “the sensitivity” of the matter.
The governor went on: “At the end of it all, states are expected to part with N42.2billion to consultants who are not primary sources of the loan records. We were shocked that out of the N19billion consultancy/legal fees paid into the NGF accounts, most consultants hired by states have not been paid a farthing.
“The bulk of the job of the reconciliation of loan refunds is being done by officials and consultants or financial advisers from each state, the Debt Management Office (DMO), the Ministry of Finance, the Office of the Accountant-General of the Federation (OAGF).
“Some of us will resist further deductions from our loan refund. The N42.2billion is outrageous.”
Following protests by states against over deductions for external debt service between 1995 and 2002, President Muhammadu Buhari approved the release of N522.74 billion (first tranche) refund to states pending reconciliation of records.
Each state was entitled to N14.5 billion or 25% of the amount claimed.
Mrs. Adeosun said the payment of the claims would enable states to offset outstanding salaries and pension, which had been “causing considerable hardship”.
Governors had sought for the refund to states and local government areas at a meeting with President Buhari on May 24, last year.
In the meantime, the Lagos State Government has agreed to inject the sum of N1bn into the Lagos Building Investment Company for it to meet the minimum capital required by the law to remain in operation as a primary mortgage bank.
The Managing Director and Chief Executive Officer, LBIC, Folasade Folivi, disclosed this to our correspondent on Friday during the company’s Annual General Meeting in Lagos.
She said the state government’s intervention was a lifesaver given that the share capital of the company had been eroded over the years to the extent that it was now below the minimum required by law for a primary mortgage bank.
Folivi said, “We realised that it would be insensitive for us to approach the shareholders to shore up the capital when there has been no returns on their investments since 2007.
“We, therefore, resolved to appeal to the major investor, the Lagos State Government, for a bailout. The government graciously agreed to inject the sum of N1bn for us to meet the minimum capital requirement and remain a going concern.”
Speaking earlier to investors and shareholders at the AGM, Folivi stated, “It is in the light of this and in line with the relevant provisions of the Investment and Securities Act, the Companies and Allied Matters Act and the Banks and Other Financial Institutions Act that we seek by this meeting to increase the authorised share capital of your company from three billion ordinary shares to four billion ordinary shares.”
Nation with additional report from Punch