The Nation Newspaper

Tag: contractors

  • Between contractors and officials

    Between contractors and officials

    •Uncompleted projects have become an index of our underdevelopment

    Abandoned or “failed” contracts became a pervasive feature of governance at every level in Nigeria since the Second Republic. A first-time visitor, seeing so many projects in various states of uncompletion, may go away with the impression that the country is bustling with work in progress and moving in the right direction, the volume of on-going construction being one of the indicators of the economy’s health.

    If the visitor were to return to same terrain the following year, the chances are that he or she would find those projects in the same state of uncompletion, with tell-tale signs of abandonment.  The scaffolding might still be in place, but construction equipment will have been transferred elsewhere.

    What had seemed to the visitor like work in progress was in reality not merely work suspended but work abandoned with impunity, after the contractor will have collected as much as 60 percent of the contract sum upfront as “mobilisation fee.”

    The contractor usually entertains no fear of punishment, much less reprimand. There is no reason for that.

    He or she must have secured the contract through connections with persons of consequence in government or in the ruling party. A good part of the upfront payment is handed back in under-the counter-payments to the awarding and vetting authorities, sponsors, and the political bosses. Whatever remains is then expended in partial and perfunctory execution of the contract.

    With the upfront payment thus distributed, the contractor is confident that no repercussions will flow from abandoning the project. Nor is that confidence unwarranted. For, in the long and sordid history of abandoned projects and failed contracts, no contractors have been prosecuted, none have been made to return payment collected for services not rendered or rendered only in part, and among the awarding authorities in under-the counter payments.

    To compensate for decades of neglect, the Federal Government set up special bodies in the Niger Delta, funded them reasonably well and tasked them with building the infrastructure and generally fast-tracking development.

    Instead, abandoned projects litter the place, as the Acting President, Professor Yemi Osinbajo found to his consternation during his recent official tour of the area. The treasuries are empty, and outstanding debts for dubious contracts stand in the tens of billions of Naira.

    This practice has endured for far too long. It is subversive of development and must be checked.  Professor Osinbajo’s warning that prosecution awaits those who bid for, and then abandon public projects, is timely.

    The impunity that runs so deep in the business must be curbed. With such projects strewn all over the landscape, many of them going back more than a decade, prosecutions should commence shortly.

    It has to be said, however, that not all contractors engage in this shady practice. Nor is government always an innocent party. Even after a contractor has fulfilled all obligations, payment is often not forthcoming. Debt owed bona fide contractors stands at hundreds of billions of Naira.

    Many a contractor has been brought to grief by government’s failure to honour its commitment promptly.

    This dereliction has to be addressed, too.

  • ‘Bayelsa paid contractors N10bn in January’

    The Bayelsa State Government paid contractors handling various projects in the state N10.2billion in January.

    Speaking at a briefing at the Government House,  Deputy Governor  John Jonah said the disbursements were made to contractors handling projects in education, sports, transport, golf course and other road projects.

    Jonah said the state incurred recurrent expenditure of N1.9 billion in January adding that N1.5 billion was used to service commercial bank loans.

    He noted that civil servants’ salaries gulped N3.6billion while political appointees were settled with N256.3 million.

    But the deputy governor said the state received gross inflow of N9.2 billion consisting of statutory allocation N1.2 billion; derivation N3.2 billion; Value Added Tax (VAT) N689 million; Petroleum Profit Tax (PPT) N1.5billion; budget support N1.1billion; exchange differences N1.4billion and refunds N57.5million.

    He said the net inflows from the Federation Allocation Account Committee (FAAC) stood at N7.8 billion after deducting bond N421 million; foreign loan N29.8 million; restructured bank loan N741.1 million; bailout to states N11.3 million; agricultural loans N66.6 million and excess crude loan N126.6 million.

    He said the state also received money from Internally Generated Revenue (IGR) N863.2 million and Sterling Bank loan of N3 billion to buy vehicles for security outfits.

    He said after all the expenses, the stage had a balance of N6.9 billion which JT carried forward to February.

    Jonah further explained that the government would complete the repayment of the N50 billion bond loan inherited from the previous administration in 2019, following the successful renegotiation of the facility.

    He said based on the restructuring, the amount paid monthly had been reduced from N1.24 billion to N422 million, in view of the economic downturn.

