Headlines

FG’s N5bn Subsidy Removal Palliative To States Revealed to be a Loan.

Published

9 months ago

August 18, 2023

Stella Charles Akupue

In a strategic move aimed at mitigating the repercussions of the removal of petrol subsidy, the Federal Government has extended financial assistance to states through a loan, according to a recent report.

Earlier, the federal government unveiled a comprehensive relief package amounting to N5 billion for each state across the nation, encompassing the national capital territory (FCT).

Speaking after the National Economic Council (NEC) meeting, chaired by Vice President Kashim Shettima, Governor Babagana Zulum of Borno State emphasized that this palliative initiative was designed to empower state governments in procuring essential commodities.

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Zulum revealed that this aid would facilitate the acquisition of 100,000 bags of rice, 40,000 bags of maize, and fertilizers. This move intends to alleviate the burgeoning food scarcity concerns gripping the nation.

However, the dynamics of this assistance package hold a notable nuance. An internal memo circulated to governors titled “Re: Distribution of Palliatives – Terms of FG Facility,” authored by Asishana Okauru, the Director-General of the Nigeria Governors Forum (NGF), shed light on the details. Okauru conveyed the potential for states to make an independent choice regarding their participation in this offer. If a state opts out, a stipulated sum of N2 billion must be reimbursed.

In this illuminating memo, the financial terms of the facility are succinctly outlined:

Facility size: N4,000,000,000.00
Loan component: N1,920,000,000.00 (48%)
FGN Grant: N2,080,000,000.00 (52%)
Beneficiary: Each state government
Tenure: 20 months
Interest Rate: Nil
Moratorium: Three months
Repayment Mode: Monthly
Repayment Amount: N120,000,000.00
Security: Irrevocable Standing Payment Order (ISPO)

The clarity of the memo underscores that this offering is not obligatory. States that find the terms unsuitable for their financial situation have the prerogative to abstain from participation. In such cases, the conditions are required to refund them the N2 billion already disbursed.