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2014 River State Budget Presented By Governor Amaechi To State Assembly

2014 BUDGET SPEECH BY HIS EXCELLENCY, THE GOVERNOR OF RIVERS STATE, RT. HON. CHIBUIKE ROTIMI AMAECHI, PRESENTED TO THE STATE HOUSE OF ASSEMBLY ON 7th JANUARY 2014

Protocols

The Rt. Hon Speaker, Deputy Speaker, Honourable members of the Rivers State House of Assembly, it gives us great joy to be able to present the appropriation bill for 2014, a year of sustained action. We are thankful that today has been made possible by the grace of God and your very kind support and encouragement. During our presentation of the 2013 Budget of the State to this great House on the 24th of December 2012, our position was that:

          i.            The 2013 Budget was to ensure the timely completion of all ongoing projects, as we do not intend to leave any project uncompleted within the tenure of this Administration. This is a commitment we promise to pursue to its conclusion as the Government is gradually coming to a close.  

        ii.            The Government has never been reckless in managing the resources of the state as we continue to make transparency and accountability our guiding principle. To this end, we have been very committed and disciplined in all our endeavors.

      iii.            We will always put the interest and the well being of the state first and above politics.

      iv.            We will continue to fulfill our electoral promises and meet citizen’s expectations even at this time of enormous political, economic and social challenges.

The preoccupation of the 2014 budget would therefore be to vigorously pursue the earnest completion of all on-going projects and open minimal windows for exigent and necessary ones which span must not exceed the tenure of this administration. This shall be our policy position in 2014 and 2015.

On behalf of the Rivers State Government, I would like to record our gratitude to Rivers people for supporting and defending the mandate given us in October 2007 to continue to lead the state. In return we shall unwavering in our determination to deliver on every promise made to you to deliver good governance and sustainable development. Neither our personal comfort nor any threat to our persons would us from reaching our collective goals as Rivers people. In the midst of these provocations we will fulfill the promises of our mandate, and make our people proud.

In the light of this, the 2014 budget will not accommodate new projects. This is in the light of current realities and out of a resolve to guarantee efficient service delivery. The economic realities arising from already dwindling revenues since mid 2013 suggest a need for prudence and good sense this year. Government will continue to demonstrate good sense of management by making more money available to finance the ongoing projects for completion next year.

In the process of formulating this budget, we kept with our tradition of consulting widely with all relevant stakeholders in the state. These consultations have helped us remain focused on our commitment to set goals and targets. Policy Makers and civil servants from all MDA’s with the Ministry of Budget and Economic Planning worked together to produce this proposal. The entire approach was participatory.

 
2013 ECONOMIC PERFORMANCE AND 2014 PROSPECT
As the state with the second largest domestic economy in the country, the performance of our budget is highly predicated on the Nigeria macro-economic environment and global economic developments particularly developments in the international oil market. In 2013, the country lost substantial revenue because of oil theft and pipeline vandalisation. Average production has been 2.3mbpd against 2.5mbpd projected in the 2013 budget. This affected revenue inflows. The projected budget revenues were not realized due this significant production shortfall. With politics dominating in 2014, we are less likely to make progress in tracking oil theft. The expected dwindling of oil revenue is likely to affect the 2014 FAAC allocation to the states, as the nation may not meet its production targets in 2014.
 
Despite the aforementioned challenges the country was facing which negatively affected the nation’s revenue base, the Nigerian economy is rated very strong. According to IMF, real GDP growth is projected at 7.4 percent in 2014, which is higher than 6.2 percent projection for 2013. Higher oil prices at the international oil market expected in 2014, may indicate strong economic prospect for Nigeria. The country’s oil production is projected at 2.3883mbpd in 2014, against 2.5260mbpd in 2013 a drop of 5.54 per cent with a benchmark price of $77.5 per barrel. Also, forecast for inflation shows that the rate will remain within single digit through to 2014, despite the pre- election spending that may threaten price stability. Therefore Economic outlook for 2014 appears mixed. Tightening of monetary conditions is likely in 2014.
 
As a key subnational economy, we are very mindful of these challenges. Our budget estimates is based on a benchmark price of $67.5 to create a safety net of  $10. This is because of the inconsistent nature of the international oil market prices to enable us accommodate any shocks resulting from possible fluctuation.  We expect our FAAC and IGR revenue profile in 2014 to be realistic based on our modest projections and the reforms and improvements going on in the Board of Internal Revenue (BIR). These strategies coupled with improvements in the implementation of policies and programmes in 2014 are designed to handle these eventualities.

