₦airaland Forum

FG gives conditions to pay N2.2tn contractors’ debts

Federal Government has said that the conversion of its financial statement from the cash accounting to the international Public Sector Accounting Standards have resulted into an unrecorded liability of N2.2tn to contractors.

Those owed the huge amount are contractors such as oil marketers, exporters, electricity distribution companies and others.

The Minister of Finance, Mrs Kemi Adeosun, stated this while at the annual dinner of the Lagos Business School in Lagos.

She said the liabilities would be addressed with a ten year Promissory Note Issuance programme in conjunction with the Central Bank of Nigeria.

The measure, she noted, would be subjected to a rigorous audit process of all claims to ensure validity and mitigate against fraud and the impact of past corrupt practices.

Adeosun who represented the Vice President, Yemi Osinbajo, at the event, warned that henceforth, measures would be put in place to prevent recurrence of such a problem.

This, according to her, would be achieved by ensuring that contracts are managed in a manner that firms have assurance over when they would be paid.

She cited the fact that many contractors were owed because many of those recently paid by Government were slow in mobilising to site.

She said, “Some contractors had not been paid in the past four years and in some cases the banks they owed refused them access to the funds released, causing delays.”

She explained further that those receiving the Promissory Notes would be expected to provide a material discount to government.

The issuance, she noted, would be a solution to a long term problem that was a drag on economic activity.

She emphasised the role of infrastructure in creating inclusive growth, stating that the drivers of inflation were structural and were being addressed through the focus on power, rail and road infrastructure.

The minister lamented that the existing provision that enables companies to claim relief for road projects had only been taken advantage of by two companies, Lafarge and Dangote Cement.

This, according to her, was because few companies were large enough to fund roads alone.

She said the revision would now allow collective tax relief such that companies would be able to jointly fund roads, subject to approval by Federal Inland Revenue Service and the Ministry of Works, and share the tax credit.

This would be particularly attractive to firms in clusters such as industrial estates, many of which are plagued by poor road conditions.

The minister also at the event outlined fiscal strategies to reposition the country’s economy in the 2017 fiscal period and return it to the path of sustainable growth.

She stated that the fiscal policies and actions to be adopted by the government to tackle the key barriers to growth would drive productivity and generate employment for the people.

A statement from her Media Adviser on Saturday stated that the minister said the plan would help improve cash flow of businesses, improve bank’s Non-Performing Loans, free up banks’ balance sheet for lending to private sector and improve government’s business interaction with the private sector.

The strategies according to her would also encourage and incentivize non-oil exports and drive import substitution as well as investment in strategic sectors

Part of the strategies according to the minister would accelerate recovery process for recovered assets by putting in place a whistle-blower scheme, centralized database on recovered assets and professional management of recovered assets.

Adeosun added that the government would catalyze Micro, Small and Medium Enterprise growth through specific measures to improve capacity and access to finance by securing $1.3bn from Development Bank of Nigeria and provision of tax incentives.

The minister also unveiled plans to restructure the Export Expansion Grant to a tax credit system and rationalize tariffs and waivers in key export sectors.

Copyright PUNCH.

http://punchng.com/fg-gives-conditions-pay-n2-2tn-contractors-debts/

Kemi is really trying her best in this terrible situation we find ourselves. I don't know why some Nairaland folks hate her so much.


2 trillion naira contracts awarded by the GEj regime, but their 2015 works budget was just about 25billion naira.

And people are still not appreciating Kemi for this intelligent move. May God help this country, it's filled with hypocrites.


Mynd44, OAM4J,

Good one there, any aproach that is of international best practice capable of bailing Nigeria out of the mess we've collectively gotten ourselves into is welcome. The poster below should be mindful of his comment, the 'kid' creat the fun that makes the forum interesting.

I'll love to read robust arguments and counter-arguments on this thread instead of the usual childish tantrums thrown around by kids on this forum. More often than not, you get childish comments completely out of point on many threads that should serve as opportunity to discuss intelligently.

Let's hope kids here listen and behave well for once.

@ Topic, Kemi Adeosun is proving to be well-versed in managing an economy especially out of recession.

Her proposal here has a long-term effect of checkmating fraud and guaranteeing govt contractors of getting paid as and when due.

The other plus is the offer of tax relief for companies:

She said the revision would now allow collective tax relief such that companies would be able to jointly fund roads, subject to approval by Federal Inland Revenue Service and the Ministry of Works, and share the tax credit.

And we shouldn't forget the debt we're talking about here was left behind by the IB and Madam Gele.

Great and smart solution from Kemi.

