The Minister of Works, Babatunde Fasola, on Wednesday appealed to the National Assembly to make the processes of payment of contractors less cumbersome and fast.
He said the slow payment of contractors and inadequate funding were hampering delivery of projects and starting new ones.
“We may want to look into the processes and make it faster. The money is not enough and doesn’t get out on time,” he said at a budget defence before the Senate Committee on Works at the National Assembly.
The minister said the federal government was owing construction firms handling 711 road projects across the country about N392billion.
According to him, the N392 billion debt is far higher than the N276 billion proposed as budgetary allocation for road projects in 2021.
Read also; #EndSARS: Lagos Reps condemn invasion of Oba palace, destruction of properties
“With the situation on ground , a stop has come for new projects and need for prioritizing existing ones towards achieving completion of them.”
Besides, he said the slow process of releasing monies for job done was making the federal government to pay higher for jobs than private organisations would.
He said, “What we will buy for N10, the private sector will likely buy for N7 because the contractors know they will get paid o time. Anytime they are indexing us, they are indexing delay into our cost.
“The Procurement Act eeks transparency and accountability which everyone subscribes but there are also processes in it that seemingly fails to understand the urgency we are dealing with.
“Sometimes it appears government spending is not competitive but these are real issues that those doing business with government would factor into any transaction they are doing with government.
“So it just for us to be more efficient and close that gap.”
Fasola said about N6.62 trillion was needed by the government to fund the 711 road projects across the country but resources were not available, hence the need to prioritize.
“We do not have the resources that we need to fix our road infrastructure at once. The very reason why we need to prioritize what want to do.
“The situation on ground requires us to cut our coat according to our cloth and not according to our size because no good will come out of more new road projects now,” he said .
The minister, however, explained that the government had categorised projects under different sources of funding to execute them.
According to him, Lagos – Shagamu – Ibadan dual carriage way, second Niger Bridge and rehabilitation of Abuja – Kaduna – Kano dual carriage way would be funded under the Presidential Infrastructure Development Fund (PIDF).
He explained that 44 roads were being funded under the Sovereign Sukuk Fund across the six geo- political zones while Lokoja- Obajana – Kabba – Ilorin road, Apapa – Wharf Road in Lagos State , Apapa – Oworonsoki – Ojota Expressway were placed under Tax Credit.
He stated that companies or groups are allowed to embark on eligible road development projects and reimbursed through tax credit.
He added that the last batch was being funded under multilateral loans where federal government was contributing counterpart funding.
Responding to a question on why contractors under SUKUK arrangement had not been paid, the minister said they could only be paid after proper appropriation as demanded by the National Assembly.
He advocated that SUKUK be classified as investment that could be accounted for under another system instead of been tied to budget.
When the Chairman of the Committee, Senator Adamu Aliero ( APC Kebbi Central ), suggested to the minister the need to look at the fund in the National Pension Commission ( PENCOM), to fund some of the road projects, he said he was not in a position to do that .
“The Central Bank of Nigeria ( CBN) seems to be in the best position to work out such arrangement. It will be helpful if that type of funding can be put together,” he said.
Fasola said it became imperative for government to prioritise its 2021 capital proposals in order to make appreciable impact within period 2022- 2023 that could be physically experienced by road users.
Speaking earlier, Aliero said despite the fact that the budgetary allocation to the Ministry of Works and its agencies still remaines one of the highest, it was like a drop of water in the ocean because of the humongous work to be done on roads and the current debt profile of N392 billion.
“Like I say every time, government can no longer fund Nigerian roads alone,” he said.
He added that the Road Infrastructure Tax Credit Scheme introduced by the government for construction and rehabilitation of over 780km of roads and bridges nationwide was a welcome development.
