Oshiomhole: Cash-strapped states can’t blame oil price crash

Oshiomhole: Cash-strapped states can’t blame oil price crash

Monday, October 12, 2015 2:42 pm

*Reveals Edo state not owing workers

Oshiomhole addresses the retreat at Transcorp Hilton, Abuja

Oshiomhole addresses the retreat at Transcorp Hilton, Abuja

Governor Adams Oshiomhole of Edo State says the current crisis in which many states owe workers’ salaries is beyond the crash in the price of crude oil, saying states need to revisit the issue of capital expenditure, recurrent expenditure and the context of the federal character principle.

The Governor who noted that Edo State meets her wage obligation to workers monthly challenged top-level public servants in the state to look inwards to ensure the state continues to initiate and execute fresh capital projects in addition to completing ongoing ones and meeting basic recurrent expenditures, in spite of the dwindling resources from the federation account.

Speaking, yesterday, at a three-day retreat for members of the State Executive Council and Permanent Secretaries holding at the Transcorp Hilton Hotel, Abuja to brainstorm and re-strategise on raising the bar on governance in the state, with the theme, “Finishing Well”, he observed that a lot still needs to be done to ensure his administration finished stronger than it started almost seven years ago.

According to him, “there are still a lot of wastages in our system. From our experience in Edo, without attacking wages, we have cut a couple of things without having to physically carry out retrenchment in the way that some other state governments have done.

“At $45, I believe it is a high price for crude, but I think the problem is that we have assumed that when the price rose to $140 and stabilised at $108, that then became the new ideal level and so when it dropped to around half of that, we think we are in crisis because when I look at what the numbers were in 1999, at the beginning of this democracy, it was less than $40 and we still had a fairly balanced budget looking at the ratio of recurrent expenditure vis-à-vis capital expenditure.

“Now if you then appreciate that we were doing relatively well at $28 dollars, and that Nigeria met its wage bill when oil crashed to $10 not too long ago at about 1997, the country was not known to be in arrears of salaries, so I think in trying to understand our crisis, it seems to me it is much more than the issue of oil price.

“So I think we need to revisit this issue of capital expenditure, recurrent expenditure, the context and the character of expenditure.

“We run a federation but the states have very little or no influence. Often times, we are not even consulted on issues that have decisive impact on our own local planning.

“The Federal Government allowed cheap import of rice, not just importing rice but granting waivers to importers which they wouldn’t even grant to local growers. Now what can I do about that? It’s clearly beyond me. With the new government, we are hopeful that things will be totally different.

“The tight policies of the Federal Government and other policies were so unstable and so unpredictable that it was very difficult for a sub-national government to carry out a meaningful forecast.

“Last year, we troubled one of our friends and he was ready to invest a couple of billions of naira and we secured, with the help of the Commissioner for Agriculture 50,000 hectares of land for rice, but again, the investor confessed that with the double policies of the Federal Government, local producers are faced with challenges.

“Talking of enabling environment, there is very little a state can do. The real enabling environment has to be created at the federal level.

“But on the whole, I want to assure my colleagues that whatever we have done in the past on the assumption that oil money will be available, it is clear that we are not going to have that level of cheap oil money, but we will have to look inward and this is where the role of everybody here comes in”.

On his part, Guest speaker and economist, Prof Doyin Salami, who was Vice Chairman of President Muhammadu Buhari’s Transition Committee lauded the state government for the judicious use of its revenues which he noted was balanced between Recurrent and Capital Project at 55% to 45 %, a feat which he noted was one of the best in the country and sued for its sustenance.

He however urged the state government to look beyond the oil sector in generating revenue for the state to enable the government deliver even more and consolidate on its developmental obligations to the people even in the face of dwindling resources from the federation account.

Professor Salami who postulated the crude oil price to continue to dwindle or remain within bracket of its current price urged the state government to make a realistic budget plan for 2016 within the current price as this price would likely remain the new ‘normal’ price for the next few months.

He urged the state government to harness her agricultural potentials, create and encourage small and medium scale businesses as well as address the issue of social development as these, he says, will in turn not only improve the well-being of the people but also increase the internal revenue base of the state.

On his part, another Guest Speaker, Mr. Austine Osakwe, a civil Society Activist urged the government to use the opportunity to reflect on some of its policies as they affect the common man, noting that the Government still has twelve months to consolidate on its developmental programmes and leave a lasting impression in the minds of the masses.

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