Fed Govt needs N7tr to fix 854 roads

November 4, 2021
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The Federal Government needs N7.4 trillion to fund 854 road projects across the six geo-political zones of the country.

It also defended the recent incursion of companies into the construction of federal roads under a policy known as  Credit Tax Scheme, saying it was to overcome the challenges of raising funds for the sector.

Minister of Works and Housing Babatunde Fashola disclosed this while defending the ministry’s  2022 budget before the House of Representatives Committee on Works in Abuja yesterday.

Fashola said: The total contract sum is N7.430 trillion of what we have in the works covering 854 roads across the six geopolitical zones. But that must speak to the need to contain our spending and our new commitments.

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” Those projects are categorised into items one to four. One is the projects financed by the Presidential Infrastructure Development Fund managed by the NSIA, the highway projects financed by the Sukuk.

“We have roads financed by the Infrastructure Tax credit scheme and we have projects financed by Multilateral loans taken by the Federal government in the name of the Federal Republic.”

The minister also told the committee that the ministry’s  indebtedness to contractors stands at N420.6 billion

He also reaffirmed government’s promise to complete   Lagos/Ibadan Expressway and the Second Niger Bridge next year.

About 90 kilometres of the ever-busy 127.6-kilometre highway have been completed, Fashola told the   House of Representatives Committee on Works  in Abuja yesterday.

The reconstruction and expansion of the road commenced in 2013 at a cost of N167 billion. It was initially billed for completion in 48 months.  As of November last year,  the Federal Government had announced that it would spend N311 billion on the project.

Work started on the 1.6 kilometre  Second Niger Bridge in 2018.  February 2022 was the deadline set for the completion  of the project which initial cost was N336 billion.

The minister disclosed that the ministry had decided on the completion of ongoing road projects rather than embarking on new ones.

He explained the adoption of the Credit Tax Scheme for road construction by some major companies, saying MTN, UNILEVER, Floor Mills and power generation companies had also indicated an interest in the policy.

Fashola said:  “The Lagos/Ibadan express road is scheduled for completion in 2022. At the moment, we have done cumulatively about 90 kilometers in sections one and two.

“For the Second Niger Bridge, the plan is to complete it in 2022 and it is on schedule. The contractors tell us that the bridges will be fully connected by the end of quarter one in 2022.

“So, by the end of the first quarter, you can walk on it from the beginning to the end. We lost some time during the COVID-19, but they are working to gain the time lost.”

The minister also explained why 21 roads across the six geo-political zones were selected for completion by the NNPC under the Credit Tax scheme. He said monies already budgeted for such roads in the budget would be used to complete other roads in the same zones.

On the tax credit scheme, he said: “This scheme was initiated by the previous administration. So, it is an inherited policy, but it was not implemented. It was in 2016/2017 when we were looking for how to fund the budget that I came across it and the first project was the Obajana/Kabba Road.

“The scheme had a sunset date and so, was going to lapse and we thought this was a useful way of finding money to fund some projects. We recommended it to Mr. President and he approved that we should continue with it.

“At the time the Executive Order was signed, a list of roads was recommended to the President because there were complaints that only two roads were benefiting. So, a set of roads were presented to the President and he approved those roads to create a balance across the zones.

“There have been subsequent requests which extend beyond the approval of the President and these explain how the roads are picked.

“Usually, it is the taxable entity who applies to say I want to do this road. What you often find is that all the roads that are chosen by those who want to use the credit have a business benefit for them and that is eminently sensible.

“The taxing entity pays the tax in advance. It is not the usual process where we wait for them to declare a profit, What tax credit means is that you are advancing tax to the government.

“Anybody who wants to provide the infrastructure that the public can use is eligible to use the tax credit.

“Beyond NNPC(Nigerian National Petroleum Corporation), there are other interested companies like Unilever, MTN, GLO, Flour Mills who are already showing interest.  We just received requests for three roads from one of the major power generation companies, saying they want to take on these roads.

“Over the last three years, we have been trying to find a way of solving this problem and NNPC now came up with this solution. Payment for these contracts will be paid by NNPC subject to condition.

“We have told the contractors that under this scheme, nobody is bringing variation or augmentation. If you can’t do it, own up and get out of the scheme.”

He explained that  N282.6 billion was set aside for the Ministry in the 2022 budget estimate, necessitating the prioritisation or projects for completion across the six geopolitical zones.

Lamenting the low budgetary allocation to the ministry, he said apart from the pressure to pay contractors for jobs already completed, there was the problem of inadequate allocation, where N100 million or N200 million is allocated for roads costing several billions of naira.

Fashola said there was the need by the ministry to concentrate on existing road contracts rather than embarking on new ones.

“Enough of new roads and new projects. Let us concentrate our limited resources to complete or progress what we have started,” he added.

Chairman of the Committee Kabiru Bichi said it was commendable that even in the face of existing financial constraints, the Federal Government is implementing over 800 road contracts.

Niger Delta Affairs Minister Godswill Akpabio, who also defended his ministry’s 2022 budget yesterday,   disclosed that over N359 billion had so far been expended on the 657km dual carriage East-West Road.

The road stretches from Calabar in Cross River State to Effurun in Delta State.

Akpabio, according to a statement by his Press Secretary, Jackson Udom, told the committee that “the ministry was considering raising funds from other sources to complete   Sections I-IV of the road” before May  2023.

Like Fashola, Akpabio lamented the low budgetary allocation to the ministry, saying it was affecting its performance.

His words: “The 2022 budgetary allocation is meager and significantly inadequate in the face of the mandate and goals of the ministry to meet the yearnings and aspirations of the people. The volume of the outstanding liabilities with underfunding has affected ongoing projects/programmes of the ministry across the region.”

The committee demanded  a concerted effort among major players in the polity, to ensure that adequate funds were  approved and released to the ministry   for “urgent completion of the East-West Road.”

Chairman, House Committee on Niger Delta Affairs, Essien Ayi, said: “What I believe we as lawmakers should do on the issue of the East-West Road, is to see to how we can meet with the leadership of the Senate and House of Representatives to fashion out ways in which substantial amount of money would be approved and released to the Ministry of Niger Delta Affairs for the completion of this very important road.”

He argued that  “a situation where   N10bn is allocated  for the East – West Road yearly is  a sign that the road would  not be completed in the next 20 years.”

A member,  Oghene Egoh, noted that with the poor yearly budgetary provision, there was no way the ministry would achieve what it was created to accomplish, including the East-West Road.

“Going by the enormity of work expected of the Ministry, as far as the East-West Road is concerned, the sum of N10bn every year in the budget for that road will do little or nothing.”

“This is the road that leads to where the resources used to run this country is located. For the completion of this road to linger on for close to 20 years, is enough to cause unrest in the region. I will suggest that the chairman of this committee, with some members, meet with the minister, to discuss what is really needed to complete this road. This road must have a terminal date.”

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