    He said the state government had concluded payment on scheme 1 of the Commercial Agricultural loan, while it paid the usual N66.7 million for the scheme 2.

    Commissioner for Information and Orientation Jonathan Obuebite said the transparency policy of the administration would be strengthened, with the collaboration with the Independent Corrupt Practices and other Related Offences Commission (ICPC).

    “The ICPC chairman who was in Bayelsa State about three days ago described Bayelsa as one of the most corruption-free states in the country. The accountability and transparency of the Restoration Government is yielding fruits,” he said.

  • Motorists groan as contractors abandons work on third mainland bridge

    Motorists groan as contractors abandons work on third mainland bridge

    The Federal Road Maintenance Agency (FERMA) has come under heavy criticism from residents in Lagos over the abandonment of the repair works in the Third Mainland Bridge and other adjoining roads.

    The Agency, last month had begun repairs on both carriage ways of the Bridge, scrapping the asphalt on some section of the bridge, but had vacated site for over two weeks, leaving motorists to contend with the current state of the road.

    Motorists had attributed several accidents which had occurred on the Bridge in recent times to the uncoordinated method by which FERMA was carrying out the repair works.

    But investigations on Friday, however, showed that though the sum of N10billion was voted for FERMA in the 2016 Budget of the Federal Ministry of Works, the contractor engaged for the job was yet to be mobilised.

    With the March 31, 2017 date for the end of the implementation of the 2017 budget fast approaching, FERMA had hurriedly moved the contractor to site, however its failure to mobilize them led to the repair works being stalled.

    Some motorists in the State are however calling on the Minister of Works to rise up to the challenge and ensure that the Agency completes the repair works so as to save motorists the nightmare and the incessant accidents caused by the present state of the Bridge.

    Mr. Babajide Kasali, a motorist who plies the axis on a daily basis, decried the long hours of traffic occasioned by the slow pace of the repair works, saying that it was gradually taking a toll on his health and productivity.

    Another motorist, Mrs. Abidemi Otegbola said FERMA’s inability to carry out its duties was due to lack of proper monitoring by the parent ministry.

  • Ondo contractors rush to meet deadline

    Contractors in Ondo State are rushing to meet deadline of projects ahead of the February 24 handover.

    It was gathered that the government had released funds for their completion .

    The accident-prone ‘Okealabojuto hill’ in Ikare-Akoko and the Okeagbe-Arigidi- Ikare Road are now receiving prompt attention.

    Another project is the Ajowa-Ikaram -Erusu-Arigidi-Ikare Road awarded over four years ago.

    On Okealabojuto and Ajowa roads, contractors were on site, leading to speculations that the projects may be inaugurated before the exit of the Olusegun Mimiko administration.

    Similar work is going on at the Oba-Ile- Akure -Airport Road, where contractors are working to beat the deadline.

    A community leader in Okeagbe, Owolabi Abannikanda, said completion of the projects, including Okeagbe-Arigidi- Ikare Road, would excite the people and serve as parting gift for residents.

    Another community leader in Afin-Akoko, Ibrahim Kilani, bemoaned the neglect of Okeagbe- Afin- Eshe to Ogbagi Road, which was awarded by the late Adebayo Adefarati’s administration and re-awarded by the late Olusegun Agagu’s administration and abandoned since then.

  • Domestic debts: FG to issue promissory notes to contractors

    Domestic debts: FG to issue promissory notes to contractors

    To clear the backlog of crippling debts owed contractors, the federal government is working to issue promissory notes to contractors to clear a preponderance of domestic debts.

    Speaking at the 14th Daily Trust dialogue with the theme Beyond Recession in Abuja on Thursday, the Minister of Finance, Mrs Kemi Adeosun disclosed that the federal government was working with the CBN on the issue.
    “When we clear the backlog then we start afresh. So when you get a government contract, you should be sure when you are going to get paid. You can’t just be incurring debt and not take any responsibility for it” she said.
    Adeosun revealed that from now on, “if you get a government contract, these are your payment terms. And that will also give us lower pricing” indicating that government will renegotiate contract terms to favour reasonable reduced pricing for contracts.

    The finance minister stated that “we have discovered that because people feel that there is a risk that they may not be paid, they load the price of the contract. We are also trying to ensure compliance with the Fiscal Responsibility Act.”

