As the financing gap for inherited projects approaches 16 trillion naira, the Minister of Works, Engr David Umahi has expressed dissatisfaction with inadequate budgetary provisions for the development of road infrastructure throughout the nation.
Umahi made this revelation on Thursday in Abuja at the Press Conference for the commemoration of one year in office
He said, “As of May 2023, the Tinubu-led administration inherited projects worth N14.4 trillion and a N13 trillion financial deficit.
“After evaluating the project in light with the state of the economy, more over N16 trillion will be needed to finish it. The annual budgetary provision is the old traditional method of funding highway projects,” he added.
The Minister stated further that the budgetary provisions have appeared to be insufficient over time to handle difficulties associated with highway development.
“Additionally, some of the projects have been ongoing for as long as five to eighteen years. All new initiatives under the Renewed Hope Agenda and the Four (4) Legacy projects are not included in this slot.
“As of May 2023, the funding gap to finish all of the inherited projects is approximately N13 trillion and will be more than N16 trillion when every proposal is examined in light of the conditions of the market today”.
He pressed further that the ministry has developed a number of alternative funding mechanisms to try and close the funding gaps.
“These mechanisms include the Sovereign SUKUK issued by the Debt Management Office (DMO), the Presidential Infrastructure Development Fund (PIDF), the Road Tax Credit Scheme (NNPCL, NLNG, Dangote, BUA, MIN, Mainstream Energy Solutions Limited GZI Industries).
“Also, the use of multi-lateral loans, the Public Private Partnership (PPP)/Highway Development Management Initiative (HDMI), and the recently established Renewed Hope Infrastructure Funding model.
“With a total investment of N100 billion in road building and repair in 2017, N100 billion in 2018, N162.55 bn in 2020, and N210.56 billion in 2021 for 2,812 km of road, the Minister went on to add that 82 projects were authorised under the SUKUK fund.
“Furthermore, the authorised SUKUK provision for 2023 was N250 billion, whereas the approved SUKUK provision for 2022 was N110 billion”.
Umahi also mentioned that the Federal Executive Council had allocated N2.590 trillion to fund 65 highway projects under Phases I and II of the NNPCL Funding.
He said the projects had a combined 6,358 km of planned coverage, and N2.586 trillion in funding would be available until 2025. N5.288 trillion is the entire contract sum that has been evaluated owing to inflation.
“There is a N2.702 trillion financial shortfall for phase I and II completion. NNPCL has paid N840 billion in total to date, and the total amount of overdue funding that the FEC has approved is N1.750 trillion. The projects are dispersed throughout the the nation’s six geopolitical zones.
“The Road Infrastructure Development & Refurbishment Tax Credit Scheme program has been embraced by other significant companies such as NLNG Limited, Dangote Limited.
“Also, BUA International Limited, MTN Nigeria Communications Plc, Mainstream Energy Solutions Limited, and GZI Industries projects. The funding surpasses N2.08 trillion over a distance of 1,548 kilometres.”
The Minister noted that the Highway Development and Management Initiative (HDMI) was launched by the Ministry of Works under the Public Private Partnership Unit (PPP) in order to maximise the use of resources along the Right of Way (ROW) and attract sustainable investment and funding for the development of road infrastructure.
This was done in accordance with the Ministry of Works’ statutory responsibilities over the Federal Road network. He explained that goal of the private sector’s involvement was to offer substitute funding sources for the construction and upkeep of roads:
“Among other things, the HDMI is anticipated to improve the Federal Highways’ operations, management, and maintenance by introducing responsibility, order, and profitable entrepreneurship.
“As may be negotiated, the emerging concessionaires will recover their investments through toll and non-toll earnings”, he stated.
Umahi added that four legacy highway projects chosen for implementation under present Renewed Hope Agenda in order to enhance the road network and rail service connections throughout the six geopolitical zones and promote socioeconomic growth.
He said, “These projects include 1,068 km Sokoto — Badagry Road, the 750 km Lagos – Calabar Coastal Road Corridor, the 482 km Calabar – Abuja Superhighway Project (TransSaharan Road), and the 439 km Akwanga-Jos-Bauchi-Gombe Road”.