BY GABRIEL EMAMEH,
The Minister of Power, Works and Housing, Babatunde Fashola, yesterday said that the federal government is owing road contractors N392 billion.
Fashola stated this when he appeared before the Senate Committee on Works for the 2021 Budget Defence in Abuja.
During the defence, the minister reaffirmed the Federal Government’s commitment to fixing the nation’s roads but emphasized the need for government to prioritise key projects given the current economic situation occasions by the outbreak of corona virus.
While giving an overview of the 2020 Appropriation for the Ministry of Works, he explained that the sum of N256.8b was appropriated to the Ministry and its parastatals for the fiscal year with capital allocation of N222.9b and N37.9b for its parastatals.
He said the overhead cost for the year was N428.9billion while revenue generated by the Ministry and its parastatals from January to September 2020 was N229.9b and has all been remitted to the consolidated Revenue Account.
He explained that the Ministry of Works is currently undertaking a total of 711 highways projects spread across the six geo political zones of the country. He also categorized four funding mechanism to fund these projects, which include: Highway projects financed with Presidential Infrastructure Development Fund (PIDF), highway projects financed with Sovereignty Sukuk Fund, highway projects financed under Tax Credit and highway projects financed through multilateral loans.
The Minister however cautioned that the days of new projects are over as the government cannot afford to continue to embark on new projects when existing ones have not been completed.
Fashola stressed that although the ministry was ready to redouble efforts on road construction across the country, inadequate budgetary provision has been the major challenges for them.
According to him: “The major challenges to the Ministry’s efforts towards the timely completion of projects is inadequate budgetary provision and release for projects to sustain annual cash flow requirements levels”.
He however said, “additional funding from PIDF and Sukuk has helped to bring some form of funding relief in additional to Tax Credit Scheme”.
While he regretted the imposition of new regulations on release of funds above N250m, Fashola appealed to the Committee to liaise with their colleagues to create other better disbursement mechanisms to enable timely payment of contractors.
“The money is not enough and if it doesn’t go out on time, anytime the contractors are indexing us, they are indexing payment period.”
Fashola said this explains why government contracts are often highly over billed.
Fashola also disclosed that the government is currently owing road contractors N392b debt for existing projects.
He noted that “given the disparity between the liabilities in unpaid certificates in the total sum of N392b and the budget provision over the years, it has become imperative that the ministry prioritise its 2021 capital proposal in order to make appreciable impact within the period of 2022-2023.
He said given this circumstances, government can’t pay for any new projects till existing ones are completed. “We Can’t Pay. No more new projects. Let us focus on what we have because no good will come out of more new roads till we catch our breath.
“You must please talk to your colleagues and convince them”, he appealed to the committee, explaining that if revenue is not increasing and government continue to committing to new ones, it would amount to creating more problems.”