    Another issue which the finance minister deliberated on was the budgeting processes of powerful revenue generating agencies which are not captured in the national budget.
    Adeosun lamented that these agencies are still outside of government and their size of revenue is actually more than the federal budget. 
    “So in other words, there is a parallel budget sitting outside the budget. The CBN, NDIC, NNPC. They sit outside the budget and we need to bring them in. So they also become more accountable and so we are working on that.”

    The National Assembly she said has given the support of ensuring that these agencies submit their budgets and will not be able to pay anything other than salaries.

    These agencies Adeosun noted “were set up to be revenue generating for the government but they have become revenue generating for themselves. We need that money to come back into the central budget.”

    Regarding the controversial government borrowing, Adeosun stated that “the truth is that we have no choice. If you are waiting for the oil price to recover, the prognosis is that it’s not going to go back to 110 dollars per barrel any time soon. So to get the economy growing, we have no choice but to look for low cost funds and put that infrastructure in place because it is the infrastructure that will unlock the economy.”
    In his presentation Mr Atedo Peterside, Chairman of Stanbic IBTC noted that he has observed this administration’s “reluctance to completely beak from the past and embrace completely economic reforms, even when our present predicament clearly warrants same”.
    According to him, “if we don’t act now, or act quickly, we will find our economy needlessly mired in a hopeless situation where the citizenry might not witness an increase in income per capita, that is living standards, from six to eight years.  
    Peterside noted that “the search for economic policy direction must end now because we are facing an economic crisis. A crisis is an inflation point where multiple outcomes become possible. When you superimpose our demanding political calendar which requires presidential elections, in a little over two years, it becomes clear that 2017 represent the last full calendar year that this administration has within which it must embrace measured economic reform.”
    If this administration expects to still attain many of the palatable economic outcomes, Atedo Peterside maintained that “it is no use arguing over who or what caused the recession or the high inflation of 18.5 percent that we are currently facing. It is far better to focus on what we need to do to get us out of this sorry state.” 
    What appears to be still missing he said “is a bold, holistic and audacious effort to harmonize fiscal, monetary, exchange rate, trade and macro prudential policies in a bold and concerted manner. Very few people want to take on the big gorilla in the room. They prefer to strut around the fringes or work in silos, whilst almost accepting that a 0.1 percent target is an achievement that we should celebrate because it means we have come out of recession. That is why the impact of the government economic team is not being felt.”
    The corollary of this he argued is that, “may people are simply minding their business because they fear for their jobs. They are not interested in battling their colleagues, whose actions are negating the most positive outcomes that the government owes electorates.”
    Atedo Peterside cautioned the government that “the public is yearning for transformative economic changes.”
    To those who will criticize him for saying that the federal government’s economic policy direction remains unclear, Peterside responded to them by saying that “the most significant economic reform embrace so far by the federal government came about rather reluctantly. That is by the federal government hanging on to an untenable situation until it disentangled itself, or got overpowered by internal contradictions. We saw this in petrol process and naira devaluation.”
  • Budget 2017: Federal Govt to raise N2tr bonds to pay off contractors

    Budget 2017: Federal Govt to raise N2tr bonds to pay off contractors

    The Federal Government plans to raise over N2 trillion bonds to pay off contractors in 2017 budget.

    Addressing reporters in Abuja yesterday during the 2017 budget breakdown, Budget and National Planning Minister, Senator Udoma Udo Udoma said “to address contractors’ liabilities the Federal Government intends to issue over N2 trillion worth of bonds to clear outstanding contractors’ liabilities.“

    These bonds, he said would have a 10 -year maturity and the amortisation is expected to begin in 2018.

    With regard to existing liabilities on bonds which were issued to contractors by past administration , Udoma stated that government has set N177.46 billion aside in the budget as a “sinking fund to retire the maturing bonds. “

    The thrust of the budget Udoma said “is to partner with private and development capital to leverage and catalyse resources for growth. Much of the capital provision is directed at those projects which will facilitate economic growth, diversification, competitiveness, ease of doing business, jobs and social inclusion and improved governance and security.“

    Udoma described the budget as an infrastructure budget. He said:  “N1.047 trillion is dedicated to key infrastructural spending , made up as follows: Power, Works and Housing-N529billion; Transportation-N262 billion; Special Intervention Programmes-N150 billion; Defence-N140 billion; Water Resources-N85 billion; Industry, Trade and Investment-N81 billion; Interior-N63 billion; Education-N50 billion; Universal Basic Education Commission-N92 billion; Health-N51 billion; Federal Capital Territory-N37 billion; Niger Delta Ministry-N33 billion; Niger Delta Development Commission-N61 billion; and Agriculture- N91 billion.