Therefore our working assumptions shall include a benchmark Oil Price of $67.5 per barrel; an estimated Oil Production of 2.3883 million barrels per day; Average Exchange Rate of N160 per dollar; Real GDP Growth Rate of 7.4 percent and single digit inflation rate that does not significantly deviate from the 2013 levels.

REVIEW OF THE 2013 BUDGET
Revenue Performance (January-September 2013)
 The 2013 Budget of N490.3 billion was to be funded by Federation Account Receipt of N245 billion; Year 2012 Closing Balance of N28.3 billion and Proposed Bond/Loan of N120billion plus an IGR of N80billion. The N245billion Federation Account budget Revenue for the 2013 has the following components: Statutory Allocation (N38billion); 13% Mineral Fund N139billion); VAT (N15billion); Excess Crude Oil Fund/Arrears (N21billion); Fuel Subsidy Revenue (N15.25Billion); Others (N16.75billion)
As at the end of third quarter of this year ending September, we have realized N206.991 billion (84.48%) of the year’s Federation Account Budget. We have also actualized N61.142 billion (76.43% of the year’s IGR Budget as against N80 billion proposed for the year. This is shown in the table as follows:
 
TABLE 1: 2013 REVENUE BUDGET PERFORMANCES
S/N
Revenue Components
Revenue Budget
Revenue Actuals
Percentage Performance
 
Statutory Allocation
N38b
N32.134b
84.56
 
Mineral Fund (13%)
N139b
N99.797b
79.80
 
VAT
N15b
N11.138b
74.25
 
Excess Crude Oil Fund/Arrears
N21b
N12.748b
60.70
 
Fuel Subsidy Revenue
N15.25b
N10.920
71.60
 
Others(Refund from Akwa Ibom and by NNPC)
N16.75b
N8.220b
49.07
 
Augmentation

N32.032b
 
 
Total Federation Account
N245b
N206.991b
84.48
 
IGR
N80b
N61.142b
76.43
 
Total Revenue Aggregate
N325b
N268.133b
82.50
 
 
 
Further analysis of the above shows the following:
·         Overall revenue performance was 82.5 percent for IGR and FAAC put together (N268.133billion) as at September 2013 against N325 Billion estimated for the entire year.
·         On FAAC budget of (N245billion) for 2013, we have achieved as at September 84.48 percent performance while IGR (N80billion) which recorded (N61.142billionn) as actual, has 76.43 percent performance within the same period.On the aggregate, as at the end of the third quarter, 2013, we are only 17.5 percent short of achieving our 2013 revenue budget. This achievement is attributed to our modest assumptions in the preparation of the budget and the strengthening of our IGR machinery. For example we benchmarked our revenue budget on $65pd against Federal Government of $75pd in 2013.
 

2013 BUDGET EXPENDITURE PROFILE AS AT THIRD QUARTER (JANUARY-SEPTEMBER)

Expenditure
The N490.3 billion aggregate expenditure proposed for 2013 fiscal year was made up of a Total Recurrent Expenditure of N177.924billion and a Capital Expenditure of N312.396 billion. Combined actual total expenditure (recurrent plus capital) is (N314.871billion) for the period ending September showing a performance rate of 64.22 percent.
 
Recurrent Expenditure
As at the end of third quarter of the year under review, we have spent a total of N98.262 billion as recurrent expenditure. This represents 55.23% of the estimated N177.924 billion) to be spent as recurrent by the State for the year. Salaries and pension benefits are paid as at when due and our overheads are released to MDAs promptly and as budgeted.
 
Capital Expenditure
Capital expenditure for 2013 is estimated at N312.396 billion. The Capital projection for 2013 represents 63.71 percent of the total Budget for the year under review. Capital expenditure releases to MDAs, as at third quarter 2013 is N216.609 billion. This shows a capital budget performance of 69.341 percent as at September this year.
 
 
Highlights of Our achievements

 We cannot elaborate all we have been able to achieve in the six years of this Administration. Last year‘s budget was designed to sustain and consolidate our earlier projects and programmes. As our administration begins to prepare its hand over notes, our priority is to complete our ongoing projects in works, power, health, education transports and water amongst others. It is gratifying to note we have recorded favourable strides in this regard, although we haven’t been without our challenges.

