The declining federally collected revenues have put Federal Government’s projects at the risk of not being completed as scheduled, a situation which can increase the number of abandoned projects in the country, BusinessDay investigation has revealed.
The nation’s monthly revenue collection has fallen to an average of N670 billion in 2014 compared with an average of N770 billion in 2013. This is coming on the heels of a steady decrease in the nation’s external reserves to $37.9 billion as at April 2014, as against $48.9 billion a year ago.
The Federal Government and its ministries awarded contracts worth N1.13 trillion from January to December 2013, based on the values of projects documented by the Bureau of Public Procurement (BPP). These projects are in addition to several others awarded in 2012, on some of which execution is still on-going.
“We can already see the evidence of dwindling revenue in the declining vote for capital projects in the yearly federal budgets,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industries (LCCI).
“Consequently, we may have more abandoned projects in the near future, as less votes are available for capital projects. I think this buttresses my earlier point that government should focus more on completing the hitherto abandoned projects and pay less attention to awarding fresh contracts,” Yusuf said.
The concerns expressed by stakeholders become pertinent because the number of projects that will be executed in a fiscal year relates to the fund government allocates to capital expenditure. And this has been on the decline in recent times. In the 2014 appropriation bill, the FG budgeted N1.1 trillion as capital expenditure, which is 31 percent lower than N1.59 trillion allocated to the same purpose in 2013.
“It is actually expected that when we are still having uncompleted projects, new ones should not be awarded. However, in some exceptional situations, new projects and contracts may be excusable due to exigencies of the moment. Government should make a strong commitment towards the completion of abandoned projects as these projects in their uncompleted state are not beneficial to anyone and the cost of completing them keeps rising. When eventually executed, they would have taken so much from the government treasury to complete,” the LCCI DG said.
With N461 billion worth of contracts, the Federal Ministry of Transport (FMT) tops the table of ministries with the highest contract value in 2013. It is closely followed by the Ministry of Works, which supervises N436 billion worth of contracts.
Others are the Federal Capital Territory (FCT), N160 billion; Ministry of Aviation, N35 billion; Finance, N12.2 billion; Education, N8.7 billion; Petroleum, N6 billion, and Power, N2.8 billion.
In monetary terms, the Phase 4B Port Facilities at Onne Oil & Gas Zone project, worth $2.797 billion (N436bn), is the most important contract under the supervision of FMT. The port facilities will have a completion period of six years and a concession period of 25 years. It was awarded on June 19, 2013 and is being handled by the Deep Offshore Services Nigeria Ltd. All these new contracts add to the existing ones, which invariably means that more resources are needed if they will be completed as initially scheduled.
Other notable contracts awarded in 2013 are the Lagos-Ibadan Expressway, the construction of a head office for the Nigeria Customs Service (NCS), and the provision of helicopter/aircraft hangar at Nnamdi Azikiwe International Airport, Abuja.
Others are the construction of Ikot-Ekpene-Aba-Owerri dualisation road section 1, consultancy services for the supervision of Omuaran-Egbe 132kv DC transmission line, and the acquisition and purchase of an office building for the Petroleum Equalisation Fund (PEF).
Many projects were equally awarded by the FG in 2011 and 2012, some of which are yet to be completed.
Meanwhile, the abandoned project phenomenon has been with the country for some time. That was why in 2011, President Goodluck Jonathan set up the Presidential Projects Assessment Committee (PPAC), which reported that 11,886 projects at the cost of N7.78 trillion were being executed by the Federal Government.
The PPAC findings stated that “reckoned in today’s prices and allowing for unreported ongoing projects, the total cost needed to complete all projects may well be as high as N8 trillion”.
Another important project is the East-West Road which might not be completed this year due to funding gap.
“The incremental budgeting approach of the FG, where every year a bit of the cost is allocated to the project, makes it extremely difficult for the projects to be completed in time,” said Femi Saibu, an associate professor at the Department of Economics, University of Lagos.
Saibu, therefore, suggested that government should prioritise projects, just as their execution must be well thought-out before being embarked upon.
“A situation where the government starts a project before realising that it is not viable doesn’t augur well for the nation’s fiscal sustainability and economic development,” he said.
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