    Udoma highlighted some of the new initiatives in the budget to include: a new Social Housing Programme of N100 billion provided for under a new Social Housing Programme targeted at a N1 trillion fund; Special Economic Zone Projects of N50 billion to be set up in each of the geo-political zones to drive manufacturing/exports; Export-Expansion Grant (EEG) of N20 billion voted for the revival of EEG in the form of tax credit and recapitalisation of Bank of Industry (BoI) and Bank of Agriculture (BoA) with N15 billion to support the development finance institutions to support Micro , Small and Medium Scale Enterprises (MSMEs).

    Some of the projects to be executed in the budget include:N20 billion Rural Electrification projects in federal universities; N18.7 billion as counterpart funding for the construction of 3,050 megawatts (Mw) Mambilla hydropower project; N 7.12 billion for the completion of power evacuation facility for 400Mw Kashimbila hydropower plant.

    Under housing, there is N41 billion Federal Government National Housing Programme nationwide, and for works,  over 65 roads and bridges construction and rehabilitation projects across the six geo-political zones of the country; N20 billion nationwide intervention fund for roads; N31.5 billion for the rehabilitation/reconstruction and expansion of Lagos–Shagamu – Ibadan dual carriageway sections I & II in Lagos and Oyo states.

    For education, the Federal Governmen budgeted N5 billion for the provision of security infrastructure in 104 colleges (perimeter fencing, solar street light, solar powered motorised borehole and close circuit television (CCTV) .

    Under transportation,  N213.14 billion will be for various railway projects (Lagos-Kano, Calabar-Lagos, Kano- Kaduna, Ajaokuta-Itakpe-Warri , Kaduna-Idu)/counterpart funds and other rail projects; N3.03 billion for the construction of terminal building at Enugu airport; N2.08 billion for airside rehabilitation of Abuja airport and N2.47 billion for the construction of an inland river port and supply of cargo handling equipment at Baro, Niger State.

    For health, N11.72 billion has been earmarked for joint venture investments in tertiary institutions with Nigeria Sovereign Investment Authority; N7.65 billion for procurement of vaccines and devices and N6.46 billion for Global Fund and GAVI counterpart funding.

  • N7.298tr budget: DisCos, contractors, others to smile

    N7.298tr budget: DisCos, contractors, others to smile

    Contractors are to smile in the New Year — if the Federal Government keeps its word to pay them.

    They and others are being owed about N2 trillion, details of which President Muhammadu Buhari said were being compiled .

    The President spoke yesterday at the presentation of a N7.298 trillion budget for the 2017 fiscal year.

    Also to be cleared are outstanding electricity bills owed the troubled Distribution Companies (DisCos).

    The presentation made at a joint session of the National Assembly has Power, Works and Housing receiving the lion’s share of N529 billion.

    Christened “budget of recovery and growth”, its implementation will be based on the economic recovery and growth strategy.

    The government proposed a budget size of N7.298 trillion, which is a nominal 20.4 per cent increase over 2016 estimates.

    Of the expenditure, 30.7 per cent will be capital — in line with the government’s determination to reflate and pull the economy out of recession as quickly as possible.

    President Buhari also said the fiscal plan will result in a deficit of N2.36 trillion for 2017, which is about 2.18% of the GDP.

    The deficit, he said, will be financed mainly by borrowing, which is projected to be about N2.32 trillion.

    He noted that the government’s intention is to source N1.067 trillion or about 46% of the borrowing from external sources; N1.254 trillion will be borrowed from the domestic market.

    On expenditure estimates, Buhari said the proposed aggregate expenditure of N7.298 trillion will comprise: statutory transfers of N419.02 billion; debt service of N1.66 trillion; sinking fund of N177.46 billion to retire certain maturing bonds; non-debt recurrent expenditure of N2.98 trillion; and Capital expenditure of N2.24 trillion (including capital in statutory transfers).

