By Soni Daniel, Regional Editor, North, Emman Ovuakporie, Jude Njoku & Kingsley Adegboye
LAGOS —THE Federal Government and local contractors are currently at war over debt owed by the government for the construction of major road projects across the country.
While the local contractors claim that they are being owed N500 billion, the Federal Government insisted that it owed the contractors only N30 billion.
It was gathered that the failure of the government to fulfil its financial obligations to the contractors has stalled the repair works on the major road projects awarded by the government such as Lagos-Ibadan expressway.
Findings by Vanguard revealed that the contractors who were awarded major highways and bridges contracts spread across the country were being owed as much as N30 billion arising from liabilities for the 2013 year, thereby exposing them to operational challenges.
The firms were said to have been awarded the strategic road projects by the Federal Government in the hope that N141 billion approved for the Federal Ministry of Works would be released as and when due by the Finance Ministry.
However, findings revealed that of the budgeted N141 billion, only N63.76 billion has so far been released to the ministry for its road projects, leaving an outstanding balance of N76.24 billion.
Some of the local contractors lamented that their operations had been virtually grounded by non-payment for jobs already executed for the Federal Government. Others complained that heavy bank charges on loans extended to them had made it impossible for them to raise more money to continue with the jobs at hand.
“It is very difficult for us to continue to work without being paid by the government,” one of the construction firms’ official told one of our correspondents.
Although the Minister of Works, Arc. Mike Onolememen, could not be reached for a reaction to the development, a competent source close to the ministry confirmed the debt being owed the local contractors, saying that it was not deliberate.
The source admitted: “It is true we have liabilities amounting to N30 billion to our contractors but this is regrettable because we have not deliberately decided to owe them. The truth of the matter is that the money approved in this year’s budget for us has not been released in full to the Ministry by the relevant agency of government.
Finance ministry cashbacked N63bn out of N141bn
“There is no way we can pay contractors what has not been given to us. Of the N141 billion budgetted for us this year, the Ministry of Finance has only cash-backed N63.76 billion. It is not our desire to owe any contractors because we know that once they mobilise to site they come under pressure from the government, the community and the banks.”
Hopes of early payment to the contractors may not materialise because of claims by the Finance Ministry that there has been sustained dwindling revenue from oil arising from theft and pipeline vandalisation in the Niger Delta.
Angered by the slow pace of work arising from debts being owed the contractors, the Chairman, House of Representatives Committee on Works, Mr. Ogbuefi Ozomgbachi, has asked the Finance Minister, Mrs. Ngozi Okonjo-Iweala, to immediately release the outstanding N81billion to the Works Ministry.
Ozomgbachi, who spoke to Vanguard on telephone, lamented that the huge amount being owed the contractor was disturbing and capable of frustrating the construction and rehabilitation of major roads in the country.
He said, “You will recall that before now, the roads were in a deplorable state and impacted negatively on the social and economic well being of the people. So, I will enjoin the Minister of Finance to release the approved funds to the Federal Ministry of Works to enable it sustain the momentum of work on roads in the overall interest of Nigerians.
The Appropriation Act is a subsisting law of the country and the Ministry of Finance is bound to comply with the provision of that law. There should be no selective implementation of any law, inclusive of the Appropriation Act.
“As we get close to the dry season, the release of 100 percent of the Ministry of Works’ allocation is very essential because the existence of good roads in the near absence of waterways and a rail system is central to the country and will have a multiplier effect on other sectors of our economy.”
Efforts to speak with the Finance Minister on the non-release of funds to the Works Ministry proved abortive as none of her officials was available to speak to our correspondents. But the Office of the Accountant-General of the Federation said that declining oil revenues was responsible for the shortfall in revenue, insisting that the government has been recording declining oil revenues since January this year.
The office maintains that apart from the surplus the government recorded in the month of July, it has been witnessing a deficit for the rest of the months. The office stated, “The Federal Government had projected a monthly earning of N702.54bn in the 2013 budget, but it only surpassed that target once during the first seven months of this year, earning N651.26bn in January, N571.7bn in February and N595.71bn in March. In the months of April, May, June and July, the revenue earned by the country was N621.07bn, N590.77bn, N863.02bn and N497.98bn respectively.”
