There are strong indications that the Federal Government will commence the issuance of the first tranche of the N2 trillion promissory notes to offset local contractors’ debt, spread across the next 10 years.
Under the arrangement, the sum of the N220 billion bond is to be issued in 2018.
Ben Akabueze, Director-General of Budget Office of the Federation disclosed this while briefing the House of Representatives’ Joint Committee on 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
Akabueze explained that the grants and bonds which added up to N199 billion for 2018 will be provided to the Joint Committee, adding that the grants’ component is not to be paid back.
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Reacting to the presentation on the N177 billion bonds captured in the 2017 Appropriation Act, Adeyinka Ajayi, Chairman, House Committee on Aids, Loans and Debt Management, noted that the proposed retirement of the N177 billion bond included by the Ministry of Budget and National Planning was not approved by the House.
Adeyinka said: “I noticed there was a document submitted by the Ministry of Budget and National Planning. For 2017, there was a provision for N177 billion to retire maturing bonds issued to local contractors.
“By that nomenclature, the bonds have been issued for you to want to retire it. The Parliament does not recollect the programme. Yes, we re-collect a policy statement that we want to issue promissory notes for local contractors’ debts, so that can liquidate it to make money, to create jobs and return people to their jobs.
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“That was a policy decision, but when you say to retire maturing bonds, that means those bonds have been issued. When were they issued? How much was issued? Those were the questions.”
Stressing the need to ascertain the status of the N177 billion bond, Ajayi (APC-Osun) said, “The MTEF is about looking at the global policy thrust and direction when we want to drill down on the specifics, there are various standing committees of the House, coincidentally, I chair the committee that will drill down on this issue of the retirement of the maturing loans. How much of these bonds were issued, when were they issued, who are the contractors that benefited from these promissory notes?
“The government made a policy statement that we discovered over N2 trillion of outstanding debts to local contractors and the way to repay them so that their staff who were laid off consequent of that debt will return.
“These are debts that concern us as Nigerians, you perform a service for the government but the government is owing to you, you’re in turn owing banks, interest is mounting, the AMCON comes seizes your property or security or assets, so you lose jobs, you lose money and all that. Yes, as a policy the National Assembly is aware of it, but the National Assembly is saying that in the decision and structure, we must be in the know that of this N2 trillion, we have issued promissory notes of N300 billion because its the guarantee of Nigeria that will support those bonds.
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“The treasury bills are issued to contractors and then trade it, you can take it to the financial institutions and receive value for it because there’s Federal Government guarantee. That brings it within the purview of Nigeria because of its a debt on Nigeria.
“It’s already a debt as it were but not secured. Once it is converted into bond, it is now a secured debt with the guarantee by Nigeria it is no longer the kind of contract that you have between the contractor who was awarded a job by Federal Government, who has payment certificate that has not been paid. That person also has recourse to legal action and can sue the government for his money because he has delivered the service. Those are contingent liabilities.
“These liabilities are crystalised because they are securities, government guarantee has been issued and it was sovereign debt on Nigeria. So it is necessarily an issue for the National Assembly to be aware of that programme and approve it before the Minister of Finance will sign out in that guarantee.
“That was why we raised a red flag seeing that an N177 billion was out for 2017 which is for the present year and explanation from the DG Budget Office, which we seek clarification for, is that it is a projection of what they expect will be the maturity of the bonds when they issue it, suggesting that it has not been issued. But we will do that at the committee level, not at MTEF level, that we will begin to engage them,” Adeyinka stressed.
In a related development, the Nigeria Customs Service (NCS) unveiled plans to recruit junior and middle cadre officers as part of efforts towards improving service delivery and policing of Nigeria’s borders.
According to Alu Sule, Deputy Comptroller General on Tariff & Trade, records from Nigerian Immigration Service show that there are 1,400 illegal routes into the country, adding that most of these illegal routes are being used by smugglers to bring goods into the country especially through the Northern part of the country during the dry season.
He noted that with the current NCS workforce, the Service will not be able to cover one-third of the Nigerian borders.
He added that discussions are ongoing with Nigerian Sovereign Investment Authority (NSIA) to secure fund for the acquisition of scanners the scanners at various borders, adding that efforts are also being intensified to halt cash payment but embark on automated revenue generation.
KEHINDE AKINTOLA, Abuja
