Nigeria requires over N16trn to complete inherited road projects – Umahi

…says budgetary allocations inadequate to fix highway projects

David Umahi, the minister of works has decried the poor budgetary provisions for the construction of road infrastructure across the country, as the funding gap reaches over N16 trillion.

Umahi, during a press briefing to mark his one year in office, in Abuja on Thursday said that the Tinubu-led administration inherited projects valued at N14.4 trillion and a N13 trillion funding gap as of May 2023. He added that reviewing the project based on current economic realities, the total fund required to complete these projects has reached over N16 trillion.

He said, “The old traditional method of funding Highway Projects is through the annual budgetary provision. Over the years, budget provisions seem to be inadequate to address the challenges of Highway Development.

“Due to the removal of fuel subsidy and the floating of the Naira, though it is a very sound economic decision of this administration, and because some of the projects have lingered for between 5 to 18 years, consequently, the projects are being reviewed to match with current market realities. This position excludes all the new projects under the Renewed Hope Agenda and the Four (4) Legacy projects.

“The funding gap to complete all the inherited projects is about N13trillion as at May, 2023 and will be more than N16 trillion when all projects are reviewed in line with current market realities,” he said.

Umahi explained that the ministry, in a bid to address the funding gaps, evolved several alternative funding mechanisms, including the Presidential Infrastructure Development Fund (PIDF), Sovereign SUKUK issued by the Debt Management Office (DMO), Road Tax Credit Scheme (NNPCL, NLNG, Dangote, BUA, MIN, Mainstream Energy Solutions Limited GZI Industries) and use of Multi-lateral loans, Public Private Partnership (PPP)/Highway Development Management Initiative (HDMI) and the newly established Renewed Hope Infrastructure Funding model.

He explained that 82 projects were approved under the SUKUK fund, with a total sum of N100 billion invested in road construction and rehabilitation in 2017, N100billion in 2018, N162.55 in 2020, N210.56 billion in 2021, for 2,812 km of road. Also, N110 billion was approved in 2022 and the approved 2023 SUKUK provision stood at N250 billion.

Umahi also noted that the sum of N2.590 trillion was approved by the Federal Executive Council for funding Highway projects under Phases I & Il of the NNPCL Funding. The projects were to cover a total of 6,358km, while the available funding for the projects up to the year 2025 is N2.586 trillion. “The reviewed total contract sum due to inflation is N5.288 trillion.

“The funding gap for the completion of both phase I &II is N2.702 trillion. To date, the total payment made by NNPCL is in the sum of N840 billion and the total outstanding funding approved by FEC is N1.750 trillion. The projects are spread across the six geopolitical zones of the country.

“Other major Companies like NLNG Limited, Dangote Industries Limited, BUA International Limited, MTN Nigeria Communications Plc, Mainstream Energy Solutions Limited and GZI Industries projects have embraced the Road Infrastructure Development & — Refurbishment Tax Credit Scheme programme. The funding exceeds the sum of N2.08trillion covering a length of 1,548km.”

The minister, speaking further explained that the Ministry of Works under its statutory responsibilities over the Federal Road network, introduced the Highway Development and Management Initiative (HDMI) under the Public Private Partnership Unit (PPP) to attract sustainable investment and funding in the development of road infrastructure and maximization of the use of assets along the Right of Way (ROW).

For him, the rationale behind the private sector engagement is to provide an alternative source of financing road development and management.

“The HDMI is expected to amongst others, bring order, accountability and profitable entrepreneurship to the Operations, management and maintenance of Federal Highways. The emergent Concessionaires will recoup their investments through Toll and Non-Toll revenues as may be negotiated,” he added.

Umahi said that under the Renewed Hope Agenda of the current administration, four (4) legacy highway projects have been selected for implementation to improve road network and train services connectivity across the six (6) geo-political zones to boost socio-economic development.

These projects include the Lagos – Calabar (750km) Coastal Road Corridor, Sokoto — Badagry (1,068km) Road; Calabar – Abuja Superhighway Project (482km) (TransSaharan Road); and Akwanga-Jos-Bauchi-Gombe Road (439km).

“These projects have the potential of improving the livelihood of the citizenry and turn around the economy of the country, especially in agriculture, mining, tourism, commerce, industrialization, Foreign Direct Investment and security.

“The successful implementation of the Renewed Hope Agenda, in the road sector, will require effective collaboration between the Federal, State, and Local governments, as well as private sector stakeholders.

“President Tinubu’s Renewed Hope Agenda in the road sector has the potential to transform Nigeria’s infrastructure, stimulate economic growth as well as improve the lives of the citizen. The focus on strategic road projects, community engagement, and sustainability will ensure that the full benefits of the Federal Government’s investment in the road sector are realized,” he added.