Oyo State Government 100 Billion Naira Bond: An effort in Illegality – Opatola Victor

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Oyo State Government 100 Billion Naira Bond: An effort in Illegality – Opatola Victor

Recently, the Oyo State Governement raised a Bond of 100 Billion Naira for the funding of the following projects: 1. Iseyin – Ogbomoso Road 2. Ibadan Airport Upgrade 3. Ibadan Dry Port and Ibadan Rail corridor 4. Ibadan Ring road.
It is of no doubt that the aim behind these projects are lofty and good intentioned; but the biting Legal question is that: Can Oyo State Governement raise a Bond for a Project not contained in the Budget or properly appropriated for under the Law?

Having perused through the Oyo State 2020 Appropriation Law and Looking at the relevant provisons of the Constitution, the decision to raise Bond to spend on the projects are Illegal.
Public money should be spent only according to the provisions and stipulation of the Law. The budget of every state is a Law on its own, passed by the Legislature. This ensures that legal control and public accountability are properly enforced.
When State Government raises bonds, or borrows funds, it is public money because it is the people that will still pay for it.
Section 120 to 129 of the 1999 Constitution of Nigeria provides for Powers and Control over public fund. This is found under Part II (House of Assembly of a State) of Chapter V (The Legislature) of the 1999 Constitution (as Amended).
Going by the above provisons, a State government cannot spend any money outside of the budget of the State. Any project not included in the State Appropriation Law cannot be funded by the State except through the stipulated procedure of the Law e.g through section 122(where the budget is not yet passed), 123 (contingency fund) or through supplementary Appropriation Law.

Section 120 of the Nigerian 1999 Constitution
Establishment of Consolidated Revenue Fund
(1) All revenues or other money raised or received by a State (not being revenues or other moneys payable under this Constitution or any Law of a House of Assembly into any other public fund of the State established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the State.
(2) No money shall be withdrawn from the Consolidated Revenue Fund of the State except to meet expenditure that is charged upon the Fund by this Constitution or where the issue of those moneys has been authorised by an Appropriation Law, Supplementary Appropriation Law or Law passed in pursuance of section 121 of this Constitution.
(3) No money shall be withdrawn from any public fund of the State, other than the Consolidated Revenue Fund of the State, unless the issue of those moneys has been authorised by a Law of the House of Assembly of the State.
(4) No money shall be withdrawn from the Consolidated Revenue Fund of the State or any other public fund of the State except in the manner prescribed by the House of Assembly.
Section 121 of the Nigerian 1999 Constitution
Authorisation of expenditure from Consolidated Revenue fund
(1) The Governor shall cause to be prepared and laid before the House of Assembly at any time before the commencement of each financial year estimates of the revenues and expenditure of the State for the next following financial year.
(2) The heads of expenditure contained in the estimates, other than expenditure charged upon the Consolidated Revenue Fund of the State by this Constitution, shall be included in a bill, to be known as an Appropriation Bill, providing for the issue from the Consolidated Revenue Fund of the State of the sums necessary to meet that expenditure and the appropriation of those sums for the purposes specified therein.
(3) Any amount standing to the credit of the judiciary in the Consolidated Revenue Fund of the State shall be paid directly to the heads of the courts concerned.
(4) If in respect of any financial year, it is found that –
(a) the amount appropriated by the Appropriation Law for any purpose is insufficient; or
(b) a need has arisen for expenditure for a purpose for which no amount has been appropriated by the Law, a supplementary estimate showing the sums required shall be laid before the House of Assembly and the heads of any such expenditure shall be included in a Supplementary Appropriation Bill.

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Section 122 of the Nigerian 1999 Constitution
Authorisation of expenditure in default of appropriations
If the Appropriation Bill in respect of any financial year has not been passed into Law by the beginning of the financial year, the Governor may authorise the withdrawal of moneys from the Consolidated Revenue Fund of the State for the purpose of meeting expenditure necessary to carry on the services of the government for a period not exceeding six months or until the coming into operation of the Law, whichever is the earlier:
Provided that the withdrawal in respect of any such period shall not exceed the amount authorised to be withdrawn from the Consolidated Revenue Fund of the State under the provisions of the Appropriation Law passed by the House of Assembly for the corresponding period in the immediately preceding financial year, being an amount proportionate to the total amount so authorised for the immediately preceding financial year.

Section 123 of the Nigerian 1999 Constitution
Contingencies Fund
(1) A House of Assembly may by Law make provisions for the establishment of a Contingencies Fund for the State and for authorising the Governor, if satisfied that there has arisen an urgent and unforeseen need for expenditure for which no other provision exists, to make advances from the Fund to meet that need.
(2) Where any advance is made in accordance with the provisions of this section, a Supplementary Estimate shall be presented and a Supplementary Appropriation Bill shall be introduced as soon as possible for the purpose of replacing the amount so advanced

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Going by the above, a borrowed fund and a bond raised for the State are all Public money to be paid into the the Consolidated account, see ANAMBRA STATE GOVERNMENT & ANOR v. OBIORA (2013) LPELR-CA/E/400/2008
The only conditions for withdrawal from the Consolidated account are those stipulated in section 120 of the 1999 Constituion (Supra).
Where it appears that any project to be carried out by a State is not expressly provided for in the State Budget, then no money can be charged to such project from the State consolidated account.

Can the fact that the State House of Assembly approved the Bond cure the defect?
The act approval of the State House of Assembly for the Bond to be raised cannot cure the defect because the two actions are different and distinct in Law.
The fact that the State Legislature approved the raising of the Bond is different from the need of the State House of Assembly to pass another appropriation bill to include such project in the budget. One does not cure or suffice for the other.

In conclusion and in the light of the above, I will strongly urge the Oyo State Government to re-trace its steps in Law and do the needful as required by the Constituion, by passing a supplementary Appropriation Law to include the projects not previously included so as to be able to use the raised Bond through the Consolidated account to fund them.

Opatola Victor Esq.
09041815408 , 07069687425
adeopatola@gmail.com

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