2020 capital projects threatened as FG stops MDAs from paying contractors

The desire of Nigerians for increased level of implementation of 2020 capital projects (as contained in the 2020 budget) is currently being threatened by the inability of Federal government Ministries, Departments and Agencies (MDAs) to pay for completed and on-going capital projects.

For many years, implementation of Capital projects component of government annual budgets has remained a major set back to economic development of Nigeria.

The Senate had on 16th December 2020 approved a request by Mr President for the extension of the Capital projects component of the 2020 budget to 31st March, 2021.

Investigations by BusinessDay reveals that the Budget Office of the Federation (BOF) in collaboration with the Office of the Accountant –General of the Federation(AGF) and the Federal Ministry of Finance (FMI) on 31st December,2020 closed the GIFMIS payment portal used by respective MDAs to pay for contracts already executed.

Many contractors who had hoped to get payments for services rendered were disappointed as they were politely told that the portal had been closed for the year and would be opened first week of January 2021.

However, as at the time of filling this report, the payment platform has not been opened, our investigations showed.

This development has made it difficult for contractors, many of whom took bank loans, to fulfill financial obligations to their creditors as well as pay staff salaries. A distraught contractor, Alhaji Muhammad Sanusi expressed his frustration in getting payment for a project he said he successfully executed for a key parastatal in the transport ministry. Said he “ My firm was awarded a contract for the execution of a major work in one of the parastatals in the federal ministry of Transport ( names withheld) we completed the work early December 2020 and funds were released for payment of the work. It is surprising that one month after, we are yet to receive payment.

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I was there last week only to be told that the Ministry of Finance closed the portal on 31st December, 2020. We were promised first week of this year, but until now, nothing has come in. I am owing my workers, bankers and suppliers. Its frustrating doing government contracts”. Sanusi said. His views were the same with other contractors and suppliers BusinessDay interviewed.

When contacted a Director in the Budget Office of Federation who would not want his name mentioned confirmed that the payment portal was closed on 31st December 2020 as a normal routine measure aimed at taking stock of what was paid out in 2020 by respective MDAs and outstanding balances. He further stated that the portal ought to have been reopened on the first Wednesday of the new year being 6th January 2021 but wondered why it didn’t not happen. He advised contractors to be patient.

The Senate, on Wednesday 16th December 2020 passed an executive communication from President Muhammadu Buhari seeking the extension of the implementation of the capital aspects of the 2020 Appropriation Act, from December 31, 2020, to March 31, 2021.

This followed the request by the president, through the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, in a letter to the National Assembly asking for the extension to enable the executive to implement the capital aspect of the budget.

The President had pointed out that the outbreak of the coronavirus pandemic, prevented the ministries, department, and agencies of government from implementing the capital aspects of the budget.

Senate Leader, Yahaya Abubakar, had moved the motion for the extension of the implementation of the 2020 Appropriation Bill to December 31, 2020, and was seconded by Senate Minority Leader, Eyinnaya Abaribe

The senate then resolved into committee of the whole to consider the Bill after it went through first and second readings.

This was subsequently read the third time and passed, with the lawmakers amending section 12 of the 2020 Appropriation Act by adding a proviso that the implementation of the capital component of the 2020 budget be extended to March 2021

This means that the two fiscal documents for 2020 and 2021 signed into law by president Buhari on 31st December 2020 would run concurrently.

Senate President, Ahmad Lawan, after the approval, gave assurance to Nigerians that the extension of the 2020 Appropriation act did not alter the January to December budget cycle of budget implementation.

The Senate explained that it took the decision to extend the implementation of the capital components of the 2020 budget till March to ensure proper utilization of the funds already disbursed to the MDAs.

What the extension of the appropriation act means

The extension of the 2020 Appropriation act means that the capital components of the budget, which could not be achieved due to the outbreak of the coronavirus pandemic, and led to a sharp drop in revenue and lockdown of the economy, would now see its implementation extended further.

It also means that the 2 proposed fiscal documents, that is the 2021 Appropriation act and the extended 2020 Appropriation act, would run concurrently.