Delta State Governor, Senator Ifeanyi Okowa, on Thursday said his administration inherited a debt profile of N637.22 billion, and called on all Deltans to be ready to “make sacrifices necessary to put the state on the path of economic recovery.”
Giving a breakdown of the debt profile, Okowa disclosed that N98.62 billion is as a result of Revenue Bond and indebtedness to commercial banks, while outstanding contractual obligations stood at N538, 601,962,421.50.
Speaking while addressing members of the State House of Assembly in Asaba on the financial status of the state, Governor Okowa said that it became necessary to let the lawmakers know the state of affairs in order “to put the Legislature on the same page with the Executive, so that we can think together, plan together, and tighten our belts going forward.”
Exuding confidence Okowa asserted that “I see more opportunities in our current economic predicament than the threats it poses,” adding: “We must muster the resolve and political will to boldly – and decisively – confront the challenges that we face, right the ship of our State and lay a solid foundation of prosperity both now and for future generation of Deltans. It won’t be easy. It is not supposed to be easy. But there is no gain without pain, no prize without a price.
“A good place to start is for us to reject the old ways of doing business. First, beginning with me and this honourable House, we must be ready to make the necessary sacrifices to reduce the cost of governance. “Secondly, the endless turf battles and approach to legislative action would need to give way to civility and respect for each arm of government.
“Thirdly, the House must make laws that protect and promote the interest of the State and our people.
“Fourthly, we must act with the sense of urgency that our current situation demands, and navigate the ship of state aright.”
The Governor told the House that the 2015 budget of N409Bn as passed “has to be reviewed” because it “is no longer realistic in the wake of current realities, which clearly show that our expected revenue is now far below what was projected, in view of the declining earnings from FAAC occasioned by the crash in oil prices.”
He assured the House that the administration is “frantically working at putting the necessary machinery in place to boost our IGR, and steps will be urgently taken to plug the loopholes in our revenue collection process. In our land resource management, action will be taken to re-certify Certificates of Occupancy (CofO) beginning with our urban settlements, while MDAs will be made more accountable in the generation of revenue.”
He called for a cordial relationship among the different arms of government, reminding the legislature of their constitutional responsibility “to make laws for the peace, order, and good governance of the State.” Governor Okowa promised to build a “model worthy of emulation” in Executive-Legislature relationship based on his experience as a former member of the Senate.
Dr Okowa appealed for patience and understanding regarding the suspension of the civil service recruitment.
Admitting that it was a painful and difficult decision to make, he noted that “we came to this inescapable decision because the entire recruitment exercise was riddled with fraud and corruption as it violated established Civil Service Rules and Regulations. More so, it was not logical that a State struggling to meet its payroll obligation should employ more persons.”
While sympathising with those affected by the exercise, he urged the house members to appeal to their constituents who were affected by the exercise for understanding because “we do not mean them any harm” and “you have my highest assurances that in the long term this decision is for the benefit of everybody. Sometimes things have to get worse before they can get better.”
Governor Okowa enjoined the house members to be mindful of their place in history.
“The focus of responsible leadership is not always about the next election; it is about the next generation,” he declared.
“We would have written our names in gold if in the next four years, Delta State can boast of a functioning public school system that ensures that the children of the poor are provided quality education, accessible and affordable primary and secondary healthcare system, a flourishing agricultural and agri-business sector, and the proliferation of Micro, Small, and Medium Scale Enterprises (that ensure our teeming youth population is productively engaged), well planned and environmentally friendly cities, and integrated rural development.”
Governor Okowa has equally directed that necessary machinery be put in place to boost the state’s Internally Generated Revenue (IGR) while steps will urgently be taken to plug loopholes in revenue collection.
According to him, “shortly after I was sworn in , I caused to be issued the suspension of ; recruitment by Civil Service Commission made after 31 December , 2013 to date”.
“Payment of 20 % cost of collection (CoC) of internally generated revenue (IGR), consultancy contracts entered into by the Board of Internal Revenue and approvals for deduction of IGR collections by MDAs pending their review; all contracts approvals or commitments entered into for and on behalf of the state government from 1st April , 2015 or any contract tied to the 2015 budget”.
Giving a breakdown of the state indebtedness Governor Okowa hinted that “Federal allocation has dipped significantly, dropping to just N8.03billion, as received in May 2015, from a high of over N20 billion in previous years”
He said the “state is currently grappling with a revenue bond and indebtedness to commercial banks totally N98.62 billion (principal sum), while outstanding contractual obligation is N538,601,962,421.50.”
Okowa revealed that “in 2011, the state government took a N50 billion facility from the bond market, with a repayment perod of seven years in 84 installments at N1.098 billion each month”, adding that “ this facility will terminate in September 2018 with 40 more installments (totally N43.92 billion) to pay with effect from June 2015.”
In November 2014, Okowa revealed that “ Delta State also acted as guarantor to some selected contractors supported by the issuance of an Irrevocable Standing Payment Order (ISPO) of N2.23 billion monthly , for which the contractors received the total sum of N40 billion”.
He explained that “the state now has paid four installments , has 20 more monthly installments totaling N44.60 billion (including interest payments) extending through year 2017 to pay”, adding that “we also have N19 billion and another N715 million overdraft facility outstanding with Zenith Bank Plc, while some other smaller loans and overdraft facility totaling about N2 billion with other banks have to be paid”.
He further lamented that “ as it stands today , a total monthly deduction of N4.60 billion will be made from our FAAC receipts with effect from this June through to March 2017, and thereafter N1.098 billion monthly until September 2018, saying that this leaves us with a balance of N3.4billion assuming the FAAC allocation stays at N8.03 billion”.
Currently, Senator Okowa pointed out that “the receipt from internally generated revenue (IGR) is about N2.0 billion monthly, after deducting cost of collection, adding that “the implication of the above scenario is that the funds available to run the state is N5.40 billion monthly in the next two years, except there is a significant rise in oil receipts and FAAC earning as well as our IGR”
Senator Okowa stated that “unfortunately, the available funds of N5.4 billion is insufficient to offset our monthly wage bill, let alone fund overhead cost or for government to embark on capital projects .
He said the state’s workforce as at May 28, 2015 stood at over N60,000 persons with a monthly personnel cost of N7,437,940,015.38 inclusive of the N678 million state government support to local government councils for the payment of primary school teacher’s salary.
He therefore called for scarifies, synergy between the executive, legislature and Deltans in his attempt to pull the parlous state of the state from the economic woods
In a brief remark, the Majority Leader of the House of Assembly, Hon. Tim Owhofere, member representing Isoko North, thanked the governor for the briefing and promised that the legislature would partner with other arms of government to deliver the dividends of democracy to the people.
