Fayemi's Alleged N40 Billion Debt: Facts vs Fiction
1 Our attention is drawn to a publication in the centre spread of the
Tribune and The Nation newspapers of Monday, November 29, 2010 by the
Ekiti State Government that the Chief Olusegun Oni-led administration
left a whopping N40 billion debt as at October 15, 2010. The
publication is a funny document which was not signed or authenticated
by either the State's Accountant – General or the Auditor –General,
the two statutorily recognized officials of the state on accounting
Making a mess of this publication and to show that the two-page
publication was the handiwork of self-styled ''geniuses'' newly hired
by the government for the purpose of running down their predecessor,
the Accountant General and the Auditor General of the State released
the Mid-Year Audited Account of Ekiti –State Government as at June 30,
2010 published on page 8 of the Nigerian Compass Newspaper of the same
Monday (November 29), and later page 9 Nigerian Tribune November 30
duly signed by the two officers.
Noteworthy is the fact that the Mid –Year Audited Account of Ekiti
State shows no correlation with the publication in the centre-spread
of the Nigerian Tribune and The Nation said to have emanated from
anonymous sources in the offices of the Accountant General and Auditor
It is clear that the Government was up to a mischief when they lumped the Local
Government Accounts with that of the State Government, notwithstanding
that the State keeps a distinct and different account from the Local
The Oni Administration is on record to have faithfully published the
Audited Accounts of the State at Mid Year and Year end throughout the
tenure of the administration.
2. The figures presented in the said publication are untidy and crude.
Below are our reaction to the facts and fiction therein.
(a) Cash and Bank Borrowings as at October 15, 2010
Total Bank Borrowing N7.0 billion
We cannot remember the loan of N532 million from Intercontinental
Bank. A cursory look shows that its details are not completed in the
publication as others. (Have they started the Lagos Arithmetic so
We want the public to note that with
Outstanding Staff Loan (deductible monthly from Salaries) N3.4 billion and
Cash Balances in Counterpart Project Funding Accounts
(SUBEB, MDG, ETF, etc of approximately N5.0 billion
Clearly there is no negative net Cash/Bank exposure!
(b) Foreign Debts
This is unclear to us and we ask: Who borrowed? When was the Debt
incurred? For what purpose?
It might be necessary to state categorically that the Ophthalmological
Centre, Ado-Ekiti project was executed completely without any foreign
or domestic borrowing!
(c) Contract Awards
Total contract award does not translate into debt. Until a contract
is satisfactorily executed, it cannot become a liability! Of course
its expected delivery will form part of Cash flow projections, but
does not become an Accounts Payable until valid certificates are
issued based on completion timelines. Government is not required to
make down-payment on total contract sums on the day a contract is
awarded! Debt occurs only when the contract is executed in part or
whole and demand for payment is made.
All contracts outstanding as at October 15, 2010 were planned to be
completed between October 2010 and December 2011 with contract awards
based on a very conservative estimate of cash inflow up to December
2011. We state the projections hereunder:
Statutory Allocation @ N2.5 billion per month (15 months) N37.5 billion
Excess Crude allocation (25% of statutory allocation) N9.4 billion
Internally Generated Revenue (N300 million/month) N4.5 billion
DMO (approved, awaiting payment = $18million) N2.7 billion
DMO under processing by Consultant ($170 million with
worst case scenario success projection of 50% or $85 million) N12.75 billion
Refund from Federal Ministry of Works on Road Projects N4.0 billion
Total Cash Inflow projection N70.85 billion
Note: This does not take into account inflow expected from UBEC, MDG,
ETF and other Grants.
Cash Outflow Estimate (October 2010 to December 2011)
Average Recurrent Expenditure 2009 N1.7 billion per month
(assuming N2.0 billion per month) N30.0 billion
This would have left opportunity for Capital Expenditure of at least
N40.85 billion for the period!
Assuming all existing contracts will be executed as awarded over the
period, and all payments made, and amount required to service all
contracts according to Government is N27.0 billion, this would still
leave N13 billion for additional Capital projects between now and
In other words, the State, as is, would not need any further borrowing
to meet existing and projected obligations and remain in solid blue.
Government and Governance is a continuum. In May 2007, the Oni
Administration inherited amongst others:
(i) Outstanding due to Contractors on projects (some dating back to
Adebayo Administration) of over N10 billion. Most of these were
settled before October 15, 2010.
(ii) Gratuity and Pension Arrears dating back to 1993 of over N2
billion.(settled completely by December 31, 2007)
(iii) Inherited Judgment Debts of over N200 million settled
(iv) Promotion arrears of Staff for the period 2004 – 2006 settled.
Plus lots more!
We are bold to say that we managed the State Treasury prudently,
without any frivolities and undue exposure to risk. On the other hand,
we know that all the alarm over so called State indebtedness is a
grand ploy to justify the need for the Fayemi Administration to borrow
heavily to enable it satisfy some hidden and extraneous interests,
especially the servicing of the over N10 billion indebtedness to his
In this regard, we ask Ekiti people to be on the alert.
Former DG, Bureau of Strategy and Statistics, Ekiti State