    The President added that on statutory transfers, the government increased the budgetary allocation to the Judiciary from N70 billion to N100 billion.

    The increase in funding, he said, is meant to enhance the independence of the judiciary and enable it perform effectively.

    Buhari said that the plan, which builds on the 2016 Budget, provides a clear roadmap of policy actions and steps designed to bring the economy out of recession and to a path of steady growth and prosperity.

    The President noted that as the country continues to face the most challenging economic situation in its history, nearly every home and nearly every business is affected one way or the other.

    The President said that in 2017, the government will focus on the rapid development of infrastructure, especially rail, roads and power.

    He added that efforts to fast-track the modernisation of the railway system would take priority.

    According to him, in 2016, the government made much progress getting the studies updated and financing arrangements completed.

    He noted that in 2016, the government conducted a critical assessment of the power sector value chain, which is experiencing major funding issues.

    He said that although the government, through the Central Bank of Nigeria (CBN) and other Development Finance Institutions, had intervened, it was clear that more capital was needed.

    He said the government must also resolve liquidity in the sector, adding that it made provisions in the new budget to clear its outstanding electricity bills.

    One issue that the Federal Government is committed to dealing with frontally, he said, is its indebtedness to contractors and other third parties.

    He said the government was at an advanced stage of collating and verifying these obligations, some of which go back 10 years,  and  estimated at about N2 trillion.

    The President said the government would continue to prioritise defence, spending “till all our enemies, within and outside, are subdued”.

    Buhari said they restricted travel costs, reduced board members’ sitting allowances, converted forfeited properties to Government offices to save on rent and eliminated thousands of ghost workers.

    “These and many other cost reduction measures will lead to savings of close to N180 billion per annum to be applied to critical areas, including health, security and education,” he said.

    He explained that the effort to diversify the economy and create jobs would continue with emphasis on agriculture, manufacturing, solid minerals and services.

    Buhari noted that non-oil revenues, largely comprising Companies Income Tax, Value Added Tax, Customs and Excise duties, and Federation Account levies are estimated to contribute N1.373 trillion.

    He said the government set a more realistic projection of N807.57 billion for Independent Revenues, “while we have projected receipts of N565.1 billion from various recoveries”. Other revenue sources, including mining, amount to N210.9 billion.

    Buhari said the 2017 budget was based on a benchmark crude oil price of $42.5 per barrel; an oil production estimate of 2.2 million barrels per day; and an average exchange rate of N305 to the US dollar.

    On this year’s budget’s performance, the President said: “In 2016, the budget was prepared on the principles of zero based budgeting to ensure our resources were prudently managed and utilised solely for the public good.”

    The President proposed expenditure on key capital spending provisions in the Budget to include Power, Works and Housing: N529 billion; Transportation: N262 billion; Special Intervention Programmes: N150 billion. Defence: N140 billion; Water Resources: N85 billion; Industry, Trade and Investment: N81 billion; Interior: N63 billion; Education N50 billion; Universal Basic Education Commission: N92 billion Health: N51 billion Federal Capital Territory: N37 billion;

    Niger Delta Ministry: N33 billion; and Niger Delta Development Commission: N61 billion.

    Buhari said N100 billion had been provided in the Special Intervention programme as seed money into the N1 trillion Family Homes Fund that will underpin a new social housing programme.

    “This substantial expenditure is expected to stimulate construction activity throughout the country,” he said

    He added that efforts to fast-track the modernisation of “our railway system will receive further boost through the allocation of N213.14 billion as counterpart funding for the Lagos-Kano, Calabar-Lagos, Ajaokuta-Itakpe-Warri  and Kaduna-Abuja railway projects. As I mentioned earlier, in 2016, we invested a lot of time ensuring the paper work is done properly while negotiating the best deal for Nigeria. I must admit this took longer than expected but I am optimistic that these projects will commence in 2017 for all to see.”

    President Buhari noted that given the emphasis placed on industrialisation and supporting SMEs, N50 billion had been set aside as Federal Government’s contribution for the expansion of existing, as well as the development of new, Export Processing and Special Economic Zones.