AGRICULTURE
Things have stabilized in this sector with the SIAT Firm-Risonpalm project and Rivers Songhai Initiatives coasting on. In year under review however, we projected N4billion as capital expenditure for agriculture, but as the end of the third quarter, N0.941b expenditure was made, representing a percentage performance of 23.53 percent.
Two of our key projects in this sector, the Buguma fish farm, banana farm came under immense pressure arising from the current political crisis but we have regained traction and are meeting our expectations of job creation and food security for our people. In the same way government has made progress in the Etche farming families project, which would provide jobs for over 300 families. Work is progressing well on the Andoni fish farm project while the ground preparation is on at the Opobo fish farm projects. So far we are pleased with the progress report on these projects. Other major projects under agriculture were implemented under RSSDA.
 
WORKS AND TRANSPORT
 Roads And Transport subsectors continued to receive priority attention in 2013. The Mono Rail construction work has continued to progress at a considerable pace. We are committed to completing this project to give our people  value for money and our city a deserving landmark. The project is novel but one that excites us because of its long term prospects.

Government completed most of the ongoing road project  in this year and some will be completed next year.The commitment to provide all communities with accessible quality roads and infrastructure all year round led to the execution of these projects. They include: construction of Ogoni-Andoni-Opobo road; Oduoha-Ogbakiri-Rumuolumeni – Eagle Island road; Trans Kalabari Highway and bridges;) Bridge construction (Woji road); Dualization Airport – Isiokpo/Omerelu road; Rumokwuta – Choba East West road; Reconstruction (Kpopie –Bodo road); Recanalization (Abonnema Wharf – Eagle Island) as well as the reconstruction of the Trans Amadi road amongst others. Significant maintenance work was carried out on roads in D/Line and Town as well as parts some parts of Diobu.

 
 
POWER AND ENERGY
 The N25billion spent on power this year was to consolidate and deepen our achievements in this subsector. Already this is yielding results with us recording between 18 to almost 24-hour power supply in towns like Buguma, Ndele, Mpogu and Abua. Many areas of Port Harcourt have also reported improved power supply. Although we still have not met our desired goals, we are pleased to note that our efforts in this sector are yielding modest gains.
 
EDUCATION
Our projects in education speak for itself. Needless to highlight all we have done and are currently doing in this subsector. We can all attest to that. In the period under review, Ministry of Education received N20.236 billion out of N47 billion budgeted. We made significant progress at rebuilding our Schools infrastructure. Our yearly scholarship programme continues to be sustained (N0.6billion estimated and N0.500 spent). We also projectedN300million to be spent at Ignatius Ajuru University, this has been overspent (N500m); UST was provided N300million in the budget but actual release as at September is N200million. Our free primary and secondary education is on course. Nne Krukubo Model Secondary School at Elem became operational since January with the conclusion of admissions. We have also concluded the construction of our vocational Training Institute to address the skill gaps among our youth, and commenced the process of recruiting students and personnel. Our German partners have long since arrived and are finalizing all details with regards to the training of our young people. Our investments in education continue to yield amazing results, with children from our public schools bringing back laurels from national competitions and improvements in our performance at external examinations. Now with the employment of 13,201 teachers, the first of its kind in our nation’s history at both state and national level, it is certain that we can only expect even better results from this sector.
 
HEALTH
In 2013, health care continued to receive our priority attention as it has been from the inception of this administration. Again the focus of the budget was on completing ongoing projects. We sustained and improved on our efforts to curbing the menace of malaria and HIV (N100million was provided in the budget, N112.5million already spent as at September, 2013). All our health projects and programmes scattered around the state were improved upon and sustained. N10billion was earmarked for Ministry of Health. Three new hospitals were earmarked to be built in the year under review and construction has begun in Etche. The mother and child hospital is 50 per-cent completed as well as 40 additional primary health care centres. The hospital in RSUST has also been equipped and furnished and ready for use. Expectedly patients will soon begin to use the hospital once all administrative and staffing issues are concluded.
 
ENVRONMENTAL SECTOR
The amount proposed for capital expenditure in 2013 was N37.60billion. This includes allocation to Waste Management Agency (N3billion and N4.892billion spent); Ministry of Land and Survey (N800 million); Urban Development spent N1.109billion out of a total allocation of N1.8billion and Ministry of Housing (N2.986billion budgeted but only N1.581billion appropriated); Water (N20.050billion proposed and N1.502billion appropriated); Ministry of Environment (N3billion earmarked N0.672billion spent). In the year under review, the reform programmes initiated in urban development, Land and Waste Management continued to yield positive results.
2014 BUDGET THRUSTS

The 2014 Budget is formulated to achieve the Agenda of this Administration with the overall objective of prospering the state and promoting the well being of the people: The 2014 budget was prepared and will be implemented based on the following policy thrust and assumptions.

