N600bn debt: Contractors abandon Lagos-Ibadan Expressway, 183 others

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.

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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.

some abandoned roads

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.