The Federal government has deployed several funding initiatives to finance the construction of several roads across the country between 2017 to date due to inadequate revenues.
The Minister of Works, Sen. David Umahi, stated this on Monday during his appearance before the National Assembly joint Committee on Works to defend the Ministry’s 2023 budget and present the 2024 budget.
Umahi revealed that in addition to the annual Appropriation Act, the government utilized the Sovereign SUKUK Fund, Road Infrastructure Development & Refurbishment Tax Credit Scheme, and Multi-Lateral Loans to execute its road obligations through the years.
Umahi provided the background as he sought the understanding and cooperation of the National Assembly to increase the Ministry’s 2024 budget to N1.5 trillion to enable it to meet its critical road project obligations in 2024.
According to him, the Federal Government, through the Debt Management Office (DMO) initiated the Sukuk Funding Programme for financing road infrastructure where N683.122bn was raised.
According to him, the money was deployed to finance 25, 28, 44, 71, and 6 projects in 2017, 2018, 2020, 2021, and 2022 respectively.
He noted, “All the works milestones for the Sukuk in years 2017, 2018, 2020, and 2021 were completely drawn down while the 2022 Sukuk, issued in the sum of N110,000,000,000.00 is ongoing.
“A total of 63 selected critical projects are being funded under the 2022 Sovereign Sukuk Issuance.
“As at end of November 2023, the total sum of N50,537,288,079.45 was drawn down translating to a performance of 46%”.
Similarly, he said the Nigerian National Petroleum Company Limited (NNPC), Nigeria LNG Limited, Dangote Industries Limited, BUA International Limited, MTN Nigeria Communications Plc, Mainstream Energy Solutions Limited, and GZI Industries embraced the Road Infrastructure Development & Refurbishment Tax Credit Scheme which also provided the government with alternative funding for some critical roads in the country.
He said the NNPC joined the Scheme by undertaking to finance 21 roads in the sum of N621bn with a total length of about 1,804.6km under the NNPC Phase I.
“These roads were identified by key stakeholders such as the NNPC, Petroleum Tanker Drivers Association (PTD) and the Ministry, etc. as being crucial for the efficient distribution of petroleum products across the nation.
“As at date, the total drawdown forwarded to the NNPC Limited is in the sum of N247,729,252,899.54 out of the Federal Executive Council (FEC) approved sum of N621,237,164,794.59 representing 39.88% performance.
“The funding gap here due to inflation is estimated at over 250bn.
“The NNPC Phase II Funded Projects were approved by the Federal Executive Council in the sum of N1,969,700,168,910 for the execution of 44 roads with a total length of 4,554.19km while the initial contract sum was about N3.969 trillion.
“This leaves a funding gap of over N2 trillion at the time of starting the projects. Presently, with inflation, the funding gap to have the NNPC Phases I & II completed shall stand at about N3.56 trillion (Inflation about N1.5 trillion) for two years from now.
“This funding gap is neither appropriated for nor has any source of funding.
“This means that without the kind intervention of this Distinguished and Honourable Joint Committees of Works, these projects will not go on mostly from March 2024 when the NNPC funding would have been exhausted.
“Your kind intervention and advice are highly, highly, and urgently solicited.
“As at date, the total drawdown forwarded to the NNPC Limited is in the sum of N752,093,618,603.51 representing 38.18% performance.
“The level of drawdown seems low because most of the projects needed to be reviewed due to the inflation.
“Several Companies have leveraged Executive Order No.7 of 2019 to commit investments in the construction/rehabilitation of roads and obtain Tax credits.
“Companies like NLNG Limited, Dangote Industries Limited, BUA International Limited, MTN Nigeria Communications Plc, Mainstream Energy Solutions Limited, and GZI Industries projects have embraced the Road Infrastructure Development & Refurbishment Tax Credit Scheme program.
“21 projects at a total cost of N1.338 trillion outside of those being funded by the NNPCL are being executed under this Scheme”.
As for projects funded from Multi-Lateral loans, Umahi stated that four major highway and bridge projects are being funded through Multilateral Loans and grants from the African Development Bank (AfDB) and the China Exim Bank.
