Contractors handling over 184 federal
road projects have abandoned the various sites due to lack of funding
from the Federal Government and the huge debt owed them by the Federal
Ministry of Works.
Saturday PUNCH reliably learnt
that following the decisions of the contractors to abandon the sites,
N1.76trn federal road projects across the country had suffered setback.
The amount is the total cost of ongoing federal road projects across the six geo-political zones of the country.
The President, Federation of
Construction Industry, the umbrella body for construction companies, Mr.
Solomon Ogunbusola, in an interview with Saturday PUNCH, said all federal roads that had not been completed had been abandoned.
The
contractors said they were owed over N600bn, adding that although part
of the sum was owed by state and local governments, over 80 per cent of
the amount was owed by the Federal Government.
This, according to them, was largely the reason why they decided to abandon the various project sites across the country.
They explained that their decision was
not in protest against the government, but was purely because they could
not function without funds.
The contractors could not state the
exact number of ongoing federal road projects abandoned across the
country, but findings showed that 184 projects were classified as
ongoing by the Federal Government as at September 2014.
The North-Central Zone had 29 projects
with a total length of 1,201.81km and a cost of N294bn; North-East had
26 projects, 1,219.65km long and cost N314bn; North-West had 20
projects, 1,040.22km long and cost N188bn; while the South-East had 45
projects stretching 1,251.4km with a worth of N357bn.
The South-South had 33 ongoing projects,
739.57km long costing N245bn; while the number of ongoing projects in
the South-West was put at 31, stretching 1,072.63km at a total cost of
N365bn.
The total number of ongoing projects at
the time this report was done by the FMW in September 2014 was 184, and
the projects were meant to cover a cumulative length of 6,525.63km
across the country at a total cost of N1.765tn.
We are owing banks –Contractors
Explaining why they abandoned the
various sites where they work, Ogunbusola told one of our correspondents
that the contractors had no fund to work with.
He said, “All federal roads awarded by
the Federal Ministry of Works that have not been completed have been
abandoned. They have not paid anybody anything, let alone improving our
payments. That is why we are not on sites. Maybe by the time the
President forms his cabinet, we will start getting payments. It could be
possible that the President wants the ministers to handle the matter.
We are owing a lot of banks, so how can we work when we are not paid?
Virtually all contractors have to abandon project sites.
“It is not that we are protesting
against government policies or its anti-corruption crusade, we are only
waiting for our payments. As soon as contractors get their payments, you
will see that infrastructural development will pick up. We are happy
with this administration’s policies, but the truth is that we have not
been paid and there is no way we can go back to site when we don’t have
money to pay workers after the construction industry has already laid
off close to 10,000 employees due to issues of funding.”
Many roads are less than 30 per cent completed –Investigation
Further findings showed that as at
September last year, only seven federal road projects out of the 51
contracts awarded in 2013 had recorded up to 40 per cent completion.
Many of the projects were far less than 30 per cent completed.
In fact, one of the projects, the
construction of Jarmai Basha Road in Plateau State, was zero per cent
complete even after it was awarded in 2013. Many others had similar
stories as they were less than 10 per cent completed one year after they
were awarded.
Major projects like the reconstruction
and expansion of the two sections of the Lagos-Ibadan dual carriageway,
which passes through Lagos, Ogun and Oyo states, were only 11 and eight
per cent completed, according to the ministry.
Also the rehabilitation and
reconstruction of the two sections of the Enugu-Port Harcourt dual
carriageway in Abia State were just eight and 3.5 per cent completed
after being awarded one year earlier.
These project sites and many others had
been abandoned by contractors working on them due to paucity of funds
from the Federal Government.
In the Federal Capital Territory,
virtually all sites that used to have heavy construction work on them
about four months ago have been abandoned.
For instance, contractors like Julius
Berger, CCECC, Dantata & Sawoe, as well as many others had stopped
work on project sites like the Lugbe-Airport road, the bridge linking
Byazhim and Kubwa market, the major bridge linking the central business
district with Nyanya, and many others in the FCT.
