PROTOCOLS
Honourable Speaker, another year has rolled by and it is my honour and pleasure to present the 2013 budget proposal to this esteemed House. While presenting the 2012 Budget of the State to honourable members on the 20th of December 2011, I did say that the Budget was to ensure the timely completion of all ongoing projects. This was because this administration does not intend to leave any project uncompleted within its tenure, and we have not deviated from that commitment. As I promised, transparency and accountability remain our guiding principles. We reckon clearly that this administration must ensure disciplined spending for efficient use of resources and service delivery. I am glad to report that we have made progress in this regard. Infrastructure and security have improved and we have laid a sustainable foundation for the transformation of our dear state.

This budget proposal is the product of extensive consultations with key stakeholders and will further translate this Administration’s agenda into concrete actions for the people in 2013. Today, in the face of critical resource constraints, the defining moment of our work is in actualizing our promises.

As is the tradition of this administration, today, we give account of the progress and challenges of our policies and programmes. While ours is work in progress, we have recorded significant milestones worthy of note.  We have impacted on the critical sectors of the economy with much work done in education, health, power, agriculture and transportation infrastructure. Our policies are designed to attract investments and create employment.

We face unique challenges as a people, but we are determined to make a break with the past and begin to chart a new path, going forward. We will continue to fulfill our electoral promises and meet citizens’ expectations at a time of enormous economic and social challenges.

2013 ECONOMIC OUTLOOK

The seeming fragility of the global economy in this current year continues to threaten the performance of the Nigerian economy and its sub-national economies. However, second quarter GDP growth in real terms was impressive with a growth of 6.25% compared to 5.4% forecast for sub-Saharan Africa.  This economic growth was mainly driven by activities in the non-oil sector.  However, the threat still remains and this underscores the need to be modest on our budget assumptions.
Since the beginning of the year, report indicates increased inflationary pressure. Inflation rate as at December 21 stood at 12.9 percent. The lag effects of the partial removal of subsidy, the security situation in the Northern part of the country and the floods that ravaged some parts of the country caused food inflation rates to rise higher than projected. Also, increase in electricity tariff and the weakened Naira are major contributors of the inflationary pressures. Prices of goods and services may continue to move upward because of these challenging situations.
The performance of our budget is predicated on the Nigerian macro-economic environment. As a sub-national economy, the international oil market as well as domestic oil production, as always, will be crucial in the year 2013.  The Federal Government will have to continue with its   programme of fiscal discipline and prudent monetary policy in order to improve the macro-economic environment of the country, which will have important effects in the sub-national economies in the coming year.
Oil production in 2013 is estimated at 2.5 million barrel per day (mbpd) as against this current year’s 2.48mbpd with a benchmark price of $75 per barrel. Our budget estimates are based on a benchmark price of $65 per barrel to create a safety net of $19 in view of the instability and the volatile nature of the international oil market. Exchange rate is predicated on N157 to a dollar.

Notwithstanding the envisaged challenges ahead, we remain hopeful that our sub-national economy will continue to improve in 2013 with our policies and programmes in agriculture and in the other critical sectors that drive economic growth.

We expect our revenue profile in 2013 to perform better as our Federation Account Revenue will likely remain sustainable based on our modest estimates and the deliberate reforms and improvements going on in the Board of Internal Revenue (BIR). Our business environment will become more attractive to investors in 2013 as we continue to improve on security, maintenance of law and order and power supply. While encouraging big time investors, our determination to improve the local economy will receive a major boost in 2013 with the creation and launching of the N5 billion State Equity/Enterprise Fund before the end of the first quarter of 2013. Building on the German model, the idea is to improve access to credit by medium scale entrepreneurs and those graduating from the micro levels.

REVIEW OF THE 2012 BUDGET

Revenue Performance

Honourable Speaker, the 2012 Budget of N438 billion was proposed to be funded by Federation Account  (FAAC) Receipts of N261 billion; Year 2011 Closing Balance of N12 billion, Proposed Bond/Loans of N100 billion and IGR of N65 billion. The N261billion Federation Account Revenue proposed for the 2012 Budget was made up of the following: Statutory Allocation (N55billion); 13% Mineral Fund N165 billion); Excess Crude Oil Fund/Arrears (N3billion); Fuel Subsidy Revenue (N11 Billion); Others(N12 billion)

