The Federal Government has said the President Bola Tinubu’s administration inherited about N14 trillion debt on road projects, 2,604 roads of 18,000 kilometres from ex-President Muhammadu Buhari’s administration.
The Minister of Works, Senator Dave Umahi, who disclosed while briefing State House correspondents after his maiden briefing session with President Bola Tinubu at the Presidential Villa, Abuja, said: “The ministry inherited a total of 2,604 projects, worth N14tn and for 18,000 kilometres of road, that’s what we had.”
The Minister also revealed that President Tinubu and the Chairman/CEO of BUA Cement met and agreed on crashing the price of cement in the country.
Senator Umahi further disclosed that he sought the approval of the President to terminate some of the projects that have stayed up to 10 years without any defined source of funding.
He added that the Federal Government would redesign yet-to-be-completed road projects to concrete pavements, and the use of cement for roads is more reliable and cost-effective than the widely used bitumen, which can last for 50 years.
The Minister explained that since assuming office on August 21, his ministry has paid N4 trillion of the N14 trillion owed to contractors of various road projects nationwide. “Between when we came on board and now, about N4tn has been paid. And so that is a balance of N10tn remaining,” he said.
Senator Umahi, who is the immediate past governor of Ebonyi State, said road projects that have lingered for about two decades were never appropriated and, therefore, would have to be terminated at his behest.
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He said: “Now, in this N10 trillion, we have defined sources that could fund up to N4 trillion. So, we have a funding gap of about N6 trillion. That is what is there now.
“We have a number of programmes for road development under the previous administration. We inherited all the projects; we have not dropped any of them. But curious to know that some of these projects have lasted for 20 years, some 10 years. In fact, in most cases, they were never appropriated throughout every tenure.
“So, I went to seek Mr. President’s nod so that I will be able to terminate some of the projects that have stayed up to 10 years without any defined source of funding. “
He lamented the current appropriation system for federal road projects, saying the piecemeal disbursement of funds to contractors is stymying delivery.
“I shared with Mr president that the way appropriation is being done is not healthy to develop our roads infrastructure. For example, for a road that may cost N10 billion, an appropriation of N150m is made.
“It is just for the contractor to take and put in his pockets because where the average cost of projects that we inherited is about N700 million per kilometre and you are given out N150 million for the whole year, then you are just enhancing the pockets of the contractor,” he said.
According to him, in his discussion with the President, he had urged him (Tinubu) to engage with the National Assembly to prioritise projects.
“Just look at over 2600 projects, 18,000 kilometres of roads, and N14 trillion. That is huge! And the worrisome part of this is that even the ones that are being funded properly, the roads hardly last up to five years,” he complained.
The short lifespan of roads, he said, necessitated his recent proposal to the President to redesign and construct yet-to-be-completed federal roads, using reinforced concrete. “So, I briefed Mr. President on what we are doing by introducing reinforced concrete technology for our road pavements,” he said.
Umahi, who is an engineer by profession, vowed to “fight” entities poised to frustrate this plan, saying: “I know that there are a lot of fights from contractors, but I’m David, I’m known for fight, and I will fight this because I’ve reported myself to Mr. President.”
Recall that while speaking in Akure on September 1, Senator Umahi said the Federal Government would redesign yet-to-be-completed road projects to concrete pavements, arguing that using cement for roads is more reliable and cost-effective than the widely used bitumen.
He insisted that it could last for 50 years. “We are sure that this is the way to go, and it has a guarantee of 50 years,” he said.
Despite pockets of opposition to the use of reinforced concrete, the Minister said he had received the President’s backing and would proceed with the plan.
“Incidentally, Mr. President is also an infrastructure guru. And he fully supports that we should use reinforced concrete for our road pavements.’’
“So, there is no other place you can report me other than to report me to God. So, Mr. President is supporting me that way. We’ll redesign our roads with reinforced concrete pavement,” he said.
According to the Global Debt Database by IMF, debt retreated for the second year in a row to $235 trillion last year, or $200 billion above its level in 2021.
“The global debt burden remained above its “already-high pre-pandemic level. It stood at 238 per cent of global gross domestic product last year, nine percentage points higher than in 2019,’’the Washington-based lender said in a new blog post.
“Policymakers will need to be unwavering over the next few years in their commitment to preserving debt sustainability,” the fund said in a report.
Global debt grew by $8.3 trillion in the first three months of 2023, the Institute of International Finance said in its Global Debt Monitor report in May.
The increase marks the second consecutive quarterly jump in global borrowing, following two quarters of sharp decline during rapid monetary policy tightening last year in countries around the world.
In Kenya, the public debt was updated at Sh10.2 trillion in June, having breached the earlier ceiling of Sh10 trillion.
The National Treasury data shows the country borrowed the largest amount of money in a single year during President William Ruto’s first year in office amid shortfalls in tax collections and increased repayment obligations.
Gross debt stock climbed Sh1.56 trillion for the financial year ended June.
Central banks around the world have eased the pace of increases in their benchmark policy rates that were raised to curb inflation. Last month, Kenya retailed the base rate at 10.5 per cent.
After hitting pause on its tightening cycle in June, the Fed in July increased the policy rate for the 11th time since March 2022 by 25 basis points, as it aims to bring inflation down to its two per cent target range after prices hit a four-decade high in June 2022.
The Fed has now raised rates by a total of 525 basis points since March 2022.
The rise in interest rates makes borrowing in US dollars more expensive for governments, corporations and financial institutions, as well as household borrowers.
“The dollar soared against most emerging market and advanced economy currencies over the course of 2022, raising the cost of meeting existing debt obligations — many of which are denominated in the US currency,’’ IMF says.
However, the smaller increases and their slowing pace have encouraged borrowers to take advantage of the window and secure capital.
Despite the economic growth rebound from 2020 and much higher-than-expected inflation, public debt remained stubbornly high last year, according to the IMF.
According to the report, deficits kept public debt levels elevated, as many governments spent more to boost growth and respond to food and energy price spikes even as they ended pandemic-related fiscal support, the lender said.
Meanwhile, private debt, which includes household and non-financial corporate debt, declined at a faster clip, dropping 12 per centage points of GDP.
Even then, the decline was not enough to erase the pandemic surge, the fund said.
“Before the pandemic, global debt-to-GDP ratios had risen for decades,” the IMF said.
“Global public debt tripled since the mid-1970s to reach 92 per cent of GDP [or just above $91 trillion] by end-2022. Private debt also tripled to 146 per cent of GDP [or close to $144 trillion], but over a longer time span between 1960 and 2022.” (Source: the-star.co)
