Nigeria will share $2.1 billion to federal, state and local governments to reduce a growing backlog of debts and restructure short-term loans as Africa’s biggest oil producer suffers declining revenues, the presidency said on Tuesday.

Governors of Nigeria’s 36 states met President Muhammadu Buhari two weeks ago to request federal government support to offset a funding crisis amid debts including unpaid salaries totalling 658 billion naira.

Special adviser to the President Femi Adesina said, however, that measures to deal with a debt crisis plagueing the states did not include any drawing from the balance of $2.078 billion in the oil savings Excess Crude Account.

The finance ministry had said late on Monday that Nigeria would release 359.37 billion naira ($1.81 billion) of liquefied natural gas (LNG) revenues to help ease the debt backlog, while the accountant general said it would share out $1.7 billion from its oil savings pot, Excess Crude Account (ECA).

“The measures approved by President Buhari to deal with the problem of unpaid public sector salaries in many states are … the sharing of the $2.1 billion dividend paid … by the Nigeria Liquefied Natural Gas Company (NLNG),” Adesina said in a statement.

He said the central bank would offer interventions of between 250 and 300 billion naira to help the States clear backlog debt while the debt management office would restructure commercial loans of over 660 billion naira.

Central Bank Governor Godwin Emefiele, who attended the meeting, asked the states to submit their loan obligations by July 8 to enable the bank restructure them.

Nigeria splits its oil and gas revenues on a monthly basis but it received extra gas funds in June when the state-owned company Nigeria Liquefied Natural Gas Co remitted an additional $1.6 billion in tax to the government.

With state funds dwindling due to plummeting oil prices, several states have been borrowing in the domestic bond market and from banks to fund infrastructure projects. Oil sales account for about 70 percent of government revenues.

The ECA had a balance of $2.078 billion at the end of June. President Buhari said last month the treasury was “virtually empty”.

Source: Reuters