  • Gombe patriots plead for contractors

    As Gombe State celebrates its 20th anniversary, the Gombe Patriots for Development has called on Governor Ibrahim Hassan Dankwambo to pay contractors, who are owed for jobs they did.

    The group said this would help the state’s economy  recover from its comatose condition.

    Group Coordinator Waziri Ahmad Gubiya, who spoke in Gombe while appreciating the governor, said it was unfortunate contractors, who worked for the state’s development, were  being owed.

    “It is unfortunate that contractors’ predicament is affecting us the youth of this state terribly. So many youths are out of business and jobs that was provided when contractors were on site.

    “ Be it roads, electricity, health and other infrasructure, many contractors are being owed in the state and this is affecting the economy terribly. As we celebrate our 20th anniversary, it is poignant that those who have laboured to build the state are not left behind as they form a major employment bracket in the state with families highly dependent on them,” the group said.

    It said it chose to lament their woes, as their unpaid status have a devastating effect on the people.

    “Agreed, the recession in the country was affecting the economy largely, however, Governor Dankwambo must find a way of paying contractors, even if in batches. The neglect of contractors as regards financial obligations by Gombe State is impacting negatively on the state. And just as the Federal Government has pumped money into the system for capital projects – knowing it’s effect, it is our belief that Gombe State must also pay contractors if the state’s economy is to be stimulated.“

  • ‘Fed Govt set to pay contractors’

    ‘Fed Govt set to pay contractors’

    Contractors in the electricity value chain will be paid on the completion of a debt verification exercise initiated by the Federal Government, the Minister of Power, Works and Housing, Babatunde Fashola, has said.

    The contractors implemented transmission, renewable and equipment surveillance projects for the government.

    Also, the government is planning to recover over 900 containers of power equipment that were trapped in one of the ports.

    Speaking yesterday at a stakeholders’ forum at Eko Atlantic City, Victoria Island, Lagos on: Powering the Main Economy: Fix Power, Fashola, said the idea will enable government to know its level of indebtedness to the operators and subsequently pay them.

    He said: ‘’The government is sorting out debts owed firms it contracted to provide services in the sector. We want to know debts that are due, while at the same time, developing instruments through which the debts can be paid. We have directed the debtors to come out with facts to buttress their assertions. We need to see more openness and transparency, before we pay the debts.

  • Kwara owes contractors N11b, says Ahmed

    Kwara State Governor Abdulfatah Ahmed has put the value of project debts in the state at N11.1 billion.

    He said his administration disbursed N1.7 billion to reduce the debts, noting that the balance is N9.4 billion.

    Ahmed spoke in Ilorin, the state capital, during the launch of the Kwara State Infrastructure Development Fund (IF-K).

    He promised that payment would resume in December, with ongoing and new projects targeted for completion by December, 2018.

    “As a demonstration of faith and a token of our commitment to pay outstanding contractor debts, this amount will be reduced on a quarterly basis until all debts are liquidated before end of the administration.

    “Simultaneously, contractors will drop off the IF-K grid as their obligations are terminated to allow for the introduction of new portfolio of fresh projects.

    “The fund will be financed through a N5 billion seed fund and a N500 million monthly contribution from the state’s Internally Generated Revenue (IGR) through an Irrevocable Standing Payment Order (ISPO). This implies that the money will be taken at source from the state’s IGR and provides an additional layer of assurance to project partners.

    “Additional non-IGR funds, such as those from the Federal Government and global development partners, will be added to IF-K as they become available.

    “Under IF-K, funds will be disbursed on a quarterly basis and are projected to grow by N6 billion by end of the year. In order to ensure accountability and insulate the funds from political control, the IF-K will be managed by a reputable investment company, Investment One, which has been appointed by law as trustee for the scheme.

    “Investment One is also to market the fund to potential investors and mitigate against payment risks by ring-fencing the funds and limiting their utilisation to the approved purposes.

    “I must also emphasise that we will continue to fund smaller projects through other platforms as only projects worth N300 million and above will be included on the IF-K payment grid.

    “Over the next 10 months, therefore, over N5.8 billion will be pumped into the state’s economy via IF-K. Our expectation is that this injection will keep our project partners in business and have a positive spiral effect on employment generation. In the medium term, the remaining N5.3 billion will boost the state’s Gross Domestic Product (GDP) for about 18 months while sustaining the multiplier impact on job creation.”