·         Commitment to aggressive and sustainable Internal Revenue drive and moving towards financing recurrent spending from internally generated revenue;

·         Completion of  all critical on-going capital projects that are central to the vision of this administration;

·         Open a few widows for exigent and necessary ones which span must not exceed the tenure of this administration.

·         Improve functionality and efficiency of the healthcare system in the state

·         Improve the quality of education;
·          Building agriculture as the main driver of our subnational economic growth and job creation
·         Improvement in physical infrastructure; roads, transport, water supply     and power;

·         Maintenance of efficient, effective and well-motivated Public Service for enhanced productivity;

·         Sustenance of good governance through budget discipline, probity and accountability in the utilization of public fund.
·         Reforming and maintaining a robust public financial management structure, system and processes that brings about efficiency and effectiveness of use of resources.
·         Improving the business environment.
 
Rt. Honourable Speaker, with due consultations with relevant stakeholders within and outside the public service, we are proposing an aggregate Budget of N485.524 billion for the year 2014. This is N4.797 billion (0.98%) lower than the 2013 budget of N490.320 billion. The focus of the budget will be on completing ongoing projects in Health, Education, Roads, Transport, power, Water and Agriculture and other critical infrastructure. Capital and Recurrent provisions are N247.573billion and N237.950billion respectively. Our Capital to Recurrent ratio is 76:24 for the financial year 2014 as against 70:30 achieved as at September, in this outgoing year.
 
FINANCING THE BUDGET
The Proposed 2014 Budget of N485.524 billion will be funded by: FAAC Allocation of N241.243billion; IGR of N92.420billion; Prior year balance of N10.717billion; proposed loans N100billion; credit from World Bank- N6.983billion, EU grant of N0.660 billion and sale of assets of N33.5billion

TABLE 3:2014 DETAILED FUNDING PROJECTIONS

S/No.

Fund Source
Amount (N billion)

Percentage (%) of the total budget

1 Statutory Allocation
42.846

8.82

2 Mineral fund (13%)
130.105

26.79

3 Excess crude oil fund/arrears
21.852

4.5

4 VAT
18.998

3.9

5 Fuel subsidy
15.800

3.25

6 Others-refund from Akwa Ibom
6.128

1.26

7 Others- refund by NNPC
5.514

1.13

8 Total FAAC
241.243

49.68

9 Capital receipts-EU grants for SEEFOR
0.660

0.14

10 IGR
91.424

 

11 Miscellaneous
1.476

Total IGR
92.920

19.04

12 Sales of assets
33.500

6.90

13 Prior year balances
10.717

2.21

14 Proposed loans
100.000

20.60

15 Credit from the world bank-SEEFOR/ministry of water resources
6.984

1.44

 

 
 

TOTAL AVAILABLE TO FUND THE BUDGET
N485.524

100

 Recurrent Expenditure

A total sum of N117.09 billion has been earmarked for the recurrent expenditure of government in the 2014 against N177.924 billion for 2013. By this proposal, recurrent expenditure is 24.12 percent of the total budget. With this, Government expects to meet salary, overhead and debt service obligations: Out of the amount proposed for recurrent expenditure, N66.96 billion is for salaries. Overhead is put at N23.34 billion.
 
Capital Expenditure proposal for 2014 is N368.43 billion against N312.396billion in 2013 and represents 75.88 per cent of the total budget.
 The fund allocation to key MDAs across the sectors as follows:

ECONOMIC SECTOR

This sector is of priority to this administration. Our objective is to deliver sustainable infrastructure to drive economic growth. Our commitment to our ongoing agricultural projects will continue, being our hope of generating employment. It is expected that most of road projects will be completed in 2014. The prospect of our 24HR power supply target looks achievable in 2014 considering the level of investments so far and the new investments in  planned for this year. We are continuing with the network upgrading through provision of 20 Nos injector substation/33∝11kv OHL, 280 distribution – Transformers ∝TDC Rumuosi transmission substation. Also we will continue the construction of New Afam 180mw GTS phase II. Completion of construction of 6 injector substations at various location (6x15MVA) 33/1kv, New Afam 18mw Gas Turbine power station, Transmission line at 132KVA.

