Govt owes N500b in contract arrears, says Okonjo-Iweala
From Seun Adeoye,
Osogbo
MINISTER of Finance, Mrs Ngozi Okonjo-Iweala, at the weekend disclosed that the Federal Government has discovered that debts owed contractors, some of which dated back to 10 years, are actually twice the initial estimation.
According to her, after compiling the number of ongoing and abandoned projects and postponing new ones, the debts yet to be paid by the federal government to contractors amounted to over N500 billion.
Okonjo-Iweala said the initial calculation put the figure in excess of N250 billion, "but we have since then discovered that the contract arrears double this".
The minister, who delivered a lecture on "Infrastructure and Sustainable Development in Nigeria" at the People's Democratic Party (PDP) South-West caucus meeting in Ada, Osun State, at the weekend, noted that this situation cannot build good business confidence.
According to her, at the beginning of his first term in 1999, President Olusegun Obasanjo inherited an economy that was severely "run down and bore all the characteristics of a post-conflict economy."
Her words: "I still believe that most Nigerians are yet to appreciate the extent of decay of our institution, infrastructure, system and processes that Mr. President encountered".
The nation, she said, can only assume its leadership position in Africa if it addresses its infrastructure deficiencies.
She said: "On a competitive basis, Nigeria ranks lower than most other African countries in terms of the quality and availability of critical infrastructure believed to be fundamental to economic development.
"Here, businesses often have to generate their own electricity, have their own boreholes for water and provide security, all of which result in high transaction costs for businesses", she added.
Citing the 2004 African Competition report by the World Economic Forum (WEF) which described inadequate infrastructure as the greatest impediment to doing business in the nation, she said "specifically, infrastructure accounts for 24 per cent of the problems associated with conducting business transactions in Nigeria".
According to the minister, besides poor infrastructure, corruption, limited access to finance, policy instability and inefficient government bureaucracy were ranked next as major contributing factors.
She said the Obasanjo administration attached high importance to redressing the infrastructure problem, hence the insistence that 65 per cent of the capital expenditure in this year's budget should go to roads, power, water, education, health and security.
She noted that the government realised it cannot do it alone, hence it has developed a number of strategies to achieve the objective.
Her words: "Through public-private sector partnership, the government is inviting the private sector to invest in infrastructure. A bill is before the National Assembly to that effect. There is also the privatisation and private sector development as well as the liberalisation and deregulation to foster competition in certain infrastructure sector such as the oil sector.
"Others are the civil service reform, budget and procurement reform and on the fiscal front, improved management of excess crude revenue".
She added that although the challenge for the Federal Government was enormous, the various reforms and structural policies of the government had started yielding results, especially in infrastructure improvement and attracting new investments.
On roads, she said out of the total length of 32,100 km federal highway road network, 26,500 had been rehabilitated, adding that the total projected expenditure of all the three categories was N362.3 billion by 2007.
She added: "Power generating capacity in the nation, had improved from the 2,000 mega watts in 1999 to about 4,000 mega watts. The target is total generating capacity of 10,000 mega watts by 2007".
On water, she said in 1999, only 50 per cent of the urban population and 40 per cent of the rural dwellers had access to clean water, saying the figure had risen to 64 per cent, about 14 per cent increase in five years.
She expressed optimism that with the current policies and the leadership of President Obasanjo, "we will be able to deliver the required results to our people".