As at November this year we have actualized N227.58 billion out of the N261 billion expected from the Federation Account for the year.  This is 87.19% achievement of the FAAC receipts projection for the entire year 2012. We have also recorded 107.06% achievement in IGR having realized N69.59 billion as against N65 billion IGR receipts proposed for the year.  Aggregate revenue (FAAC & IGR) achieved by the end of November 2012 stood at N297.17 billion out of a projected total of N326 billion giving us an aggregate revenue achievement of 91.16% for the period under review.
The revenue achievement is not unconnected, among other things, with our modest assumptions in the preparation of the budget and the strengthening of the State’s IGR machinery. For example, we benchmarked our revenue budget on $60 per barrel against Federal Government’s benchmark of $70 per barrel in 2012.
A breakdown of the  revenue targets achieved by the end of November 2012 is as shown here under:

o Statutory Allocation                                        N34.21 billion

o Mineral Fund (13%)                                          N115.08 billion

o VAT                                                                        N11.10 billion

o Excess Crude Oil Fund/Arrears                 N11.60 billion

o Fuel Subsidy Revenue                                  N10.17  billion

o Others                                                                  N45.42 billion
Total Federation Account                              N227.58 billion

o IGR                                                                      N69.59 billion
2012 Budget Expenditure Profile

Expenditure

The N438 billion aggregate expenditure proposed for 2012 fiscal year was made up of a total Recurrent Expenditure of N114.26 billion and a Capital Expenditure of N323.75 billion. Combined actual total expenditure (Recurrent plus Capital) is (N310.24 billion) for the period ending November, 2012.

Recurrent Expenditure

We have so far spent a total of N93.54 billion on Recurrent Expenditure by the end of November this year. This represents 81.87% of our total Recurrent Expenditure of  N114.26 estimated for the year. Salaries and pension benefits were paid as at when due and our Overheads were released to MDAs promptly and as budgeted. We have kept Recurrent Expenditure under check as a demonstration of strong financial discipline and good budgeting assumptions.

Capital Expenditure

Capital expenditure for 2012 was estimated at N323.75 billion. The Capital projection for 2012 amounted to 73.92% of the total Budget estimates for the year 2012. Capital expenditure releases to MDAs as at November 2012 showed that we have so far spent N216.70 billion which is 66.93% of the total Capital Appropriation of N323.75 billion projected for the whole year.
The sectorial performance is as highlighted below.

Sectoral/MDAs Performance (Capital Expenditure)

Capital estimates to some critical sectors in 2012 budget are as follows: Economic Sector N99.40 billion; Social Sector N100.05 billion; and Environmental Sector N17.91 billion

ECONOMIC SECTOR

In this sector, out of a total budget of N99.40 billion estimated for capital expenditure for the year, N57.79 billion has so far been spent by the MDAs as at November ending this year. This represents 58.14% of the budgeted capital expenditure for the sector. Below are some highlights of performance of its various sub sectors.
AGRICULTURE

Agriculture remains our brightest hope for employment generation and a key driver of a sustainable economic growth and improving rural life. In 2012, we made significant progress in our agricultural projects. We have put in place a 15 year contract for the operation and management of the Agro Industrial Farms/Villages by LR Group, an Israeli company. Our partnership with SIAT Nigeria Limited to revamp and manage Risonpalm recorded huge progress in this year, so also is our investment in the Songhai Farms. These investments and their value chains will have capacity to create over 10,000 jobs when fully operational.
 ROADS AND TRANSPORT

With regards to our rail transport, the Monorail construction continued unhindered in the year 2012. All components of the project, design, installation and construction were on schedule during the year.  Installation  of the track elements and beam has already commenced on the  UTC – Lagos Bus Stop axis of the project while construction of the monorail stations at UTC Junction and Azikiwe Bus Stop is on going. Various road constructions are ongoing across the State. In 2012, our roads continued to witness improvements despite the huge challenge of high frequency of rain.  Government completed most of the ongoing project works in this year and some will be completed next year. There is massive rehabilitation and construction of roads in Port Harcourt metropolis. To demonstrate this commitment in 2012, we provided N60 billion with an actual appropriation of N46.32 billion as at the end November.
POWER AND ENERGY

We are fast-tracking the implementation of our power project to guarantee steady power supply in the State. This honourable Assembly graciously approved the resolution on issuance of Guarantee for the Acquisition of Port Harcourt Power Distribution Company by 4-Power Consortium LTD. We are also building 28 new injection substations in the state which will help stabilize the distribution network and bring power to our people. Our commitment to build a refinery at Ikpokiri remains unshaken. N25.16 billion was earmarked for this sub sector which was also fully  appropriated.
SOCIAL SECTOR

