Buhari approves N1.2 trn rescue plan for bankrupt states; releases LNG funds

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Tuesday, July 07, 2015 2.30 PM /Premiumtimes

President Muhammadu Buhari on Monday opened the federal cash till, approving multiple intervention packages totalling N1.2 trillion to help bankrupt states pay workers owed for several months.

At least 12 of the 36 states of the federation are believed to be owning their workers over N110billion in salaries and allowances.

The worst hit states are Osun, Rivers, Oyo, Ekiti, Kwara, Kogi, Ondo, Plateau, Benue, and Bauchi states.

However, government sources said Monday that the Finance Ministry and the Central Bank have pegged the amount needed to settle all the outstanding public workers’ pay at about N250 billion.

The differential takes care of federal workers also owed for months, PREMIUM TIMES understands.

On Monday, Mr. Buhari approved, first, the sharing between the federal and 36 states governments, of $1.7billion of the $2billion balance in the Excess Crude Account.

After the amount — which is about N402 billion — is shared, there will be just about $.3billion remaining in the account which was created to help the two tiers of government save for raining days.

The president had recently raised a committee to explore the possibility of sharing revenue from the account after state governments approached him for bailout.

Besides the Excess Crude Account, government sources told PREMIUM TIMES that the president also approved another three-pronged relief package to end workers’ plight.

First, according to the officials who spoke on the condition of anonymity, the federal and state governments will share another $2.1 billion (about N497 billion) sourced from recent LNG proceeds to the federation account.

Second, Mr. Buhari has directed the Central Bank to prepare a special intervention fund that will offer financing to the states. The package, between N250 billion and N300 billion, will serve as a soft loan available to states to access to defray backlog of salaries.

The Excess Crude money, LNG funds and the CBN loan, total N1.2 trillion, at Monday’s official exchange rate of N236.50 to $1.

Third, the president also approved a debt relief program designed by the Debt Management Office, which will help states restructure their commercial loans currently put at over N660 billion, and extend the life span of such loans while reducing their debt-servicing expenditures.

This third option will free up more money currently being used for debt servicing. Our sources said the federal government will sway its financial muscle to guarantee the elongation of the loans in the benefit of the states.

They said the options were considered at the National Economic Council, NEC, last week is designed specifically for workers.

PREMIUM TIMES can also confirm that the second option, having to do with the Central Bank, was part of a slew of quick interventions recommended by the Ahmed Joda transition committee, whose analyses and proposals to the president, this newspaper has extensively reported.

The committee had advised the president to consider the CBN option, and indeed borrow if the need arises, to pay fuel subsidies and help states pay their workers in the first one month of the administration, to “avoid chaos”.

Reached Monday, the Special Adviser to the president on Media and Publicity, Femi Adesina, confirmed that indeed a special package was on the way for the workers. He said the president was deeply concerned about the plight of the workers who have been unpaid for long months.

In his speech while inaugurating the NEC last week, Mr. Buhari had asked the Council, which is a constitutional advisory body to him, to, as a matter of priority consider how to liquidate the unpaid salaries of workers across the country, a situation he observed has brought untold hardship to the workers.

The approved packages are expected to go into effect this week as the president is said to have directed that releases be made as soon as possible.

The move is also expected to boost the purchasing power of a good percentage of the Nigerian consumers and thereby reflate the economy.

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