We must not 4get that this 2.2 trillion debt is d debt left behind by past govt at high oil price!!

To me Kemi is better than Ngozi. Ngozi was never tested. Ngozi was a minister when oil price was high and she could not use her office to create a long lasting economic security for the country. All they did was to spend bulk of the money on consumption and luxury.

The so called economic growth under ngozi was simply spending of oil money. Nothing more and nothing less.

However i commend Ngozi and Sanusi former CBN governor for ideas like bvn, TSA and IPPIS. But we must realise that these are just monetary monitoring tools and are not economic strategy.

Even if Goat, Monkey or Sheep was the minister of finance under GEJ, the growth in oil price which has nothing to do with Nigeria contribution or input would have resulted in the same "Short Term Prosperity" we experienced under GEJ.

Okay

All this 'We will' 'We Assure' will not get this country out of this mess Kemi or whatever your name is.

In saner climes what people like you does is take a bow out of the system; Greece finance minister did it, David Cameron did it when his call for referendum failed and Italian Prime Minister Renzi is about towing the same line.

To preside over people is not by force when your failures are too glaring for all to see. I don't know what sort of people We have in our own so called technocrats who insists on their own ways of doing things despite failing all the indicators of duty-call. Smh

tuale4u:
Great and smart solution.
We must not 4get that this 2.2 trillion debt is d debt left behind by past govt at high oil price!!

To me Kemi is better than Ngozi. Ngozi was not tested. Ngozi was a minister when oil price was high and she could not use her office to create a long lasting economic security for the country. All they did was to spend bulk of the money on consumption and luxury.

The so called economic growth under ngozi was simply spending of oil money. Nothing more and nothing less.

imagine Obama who took over an economy already in recession mention Bush and the past! Una no dey tire It is stale

PresidentAtiku:
imagine Obama who took over an economy already in recession mention Bush and the past! Una no dey tire It is stale

Well, you failed to mention that the US economy is the largest and most productive in the world. The country leads in terms of manufactured goods. Nigeria's economy on the other hand, is a consumptive, non productive, and moribund one.

Obama need not blame Bush thanks in part to Silicon Valley and the entire California. Were oil still selling at above $100, there wouldn't have been a need to echo GEJ's failings to your hearing too often. Although it still wouldn't mean that his regime was any less wasteful.

Obama was a prudent manager, not some miracle worker. Even he will seem clueless in a situation like this. He may fare a bit better, but overwhelmed, nonetheless.

Maybe people play the blame game a bit too much nowadays, but who's to blame when you squander your windfall today and your family goes hungry tomorrow?

Remember, tomorrow's problem never starts tomorrow; it only marks the manifestation of an ugly situation created yesterday.

[s]

PresidentAtiku:
imagine Obama who took over an economy already in recession mention Bush and the past! Una no dey tire It is stale

[/s]
And Bush and his co-travelers were not in the habit of blaming Obama or sponsoring saboteurs to discredit his government.

GEJ messed up Nigeria. Deal with that fact!

[s]

ugolance:
All this 'We will' 'We Assure' will not get this country out of this mess Kemi or whatever your name is.

In saner climes what people like you does is take a bow out of the system; Greece finance minister did it, David Cameron did it when his call for referendum failed and Italian Prime Minister Renzi is about towing the same line.

To preside over people is not by force when your failures are too glaring for all to see. I don't know what sort of people We have in our own so called technocrats who insists on their own ways of doing things despite failing all the indicators of duty-call. Smh

[/s]
Just like the over-hyped madam Pof-Pof took a bow when she couldn't prevent looting and wasting of our humongous earnings.

Adeosun is proving to be smarter than the Olodo madam Gele. Deal with it!

Gat nafin 2 say

I see

Front page

tuale4u:
Great and smart solution from Kemi.

We must not 4get that this 2.2 trillion debt is d debt left behind by past govt at high oil price!!

To me Kemi is better than Ngozi. Ngozi was never tested. Ngozi was a minister when oil price was high and she could not use her office to create a long lasting economic security for the country. All they did was to spend bulk of the money on consumption and luxury.

The so called economic growth under ngozi was simply spending of oil money. Nothing more and nothing less.

However i commend Ngozi and Sanusi former CBN governor for ideas like bvn, TSA and IPPIS. But we must realise that these are just monetary monitoring tools and are not economic strategy.

Even if Goat, Monkey or Sheep was the minister of finance under GEJ, the growth in oil price which has nothing to do with Nigeria contribution or input would have resulted in the same "Short Term Prosperity" we experienced under GEJ.