Governors have been at loggerheads with the Finance Minister, Ngozi Okonjo-Iweala, accusing her of not telling the truth about the economy, which they claim is dwindling.
At the height of their face-off, the state governors called on the Finance Minister to resign but the minister rebuffed them, saying: “I dey kampe.” The major road projects that have been badly affected by the non release of funds to the contractors include the Lagos-Ibadan expressway, Lagos-Benin Expressway and the Apapa-Oshodi Expressway. It was gathered that no activity is happening on the Lagos-Ibadan Expressway because the contractor has not been adequately mobilised to undertake the repair work.
Julius Berger, other contractors not paid
Meanwhile, reacting to the alleged N500 billion being owed local contractors by the Federal Ministry of Works, Mr. Clement Iloba, Head of Corporate Affairs Unit of Julius Berger Nigeria Plc said “in road construction projects, clients are bound to owe contractors since payments for jobs are not made in advance before commencement of contracts. However, I am not in a position to know the exact amount Julius Berger Nigeria Plc is being owed, just as I cannot say if other contractors are being owed and how much they (contractors) are being owed”.
Immediate past president of the Federation of Construction Industry, FOCI, the umbrella organisation for 125 indigenous and indigenised contracting firms in Nigeria, Mr. Mobolaji Williams, an engineer, explained that about two years ago, when he was still the President of FOCI, the Federal Government was owing its members more than N100 billion for jobs already done. Although Mr. Williams who works for MOS Engineering Services Limited, could not give the actual amount being owed contractors, he noted that the figure must have risen by now.
Williams had alleged that between 2010 and 2011, more than 60,000 workers in FOCI member-companies were sent home due to closure of sites following government’s failure to meet its financial obligations to contractors. According to him, “while the contractors are being owed more than N100 billion for jobs already done, more debts are piling up as the contractors try to get the projects to a reasonable landmark before closing their sites to await payment.”
The former FOCI president directed Vanguard to speak with the current president of the organisation, Mr. Solomon Ogunbusola, a builder and CEO of S & M Nigeria Limited, because he would be in a position to give the actual figure of the amount owed contractors. Efforts to speak with him failed as he was not picking his calls.
But a dependable source at the Federal Ministry of Works, Abuja, would neither confirm nor deny the fact that local contractors were being owed to the tune of N500 billion. He however, agreed that the Ministry was having problems funding its ongoing road projects, adding that most contractors would not move to site until they are paid.
Contractors not mobilised financially to work on Lagos Ibadan expressway
Unconfirmed reports alleged that work on the reconstruction of the Lagos-Ibadan expressway which was awarded to Messrs Julius Berger Nigeria Plc following the termination of the concession agreement with Messrs Bi-Courtney Nigeria Limited, was yet to commence because the new contractors have not been mobilised financially, despite the flag-off by President Goodluck Jonathan.
Nigeria has a total road network of 200,000 km owned by the federal, state and local governments. Only about 65,000 kilometres are paved mostly with bitumen. Out of this figure, the Federal Government owns about 35,000km, representing 54 per cent of the bituminous road network in Nigeria.
The balance is shared between the 36 states and the 774 Local Government Areas. Currently, most of the goods and passengers transportation in the country are done by road, which is about 80 per cent of the national vehicular traffic. 35,000 kilometres of federal roads were constructed as at1983. In 1983, only about 150,000 vehicles were plying Nigerian roads. In 2000, about 1.3million vehicles were moving on Nigerian roads. In 2012, the number of vehicles on Nigerian roads rose to nine million. Yet, the total kilometre of bituminous roads in the country did not witness any appreciable increase to meet the demand. This has led to increased pressure on our roads, coupled with the non availlability of rail transportation of haulage in the 20 years.
Leveraging on the major structural/management changes of 2011, the FMW set out to achieve the following-the mandate of planning, design, construction, maintenance of federal roads network.