MY PREDECESSOR MORTGAGED DELTA FOR N637.22BN DEBT – OKOWA

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Delta State governor, Dr Ifeanyi Okowa, has pledged to extricate the state from what he called its stringent mortgage to financial institutions between June 2015 and September 2018 over a cumulative debt of N637.22 billion.
In his maiden address to the Delta State House of Assembly yesterday on the “State of our Economy”, Okowa said “the state is grappling with a revenue bond and indebtedness totalling N98.62bn (principal sum) to commercial banks, while outstanding contractual obligation is N538,601,962,421.50.”
He disclosed that “in 2011, the government took a N50bn facility from the bond market, with a repayment period of seven years in 84 instalments at N1.098bn each month.”
He said the facility would terminate in September 2018 with 40 more instalments (totalling N43.92bn) to pay with effect from June 2015.He continued, “In November 2014, Delta State also acted as guarantor to some select contractors supported by the issuance of an Irrevocable Standing Payment Order (ISPO) of N2.23bn monthly for which the contractors received the total sum of N40bn.
“The state, now having paid four instalments, has 20 more monthly instalments totalling N44.60bn (including interest payments) extending through year 2017 to pay.”
Furthermore, he stated, there exists another N19bn and yet another N715m overdraft facility outstanding with Zenith Bank PLC, adding that there were some “other smaller loans and overdraft facilities totalling about N2bn with other banks to be paid”.
The governor said a total monthly deduction of N4.60bn would be made from the state’s federal allocation receipts with effect from this month to March 2017, and, thereafter, N1.098bn monthly until September 2018, leaving the state with a balance of N3.4bn, “assuming the state’s FAAC revenue stays at N8.03bn that was received for April 2015.”
He told the house that the implication of the state’s financial situation is such that even with receipts from internally generated revenue (IGR), which stands at N2bn monthly, the state cannot afford to offset its wage bill, let alone fund overhead costs.
“The available fund of N5.4bn is insufficient to offset our monthly wage bill, let alone fund overhead costs or embark on capital projects. The state’s workforce by May 28, 2015 stood at over 60,000 with a monthly personnel cost of N7,437,940,015.38, inclusive of the N678m state government’s support to local government councils for the payment of primary school teachers’ salaries”, he said.
Gov Okowa remarked that the state’s financial problem was being tackled as he had directed the state’s Accountant-General “to restructure the Irrevocable Standing Payment Order on contractors’ guarantee and overdraft facility over a period of 42 months as a first step to reduce our monthly exposure.”
-Daily Trust

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