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.
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 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.
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.
-PUNCH