The audacity of you people: was Kemi not finance commissioner for Ogun state at a time of high oil prices? What she accomplished - unlike her Anambra state equivalent for instance - was to help load up the Govt balance sheet with debt which required an FG-led bailout for Ogun state to meet its basic obligations like paying workers. This is a state that via its proximity to Nigeria's economic capital, Lagos, should be in robust financial shape.

You keep repeating this line that NOI failed to secure the future. It conveys the impression that the FG had fiscal space to make big savings during NOI's tenure. Once the decision had been made to spend our oil bounty on increasing public sector wages - with the minimum wage going from 5k to 18k - it meant that the FG's expenses was loaded with recurrent expenditure which could not be cut. The FG was already running +1trillion Naira deficit when NOI took over 2011.

The reason why I draw the parallel with Adeosun's management of finances at state level is that both NOI and Adeosun and NOI faced similar challenges: managing finances largely dependent on oil revenues (Ogun state via the FAAC monthly allocations). Kemi dealt with the challenge via a debt binge - making borrowing projections that didn't accommodate for a slump in oil prices. Had NOI encouraged such borrowing, particularly external borrowing as the current finance team with their $29bn debt plan intend to, the FG today would face escalating debt obligations due to currency depreciation.

The reality is that policy choices made by Kemi as Ogun finance commissioner reveal an imprudence which left her state in a precarious position. At the FG level, she was part and parcel of the 2016 budget formulation - a budget I noted ab initio was unimplementable: https://www.nairaland.com/2827820/why-implementation-2016-budget-unlikely. If I could see that that budget was based on fantasy, why couldn't Kemi and Udoma? Quite frankly, the common variable for Kemi defenders on this forum is ethnic kinship: Ogun pensioners and workers be damned for all they care.

Actually obama did blame bush a lot

http://www.thepoliticalinsider.com/the-blame-game-at-its-finest-21-times-obama-has-passed-the-buck/

oloyesaso:
Actually obama did blame bush a lot

http://www.thepoliticalinsider.com/the-blame-game-at-its-finest-21-times-obama-has-passed-the-buck/

Please let them know abeg, they think governance is beans.

SillyMods:
[s][/s]
And Bush and his co-travelers were not in the habit of blaming Obama or sponsoring saboteurs to discredit his government.

GEJ messed up Nigeria. Deal with that fact!

dis guy. U dull and you don't even know. If GEJ messed up Nigeria then Buhari used acid to dissolve Nigeria. Wake up

malton:
Well, you failed to mention that the US economy is the largest and most productive in the world. The country leads in terms of manufactured goods. Nigeria's economy on the other hand, is a consumptive, non productive, and moribund one.

Obama need not blame Bush thanks in part to Silicon Valley and the entire California. Were oil still selling at above $100, there wouldn't have been a need to echo GEJ's failings to your hearing too often. Although it still wouldn't mean that his regime was any less wasteful.

Obama was a prudent manager, not some miracle worker. Even he will seem clueless in a situation like this. He may fare a bit better, but overwhelmed, nonetheless.

Maybe people play the blame game a bit too much nowadays, but who's to blame when you squander your windfall today and your family goes hungry tomorrow?

Remember, tomorrow's problem never starts tomorrow; it only marks the manifestation of an ugly situation created yesterday.

you people keep creating excuses for Buhari and the old man keeps increasing your workload by his mega cluelessness. Go get a life! U must not support because of religion.

Of what importance is this thread? No reasonable project was commissioned this year. The largest budget in Nigeria history did not even mould a block and not to talk of build. Praise singers everywhere meanwhile they are feel the bite of the economy. History should be made compulsory for the younger generation. They need to learn, unlearn and relearn.

this regime will just shout that the previous government didn't pay contracts for over 4 years without telling Nigerians the actual reasons for the so called accumulated debt in the first place.

while not disputing the fact that a portion of these debts could have been paid off, the major reasons for a larger percentage of the debts are;

1. variations/reviews in contract sums:

some contractors after getting the contract at a certain amount, will ask for an upward review of the cost of the job when they are about 40% completed. the government naturally cannot just accede to that, hence you have a stalemate.

2. Abandonment of jobs by contractors:

some contractors end up abandoning jobs & you can't expect the FG to balance them their money. but when the government leaves, they claim they are being owed.

3. installmental/milestone payments:

payment for some jobs are tied to certain milestones. so if the contractor doesn't meet those milestones, additional funds won't be released.

thankfully, this regime will undertake a review of the debt & I hope they will be honest enough to reveal why some contractors are being owed.