•Okorocha spends N12.5b on uncompleted schools, hospitals
•Ohakim spent N4.3b on ‘phoney projects’
•Government spends N375 million monthly, N1.5 billion yearly to service loan
Owelle Rocha Okorocha
A huge chunk of the N18.5 billion bond Imo State took from the capital market five years ago may have gone down the drain, apart from sums tied to projects abandoned at various stages of completion.
The current administration dismissed as phoney some of the projects the previous administration claimed to have spent part of the loan on. That has spewed a counter allegation.
What is not disputed, however, is that about N1.5 billion of tax payers’ money is spent yearly by the state government to service the loan, which was obtained from the capital market, where N375 million is deducted monthly at source from the federal allocation accruing to Imo.
Investigation by TheNiche showed that at least N12.5 billion of the loan has been used by the administration of Governor Rochas Okorocha on school and hospital projects, most of which are uncompleted.
Original purpose of loan
The amount represents 71.12 per cent of the total loan sum, which was initially intended to develop Oguta Wonder Lake and Oguta Lake Resort by the administration of former Governor Ikedi Ohakim.
But the Okorocha administration applied to the Securities and Exchange Commission (SEC) to change the original use of the money to build 305 primary schools in Owerri and one general hospital each in 26 councils.
Investment analysts say the bond should have been used for high income-yielding projects to generate revenue to service the loan without subjecting the state treasury to stress.
The SEC always advises that loans taken by state governments be ploughed into capital projects that can enhance revenue and generate returns to facilitate repayment.
This partly explains why the SEC monitors projects executed with such funds to ensure they are not frittered away.
Billions misappropriated
However, there are indications that the state government, past and present, frittered away significant part of the loan, triggering allegations and counter allegations.
The Ohakim administration spent N4.3 billion on projects which the Okorocha government described as phoney. Ohakim handed a balance of N13.3 billion to Okorocha.
Former Finance Commissioner, George Irechukwu, who served under Ohakim, said the N4.3 billion was spent to rehabilitate Oguta Lake Resort, drill about 27 boreholes and implement other undisclosed projects.
However, in Oguta Wonder Lake, where N390 million was allegedly spent, only a two-block bungalow and the perimeter fence were rehabilitated as of 2011 when Ohakim was voted out of office.
By the end of 2012, the Okorocha administration completed a civic centre at the resort.
Finance Commissioner, Chike Okafor, said “some of the projects they (Ohakim administration) claimed to have executed are water projects. But we discovered that some of the projects were financed with funds from the Millennium Development Goal (MDG) agency. There are about 17 of such water projects.
“MDG is an intervention agency. Its funds come separately, and the projects are also executed and monitored separately.”
SEC plans project inspection
Officials of the SEC may visit Owerri in the coming weeks to see how the bond money was utilised.
It does not seem that the Okorocha administration has managed any better the N13.3 billion it inherited from the Ohakim administration as most of the projects it executed with the money are uncompleted.
In 2012, the government applied to the SEC to change the use of the balance of N13.3 billion on projects other than those for which the loan was initially obtained.
The reason it gave was that the counterpart fund was not forthcoming as the investor withdrew from the project, doubting its potential to yield returns.
Compulsory debt servicing
Even as the projects remain largely uncompleted five years after the loan was obtained, the government has been servicing it with a deduction at source of N375 million monthly and N1.5 billion annually from its federal allocations.
With an irrevocable payment order that compels monthly deductions, the government has since 2009 been paying into a sinking fund from which investors get paid as and when due. The loan is expected to be fully repaid this year or next.
It could not be confirmed at press time whether the state has returned to the market to pick the balance N21.5 billion medium term loan.
In March, Okorocha scheduled a visit to the Nigerian Stock Exchange (NSE) to sensitise the market for the second tranche, but the visit did not take place.
Calls to the mobile telephone line of Okafor for comment were not answered and text messages not replied.
Government’s defence
But Okorocha’s spokesman, Sam Onwuemedo, maintained that the bond money was properly utilised on projects the people wanted.
He said the building of schools and hospitals for which the SEC approved the loan has been completed, and other projects are at 70 per cent completion.