The State planned to appropriate N100.10 billion for 2012. So far, the sum of N48.56 billion has been spent on this sector. Key Sub sectoral highlights include:

EDUCATION

In the year under review, this sub sector received N18.25billion out of N64 billion budgeted. We made significant progress at rebuilding our Schools infrastructure. Education remains free at the primary and secondary levels. We continued with the construction of 24 model secondary schools.  Nne Krukrubo Model Secondary School at Eleme is concluding its admission process and normal academic activities is commencing in January 2013. We are vigorously pursuing the construction of the remaining Model Primary Schools earmarked for completion. We sustained our yearly overseas and local scholarship awards. We have also improved facilities at the Ignatius Ajuru University of Education and the Rivers State University of Science and Technology despite challenging situations in the institutions.
HEALTH

The main focus of 2012 budget for health was on completing ongoing projects. We sustained and improved on our efforts to curbing the menace of malaria and HIV. We have started the renovation of major hospitals in the three Senatorial Zones to serve as referrals for the Model Health Centers. Our effort was further rewarded as the Braithwaite Memorial Specialist Hospital (BMSH) is now on the map of accredited hospitals in West Africa. In 2012, we started full implementation of our Free Medical Programme for all persons residing in the State. We also signed a Memorandum of Understanding (MoU) with a foreign firm to expand the state owned Auto –Disable- Syringe factory to produce one billion syringes instead of the current 160 million annually. N18 billion was earmarked N1.93billion has been spent as at November 2012.

ENVIRONMENTAL SECTOR

The sum of N17.91 billion was budgeted for this sector with N13.16 billion spent. Government has initiated reforms in waste management aimed at giving the State a healthy and clean environment, the result of which will begin to show soon.
During the period under review, government spent N4.88 billion to fund the Rivers State Environmental Sanitation Authority; Ministry of Lands and Survey received N3.84 billion; Urban Development spent N3.10 billion while the Ministry of Housing spent N430 million. For property and land related issues, we will remain true to our commitment that duly signed land titles and Certificate of Occupancy on land in the State will be released within 30 days after submission. Already, a One –Stop- Shop has been opened by the Ministry of Urban Development to simplify plan assessment and approval processes.

On the whole, our hope in 2013 is to improve the performance ratios in the various sectors of our economy.
KEY POLICY THRUST FOR 2013

Honourable Speaker, the 2013 budget will be implemented based on the following policy assumptions and guidelines.

* Balancing the budget structure to ensure that Recurrent spending is financed from Internally Generated Revenue (IGR) and heading towards achieving a ratio of 30%:70% for Recurrent to Capital Expenditure. With the reengineering of the Board of Internal Revenue (BIR), the average monthly revenue of N6.5 billion in this current year is expected to improve to a minimum of N7.5 billion per month in 2013. At full capacity we expect the 2013 monthly Recurrent Expenditure items of Salaries, Overheads & Monthly Pensions currently averaging N8.5billion to be funded from IGR

• Completing ongoing projects in the critical sectors of the economy

• Building agriculture as the main driver of our subnational economic growth and job creation
• Reforming and maintaining a robust public financial management structure, system and processes that brings about efficiency and effectiveness of use of our resources.

• sustain the promotion of Public Private Partnership (PPP) to accelerate development and implementation of projects
• Improving capacity of public servants to enhance efficiency and ensure good governances and service delivery

• Improving security and maintenance of law and order
• Improving the business environment.
THE 2013 BUDGET

Honourable Speaker, as already emphasized, Agriculture is expected to provide the lead in driving economic growth and providing job opportunities. We will continue to manage our sub-national economy in such a way to playing a leading role in the Nigerian economy. We are the second largest sub-national economy in the country and the nation’s leading producer of oil and gas. In 2013, our commitment to the critical sectors that drive and sustain economic growth (power, roads and transport, education and health) will continue to remain a topmost priority as well as improve governance. Sound regulatory framework will be put in place to ensure best practice and sustainability.
Honourable Speaker, with the effort and inputs from all stakeholders, we are proposing an aggregate Budget of N490.32 billion for the year 2013. The proposed budget is N52.32 billion higher than N438 billion Appropriation of the out-going fiscal year. This translates to a 11.95% increase in the budget volume for 2013. This proposed figure was reached after a careful consideration of project submissions, options and factors that are needed to achieve our developmental targets in view of the challenges facing us as a State.  We took pains and consulted broadly with relevant stakeholders, bureaucrats and experts during its preparation. We are committed to ensuring that no project is left uncompleted in the life of this Administration.

