The Minister of Works, David Umahi, revealed that the Federal Government requires over N16 trillion to complete road projects inherited from previous administrations.
During a press briefing in Abuja on Thursday, Umahi provided an update on the Ministry’s achievements under President Bola Tinubu’s Renewed Hope Agenda.
He stated that the current administration inherited 18,932.50 kilometers of ongoing road projects, encompassing 2,064 contracts.
According to him, the total value of these projects as of May 2023 was estimated at N14.42 trillion.
He stated that out of the total amount certified, N4.73 trillion, N3.12 trillion has been paid, leaving an outstanding balance of N1.61 trillion.
“The funding gap to complete all the inherited projects is about N13 trillion as at May 2023; that will be more than N16 trillion when all projects are reviewed in line with current market realities.
“This is due to the removal of fuel subsidies and the floating of the naira.
“It is a very sound economic decision by this administration, considering the fact that some of the projects have lingered for between five and eight years.
“Consequently, the projects are being reviewed to match current market realities; this position excludes all the new projects under the Renewed Hope Agenda and the four legacy projects,’’ Umahi said.
Other means of Funding Road Projects
Furthermore, he explained that traditionally, highway projects were funded through annual budgetary allocations. However, over the years, these budget provisions have proven insufficient to address the growing challenges in highway development.
To bridge the funding gap, Umahi noted that the ministry has adopted alternative funding mechanisms such as the Presidential Infrastructure Development Fund (PIDF) and Sovereign SUKUK issued by the Debt Management Office (DMO).
Additionally, he said funding has been secured through the Road Tax Credit Scheme, involving companies like NNPCL, NLNG, Dangote, BUA, MIN, Mainstream Energy Solutions Ltd., and GZI Industries, as well as through multilateral loans.
He said that the sum of N2.59 trillion was approved by the Federal Executive Council (FEC) for the funding of 65 highway projects under Phases I and II of the NNPCL Funding.
The minister said that the projects were to cover a total of 6,358 km, while the available funding for the projects up to 2025 was N2.59 trillion.
“The reviewed total contract sum due to inflation is N5.288 trillion.
“The reviewed total contract sum due to inflation is N5.288 trillion.
“The funding gap for the completion of both phases I and II is N2.702 trillion.
“To date, the total payment made by NNPCL is in the sum of N840 billion, and the total outstanding funding approved by FEC is N1.750 trillion.
The projects are spread across the six geopolitical zones of the country,’’ he said.
What you should know
In recent times, several road construction projects undertaken by the Federal Government across the country have been abandoned by the contractors responsible for them.
The primary reason cited for these abandonments is the contractors’ requests for price variations, arguing that the agreed sums are insufficient to complete the projects due to factors such as inflation and the cost of importing machinery
Examples of recently abandoned road construction projects include the Bodo-Bonny road project being handled by Julius Berger, the Lokoja-Benin and Obajana Junction-Benin road projects in Kogi and Edo States, and the 15 km section of East-West Road from Eleme Junction to Onne Port Junction in Rivers State.