Naira fall threatens N1.7tn road projects

Some construction firms are considering a review of the over N1.765tn road contracts they entered into with the Federal Government following the continued depreciation of the naira against the United States dollar.

It was learnt on Saturday that many of the contracts signed between the government and some construction companies had ended up as abandoned projects, which are scattered across the country.

A large number of the abandoned projects had been left unattended to since the end of the second quarter of 2014, it was learnt.  

Although the contractors could not state the exact number of ongoing federal road projects that were abandoned across the country as of the time of this investigation, findings showed that 184 projects were classified as ‘ongoing’ by the Federal Government as of September 2014.

Findings from the Federal Ministry of Works showed that the ongoing projects were located in the six geopolitical zones of the country, while their total cost was put at N1.765tn.

The contractors, who spoke to SUNDAY PUNCH, also admitted to have abandoned all federal road projects across the country as a result of the huge debt owed them by the Federal Government.

Our correspondent gathered that most contractors were not willing to sign any construction contract at the moment, as most of them were owed billions of naira by the government.

It was further learnt that the refusal of some of the firms in signing any construction contract was also attributed to the fall of the local currency against the greenback.

Senior officials of contraction companies and executive members of the Federation of Construction Industry, an umbrella body for construction firms in Nigeria, also told our correspondent on Saturday that the new government had yet to sign any new road construction project.

“All the federal road projects you see abandoned across the country were inherited by this government. They’ve not signed any new construction contract as far as I know, particularly on roads construction,” a senior official of a major construction firm, who spoke on condition of anonymity, as his company was owed billions of naira, said.

The Minister of Power, Works and Housing, Mr. Babatunde Fashola, had during his first maiden press briefing in Abuja late last year stated that the government owed construction firms hundreds of billions of naira.

“As of May 2015, many contractors have stopped work because of payment, and many fathers and wives employed by them have been laid off as a result. Some of the numbers from only four companies that were sampled suggest that at least 5,150 workers had been laid off as at March 11, 2015,” Fashola had said.

The official also stated that the fall of the naira had also negatively impacted the activities of construction firms, stressing that this was why many firms were considering a review of their contract terms with the government, which were signed before they abandoned the various project sites.

He said, “The fall of the naira has direct impact on the construction sector. Most of the spare parts used on machineries in this business are imported and you need dollar for this. Foreign experts are also maintained using the US dollar, so as it is now, it is becoming very expensive to maintain them. This is why some companies are seeking a review of their contract terms.”

Explaining why no new road construction contract had been signed, the President, FOCI, Mr. Solomon Ogunbusola, told our correspondent that the government had stated that it would work towards completing ongoing projects and would not award new contracts at the moment.

He said, “The government has said that it will continue the ongoing road projects initiated by the past administration. They are not awarding new road contracts, for according to their policy statements, they want to make sure that the ongoing jobs are finished or that they continue with them instead of awarding new ones.

“But it is a fact that the instability in the naira will affect the construction business and some companies may want to review their contracts terms.”

When asked if work had commenced on some abandoned roads, he said, “Everything boils down to payment of the debt owed construction companies. If you owe somebody about N20bn and you are paying N200m, what kind of payment is that one? I think we should hold on till when the budget is passed. But for now, I don’t think anyone is ready to return to site considering the huge debt owed us.”

Officials at the Federal Ministry of Works told our correspondent that the government had been meeting with some construction companies with respect to their return to project sites.

It was learnt that work would commence on most projects across the country once the budget is passed by the National Assembly.

“The government is meeting with key construction firms and the minister stated this during his maiden press briefing. I am sure that once the budget is passed, you will start seeing serious work on some of these roads. But I don’t think new projects will be signed now,” a senior official at the Works ministry who was not authorised to speak on the matter, told our correspondent on condition of anonymity.

Efforts to reach the Director of Information at the works ministry, Mr. ‘Bisi Agbonhin, were unsuccessful as his mobile phone number did not connect and he did not respond to a text message sent to him on Saturday.