FINANCING THE BUDGET

The Proposed 2013 Budget of N490.32 billion is expected to be funded by: Statutory Allocation (FAAC) of N245 billion; IGR including Social Levy of N80 billion; Prior year balance of N48.32 billion; Bond proceeds of  N100 billion & World Bank/African Development Bank (AfDB) Credit of N17 billion.

EXPENDITURES

Capital Expenditure proposal for 2013 is N314.30 billion as against N323.70 billion in 2012. Proposed Recurrent spending is N176.02 billion as against N114.25 billion in 2012. These proposed expenditures show a sharp increase of 54.06% in Recurrent Expenditure and a decline 2.92% in Capital Expenditure compared to the 2012 Budget respectively. Capital Expenditure projection for 2013 is 64.10% of the total budget while Recurrent Expenditure is 35.90% of the budget.
We had made provisions under the Recurrent Expenditure window for new recruitments including the hiring of additional 13,000 teachers to strengthen our education sub sector.  Adequate provisions were equally made for the Monthly Pension/Contributory Pension Scheme, bond issuance related costs and loan repayment in 2013. These provisions totaling in all N92.19 billion is responsible for the obvious increase in the proposed Recurrent Expenditure for 2013.
We are hopeful, Honourable Speaker, to approach the capital market in the first quarter of 2013 and conclude our first Bond issuance for N100 billion. It is necessary to emphasize that the Bond proceeds would be applied only on specific projects as outlined in the Bond documents. These would include:
• The Greater Port- Harcourt M-10 Highway -a 10km road consisting of five bridges linking the New City from the International Airport to Onne Seaport. This is to facilitate movement of goods and services from the Airport to Seaport, provide connectivity between the Old and The New City, decongest the Old City of traffic and improve access to Airport, the New City and Onne Seaport
• The construction of M-1 Highway from UTC Junction to the International Airport
• The new Rivers State University of Science & Technology (RSUST) Campus Project to develop a world class academic institution in the State

• The part funding of the Monorail project from UTC to Waterlines Junction- a distance of about 3.9km
• Funding of priority roads in Greater Port Harcourt and internal township services (sewage etc)
BREAKDOWN OF CAPITAL BUDGET:
Economic Sector                                           N93.09 billion
• Works                                                               N65 billion
• Power                                                               N15 billion
• Transport                                                        N8.5 billion
• Agriculture                                                     N4.03 billion
• Commerce & Industry.                              N400 million
• Energy and Natural Resources               N160 million

Social Sector                                                      N64.50 billion
• Education                                                         N47.81 billion
• Health                                                                 N10.23 billion
• Sports                                                                 N3.04 billion
• Information                                                      N1.2 billion
• Women Affairs                                                 N600 million
• Culture and Tourism                                     N1.12 billion
• Social Welfare and Rehabilitation            N500 million

ENVIRONMENTAL SECTOR

Capital Expenditure proposal for this sector is N37.60 billion with allocations as follows: Housing (N3 billion); Ministry of Environment (N3 billion); Water Resources (N25.5 billion); Lands and Survey (N800 million); Urban Development (N1.8 billion);Housing and Property Development Authority (N200 million) Waste Management Agency (N3 billion); Environmental Protection Agency (N200 million );Urban Beautification, Parks And Gardens (N100 million)
Honourable Speaker, permit me to provide some explanations in the allocations to key sectors. A Detailed breakdown of the Budget will be provided by the Honourable Commissioner for Budget and Economic Planning at a later date.

HEALTH

The proposed amount of N10.23 billion is aimed at completing ongoing health projects spread across the State and to sustain and improve our health programmes. Our Free Medical Programme for all persons residing in the State commenced in 2012. We are establishing a Fertility Centre at BMSH; Expanding Auto –Disable- Syringe factory to produce one billion syringes annually.  We will be intensifying our efforts to receive further accreditations from the West Africa Post Graduate Medical College to turn BMSH to a Medical College for the Rivers State University of Science and Technology. Already the health facility has received accreditation for four departments.

