2016 capital projects: Fashola hits the ground running

Federal Ministry of Power, Works and Housing has commenced phased implementation of the capital projects approved in the 2016 budget with an invitation for bids aimed at delivering over 20 road projects including construction of schools, government buildings and solar powered projects in the six geopolitical zones of the country.

Through publications in some national dailies, the ministry is inviting bidders for projects in key sectors it covers, namely housing, works and power projects.

Among priority projects listed for implementation are,dualisation of the Kano-Maiduguri road, Lagos-Ibadan Expressway and the generation of 700MW from Zungeru Hydro Power Project.

Others include, completion of Abuja (Idu) – Kaduna single track rail line; counterpart funding for Lagos- Kano Standard Guage rail line and counterpart funding for Calabar-Lagos Standard Guage rail line, among others.

Analysts said last night that despite the late approval of the budget, the ministry’s action is a good omen for the economy and demonstration of readiness to execute the capital aspect of the budget as the spending is expected to trickle down on other sectors of the economy.

“This is a good development and demonstration of commitment to improve infrastructure with its attendant positive oimpact on ease of doing business in Nigeria,” says Friday Ameh, energy analyst

Daniel Magnowski, Senior Analyst at Control Risks  sees the development as a great departure from the past , adding however that there is need to resolve all pending issues on the budget such as the loan agreement during the recent  presidential visits to china and issues bothering on taxation.

“Attempting to increase government spending on capital projects is a shift that previous governments wanted to make, but in this budget there’s a clear move to significantly boost infrastructure spending.

The difference now, in a budget where recurrent spending is still high, is that the government is willing to borrow big sums, and run a much bigger deficit than in previous years, in order to finance the infrastructure-building projects that the Buhari administration has made central to its economic plan.” Magnowski said.   

“But there are big questions about the budget: investors are still waiting for details about reported loan agreements made during a governmental visit to China, the amount of income the government aims to bring in through tax looks very ambitious in a shrinking economy, and oil income forecasts could be at risk if production outages aren’t remedied quickly,” he added.

Part of the advertisement reads, “The Federal Ministry of Power Works and Housing wishes to undertake the procurement of various works, goods and services under the 2016 Capital Appropriation.

“In compliance with the Public Procurement Act 2007, the ministry invites interested and qualified contractors, consultants, and service providers to bid for their procurement and execution,” the ministry stated in an advertisement.”

In the housing sector, the projects are divided into three categories, which include consultancy, construction/works, furnishing, rehabilitation and supply.

Consultancy projects include surveys towards construction of housing units, establishment and operations of comprehensive land management database systems and architectural designs.

Construction category will see the execution of blocks of classrooms, government buildings, erosion control and drainage projects.

Furnishings and rehabilitation of government buildings and supply of information technology facilities will also feature in this round of projects.

Power projects earmarked for this phase of implementation include installation of transformers, solar powered street lights and boreholes in selected communities.

In the works sector, 12 road projects will be rehabilitated or reconstructed in Adamawa, Kwara, Yobe, Kaduna, Gombe, Plateau, and Kano states, while 7 new roads will be constructed in Bauchi and Kano states.

Only qualified bidders were invited to submit bid documents within two weeks allotted for it. Pre-qualification will include evidence of tax payments, experience in handling similar projects and evidence of technical and financial competence.

Fashola has said that limited funds have reduced the number of projects his ministry can deliver this year; hence, it is prioritising projects to be completed.

“The ministry cannot accommodate all the contractors due to insufficient funds being expected from the Federal Government. The priority of the ministry is to finish as many on-going road projects as possible,” he said at a recent media interview.

Fashola also said that out of the N79bn earmarked for road projects in 2016, N24bn goes to power while about N5bn was allocated for housing projects.

He further stated: “Right now, I am not focusing on the number of houses that this administration will build, rather, I am focusing on long-term solutions that whether this administration is there tomorrow or not, it will be difficult to say you want to change it because it works. In a matter of weeks, we will finish and unveil the design. We already have a budget, next is to start something to validate our concept, then we will expand next year.”

According to Udo Udoma, minister of budget and national planning, capital expenditure (excluding share of capital in statutory transfers) is N1.59 trillion, while the Capital Expenditure (including share of capital expenditure in statutory transfer) is N1.7trillion.

Some key allocations in the 2016 budget include: ministry of power, works and housing, N456.93billion; transportation, N202.34billion; defence N443.07billion; interiors N513.65billion; education N403.16billion; health, N250.06billion; agriculture and rural development, 75.80billion; solid minerals N16.73billion; youth and sports development, N75.79billion; water resources, N53.30 billion; and special intervention programmes of N500billion.

The budget is predicated on an oil production benchmark of 2.2million barrels per day at $38 per barrel and an exchange rate of N197 naira to a dollar.

ISAAC ANYAOGU