 We will be finalizing construction of the first phase of the monorail project before the end of this coming fiscal year.
Below is the highlight of the fund allocation to Sub- sectors of the Economic Sector:
 
S/No.

MDAs
Amount (N billions)

1 Min of Works
60.000

2 Min. of Power
7.000

3 Min. of Agriculture
2.000

4 Min. of Transport
10.000

5 Ministry of Commerce and Industry
0.400

6 Min. of Energy and Natural Resources
0.150
 
 

SOCIAL SERVICE SECTOR

Education and Healthcare services have remained cardinal programmes of our Administration. This government is raising the standard of education and healthcare in the State. Significant resources will continue to be provided to improve and sustain these efforts. All outstanding projects here will be completed, in the area of furnishing of 2 model secondary schools, procurement of ICT equipment in school furnishing of 250 model primary school, completing of 100 new schools which was started in 2009 among others. This will also include amongst others: construction of Chief A.K. Hart hospital; upgrading of 3 zonal hospitals; and construction of 10 new health centres among others.  The operation of free medical services to all residents of the state will continue to be our focus.

In view of our commitment to gender equality and youth development, we shall continue to provide the required attention and support to strengthening existing gender based programmes, youth employment and empowerment programmes in the State.   Sports development in the state that witnessed resurgence in the last few years will have to be maintained including the infrastructure.

 
S/No.

MDAs
Amount (N billions)

1 Min. of Education
30.000

2 Min. of Health
4.000

3 Min. of Sports
8.995

4 Min. of Information
1.600

5 Min. of Women Affairs
0.450

6 Min. of Social Welfare and Rehabilitation
0.600

7 Min. of Employment Generation and Empowerment
0.500

8 Min. of Local Govt. Affairs
0.100

9 Min. of Chieftaincy and Community Affairs
0.120

10 Min of Youth Development
0.200

 

 
 

Environmental Sector

This Administration shall maintain a greener and cleaner environment across the state. Considerable attention is being given to Port Harcourt and its surrounding areas. The de-flooding and drainage clearing and maintenance project will continue to receive our attention in 2014. Housing and water projects will be pursued with vigour. We expect to conclude our financing arrangements with the World Bank this year for the water project.
 
 S/No.

MDAs
Amount (N billions)

1 Min. of Environment
1.300

2 Min. of Housing
1.500

3 Min. of Urban Development
1.100 

4 Waste Management Agency
6.500

5 Min. of lands and Survey
0.600

6 Min. of Water Resources
8.000

7 R/S Urban Beautification, Parks and Garden
0.080

General Administration 

We have made adequate provision in the 2014 Budget for the running, proper functioning and maintenance of all government institutions in the state. This is especially so because of the critical role of public institutions in guaranteeing sustainable development. Capital expenditures have been proposed for the functioning of legislative activities, the judiciary, and the public expenditure management systems in the state. It is our resolve to facilitate efficiency in human resources management in the public service and to adopt global best practice in auditing, public procurement, budgeting and financial management to promote accountability and transparency. The State Integrated Financial management Information System (SIFMIS), a World Bank supported initiative to link the public expenditure management systems leveraging on ICT will be pursued with vigour.

                                                                                                                           

S/No.

MDAs
Amount (N billions)

1 Min of Budget and Economic Planning
0.400

2 Min. of Finance
0.400

3 Auditor-General (State)
0.080

4 Head of Service
1.000

5 Min of Justice
0.400

6 Government House
6.500

7 Office of the deputy Governor
0.450

8 ICT Dept
0.400

9 Bureau on Public Procurement
1.000

10 Greater Port Harcourt City Authority
20.000

11 R/S Sustainable Development Agency
10.000

12 Rivers state House of Assembly
6.100

13 Secretary to the State Government
11.000

Conclusion

 Mr. Speaker, distinguished members, our administration remains indebted to you and grateful for all for your support, encouragement and good sense of judgment particularly at this great moment of our political history. We urge you to sustain the tempo in the interest of our people. Posterity will judge your stance fairly even as today you have become hallmarks and bastions of our democracy. We at the Executive, reaffirm the commitment of this administration to our people and our stand for justice and equity and fair play. We are grateful also to all who made this Budget Presentation possible. May I therefore respectfully lay before the 2014 Budget proposal before this respected House for consideration and passage into law?

 I wish you all God’s blessings and a prosperous New Year in advance.

 Thank you Mr. Speaker.

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