EDUCATION

We will continue to sustain and improve on our Free Education Programme (Primary and Secondary levels ). Full academic activities in some of our Model Secondary Schools will commence in 2013. Management of these Model Schools is already outsourced to an Indian Firm. The Ambassador Nne Krurubo Model Secondary School at Eleme will be operational in January, 2013 as admission processes will soon be concluded. We have concluded the construction of our Vocational Training Institute to address skill gaps amongst our youth. The institute would be managed by a German team.  An agreement with the team to manage the centre for 6 years will soon be signed. Our Technical Colleges will be receiving financial and technical assistance from the World Bank supported SEEFOR project to improve learning outcomes and skills acquired. These efforts are aimed at increasing opportunities for employment for our youth.

The new RSUST  Campus project is on course. We will continue to improve infrastructure and learning conditions at RSUST, Ignatius Ajuru University of Education and other tertiary institutions in the State. More of the model primary schools will be completed in the coming year. We are implementing Free Primary and Secondary Education. Our yearly overseas and local scholarship awards will be sustained in 2013. The sum of N47.81 billion is allocated to this sub sector.

AGRICULTURE
We will continue in our drive to improve on food security and reduce unemployment through our programmes in the Agric sub- sector. We are providing N4.03billon for agriculture in this coming fiscal year. This provision will be used to finance our commitments to our Fish Farm projects in Buguma, Andoni and Opobo/Nkoro Local Government Areas, the Agro Industrial Farms/Villages managed by LR group, an Israeli firm,  Songhai farms and our partnership with SIAT Nigeria Limited to revamp and manage Risonpalm.

POWER
In the year 2013, most ongoing projects in the Power Sub-sector will be completed. We are budgeting N15 billion to accomplish this, including our rural electrification projects. We have taken significant steps in using the 4-Power Consortium Ltd. to facilitate the distribution of electricity to all parts of the State in 2013. The 28 new injection substations are expected to be completed in 2013 to stabilize distribution network and bring stable power to our people.

WATER
Last year, we mentioned that due to  the huge financial outlay required in executing water projects, government was developing a long term integrated approach to the provision of water in the State. I am happy to announce, Honourable Speaker, that we have finally secured the necessary long term finance required to fund the new Port Harcourt metropolis water supply project.  The funding secured from the World Bank and African Development Bank shall ensure that necessary infrastructure is in place for sustainable delivery of water to the residents of Port Harcourt metropolis. We shall also continue with our water sector reforms and institutional strengthening that will change the face of water sector in the State once and for all. The sum of N25.50 billion  is earmarked for appropriation in 2013.

ROADS AND TRANSPORTATION
The ongoing massive road reconstruction and rehabilitation work within Port Harcourt will be intensified. The Ministry of Works is applying world best practices in road construction. The process though expensive would enhance the realization of the Transformation Agenda and promote value for money spent on road construction in the State. Our ongoing road projects outside Port Harcourt will continue to receive our attention. We are allocating N73 billion (N65 billion for roads and N8 billion for the Mono Rail project) to this sub sector in 2013. As already highlighted, construction of the M-I and M-10 Highways will commence in 2013. We will continue in our efforts in the Mono Rail project. It is aimed practically at addressing the swelling traffic problems encountered in the city of Port Harcourt. We believe the project should be given a chance because it would deliver on a whole lot of advantages especially by unlocking the City Centre of the burden of heavy traffic.
GOOD GOVERNANCE.
In 2013, we will intensify our efforts at improving the public service both in terms of capacity building and reengineering the business processes of government and provision of motivations. Our public expenditure management system and processes will continue to witness great transformation especially with the technical support of the World Bank under the SEEFOR project. The government is committed to ensuring that all public servants are ICT compliant to improve the efficiency and increase productivity. Our agenda on openness, accountability and transparency will continue to be executed in 2013. We will not stop at rendering accountable stewardship to our people.

CONCLUSION
Honourable speaker, Distinguished Members of the State House of Assembly, I thank you all for your support and consideration when issues and requests are presented before this Assembly. I am humbled by your appreciation of the challenges in governance. I on behalf of the government and people of Rivers State appreciate you all. Our deep gratitude also goes to all who made this Budget Presentation possible. We therefore most respectfully lay before this House the 2013 Budget proposal for consideration and passage into law, as we wish you all a merry Christmas and prosperous new year in advance.