Home / Business and Economy / Bayelsa says N38 bn refunds  slashed to N27 bn in a ‘discount deal’

Bayelsa says N38 bn refunds  slashed to N27 bn in a ‘discount deal’

Gov. Douye Diri of Bayelsa State

The Bayelsa Government on Sunday said that it got N27 billion and not N38 bn approved by the Federal Government for federal projects executed by the state from 2005 till date.

The Senate had on Nov. 24, 2020 approved promissory notes and bond issuances worth N148.1 billion as refunds to some states for executing federal; projects.

The beneficiaries are Bayelsa, Rivers, Cross River, Osun and Ondo State governments.

A breakdown of the money shows that Bayelsa got  N 38.4 billion, Cross River N18.4 billion, Ondo State N7.8 billion, Osun N 4.5 billion and River N78.9.

Promissory notes and bonds are debt instruments which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time, under specific terms and redeemable before maturity at a discount.

Gov Douye Diri gave the clarification amidst speculations that the state government was in receipt of the N38 billion in cash while giving financial update for November and December 2020.

Represented by his Technical Adviser on Treasury and Accounts, Timipre Seipulo, who explained that the debt instrument issued by the federal government has a tenor of four to five years maturity.

He said that the refund was structured in such a way that benefiting states will have to wait for four to five years before they can access the full amount of the refunds.

He explained that for states that want their funds, it has to be discounted and as such the N27 billion announced by the government is the discounted amount from the N38 billion.

Although the government did not disclose the details of the spread of the instruments in promissory notes and bonds, the discount amounted to 71 per cent of the N38.4 billion value.

It implies that the state forfeited 29 percent of the funds amounting to N11.4 bn

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