Ogunbusola further explained that
although the former government of President Goodluck Jonathan gave out
many contracts, it did not pay for most of the jobs, a development that
had made many construction firms distressed.
When asked to state specifically the
amount owed construction companies across the country, he replied, “It
is over N600bn. I can mention over three companies that were owed over
N200bn. The financial director of Julius Berger said at their AGM that
they were being owed over N90bn. And out of the N90bn, over N70bn is
owed by the Federal Government.
“MCC is owed over N70bn too, Setraco
over N80bn. So all the companies are being owed. Even Dantata, they owe
them and I will not tell you what I don’t know. How can you continue to
owe all these companies? For over a year or two years now, we have never
had it so bad! Because the payments are not coming, we don’t know what
to do. We cannot carry placards.”
A senior official with one of the major
construction firms confided in one of our correspondents that it was
unfortunate that the government was faced with so much financial
challenges.
He stressed that the sector would collapse if the government failed to pay the companies.
The official who pleaded not to be
named, as he was not authorised to speak on the matter, said, “Over
10,000 workers have been retrenched as a result of this challenge. We
are aware that the President is complaining, but the truth is that he
has to sort out the issue in the construction sector if he doesn’t want
this industry to collapse.
“We cannot go back to site, go back to
do what when you have no money to work on projects? It is beyond begging
us to return to work. They (government) have to show some seriousness,
pay your contractors and work will commence on the projects.”
Ministry, contractors meet over abandoned projects
When contacted, officials of the FMW
told one of our correspondents that the ministry’s Permanent Secretary,
Mr. Dauda Kigbu, met with major contractors last month to discuss the
challenges confronting the road sector.
The Director of Information, FMW, Mr.
‘Bisi Agbonhin, said the meeting considered the pressure on the national
budget and the country’s dwindling revenue, adding that contractors
resolved to maintain some level of presence at project sites to ensure
good motorable roads.
Agbonhin said, “It was agreed that the
FMW would swiftly resolve the outstanding issues in order to enable the
contractors to execute the various projects they were handling.”
It said the meeting was attended by not
less than 10 major contractors including Julius Berger Nigeria Plc,
CCECC Nigeria Limited, Setraco Nigeria Limited, CGC Nigeria Limited,
Gitto Construzioni General Nigeria Limited.
Contract debts linked with revenue decline
It was learnt that government’s failure
to pay the contractors might not be unconnected with non-release of
capital votes and the fall in the country’s revenues.
The PUNCH had exclusively reported on August 5 that the Federal Government had not released capital votes in the last 14 months.
The Presidency had told The PUNCH that capital votes would not be released until the government’s revenue generation improved.
The Special Adviser to the President on
Media and Publicity, Mr. Femi Adesina, had said that capital votes had
not been released since the second quarter of 2014, meaning that in all,
there had been no release of budgeted capital votes for 14 months.
Adesina said the implication was that
the administration of former President Goodluck Jonathan did not release
capital votes for three quarters while the present administration had
not released for one quarter.
He was, however, hopeful that the
present administration would release the capital votes of at least one
quarter this month “once the nation’s revenue increases.”
The President’s spokesman said, “Since
the second quarter of last year, capital votes have not been paid. This
means that the outgone administration did not pay for three quarters.
“We are, however, hopeful that revenue
normally goes up mid-year. If revenue goes up this month, the government
will pay for at least one quarter.”
The 2015 budget is targeting a gross federally collectible revenue of N9.78trn to be shared by the three tiers of government.
The figure when spread over a 12-month
period upon which the amount is to be generated, translates into a
monthly revenue of N815bn or N2.44trn per quarter.
But figures obtained from the Federal
Ministry of Finance revealed that between January and May this year, the
country has only been able to generate the sum of N1.74trn as gross
revenue.
When the actual N1.74trn revenue is
compared to the budgeted target of N4.07trn that should have been earned
within the five months period, it translates into a revenue shortfall
of 42.5 per cent or N2.3trn.
A breakdown of the actual revenue
revealed that the sum of N416.04bn was generated in January, N401.46bn
in February while the months of March, April and May had N315.04bn,
N282.06bn and N324.96bn respectively.
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