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Saudi Cuts Projects With Petrol Dollars Down

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  • Saudi Cuts Projects With Petrol Dollars Down

Saudi Arabia’s government is ordering its ministries and agencies to review billions of dollars’ worth of unfinished infrastructure and economic development projects with a view to shelving or restructuring them, government sources said.

Riyadh’s Bureau of Capital and Operational Spending Rationalization, set up last year to make the government more efficient, is compiling a list of projects that are under 25 percent complete, the sources told Reuters.

Many of these projects are relics of a decade-long boom of high oil prices and lavish state spending, which ended when oil began sliding in mid-2014, making it increasingly difficult for Riyadh to find the money needed to complete their construction.

Officials will study the feasibility of the projects in light of the government’s reform drive, which aims to diversify the economy beyond oil exports, and decide whether to suspend them indefinitely or try to improve how they are conducted.

“Some projects could be retendered so they can be executed in partnership with the private sector, possibly through build-operate-transfer (BOT) contracts,” said one source familiar with the plan, declining to be named as the matter is not yet public.

Under BOT contracts, private investors finance and build projects and operate them for a period of time to earn a profit before eventually transferring ownership to the government. Riyadh has said it is keen to begin bringing the private sector into projects to ease pressure on state finances.

“Other projects could be suspended if they do not meet the current economic objectives,” the source said. Recommendations for some projects may be made within days, he added.

Seeking to close a huge budget deficit caused by low oil prices, the government clamped down on infrastructure spending last year. Finance Minister Mohammed al-Jadaan said in February this year that the efficiency bureau had so far saved the kingdom 80 billion riyals ($21.33 billion).

The plan to review unfinished projects suggests the government is looking for large additional savings this year. In a report at the end of last year, it estimated the cost of completing all capital spending projects currently underway at about 1.4 trillion riyals.

In a January report, consultants Faithful+Gould estimated at least $13.3 billion of government projects were at risk of being canceled in Saudi Arabia this year because of fiscal pressures and changing government priorities.

The government is likely to prioritize projects with strong social welfare and business justifications such as power and water generation, while less essential “vanity projects” such as sports infrastructure, some transport systems and perhaps nuclear energy could be cut back, it said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Government

Ekiti Governor Unveils Multi-Billion Naira Relief Programmes Amid Economic Crisis

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Biodun Oyebanji

Ekiti State Governor, Mr. Biodun Abayomi Oyebanji, has announced a comprehensive relief package aimed at alleviating the hardship faced by the people of the state.

The relief programs encompass various sectors to cushion the impact of the economic downturn.

One of the key initiatives entails clearing salary arrears amounting to over N2.7 billion owed to both State and Local Government workers.

This move signifies the government’s commitment to addressing the financial burdens faced by its workforce.

Furthermore, Governor Oyebanji has approved a substantial increase of N600 million per month in the subvention of autonomous institutions, including the Judiciary and tertiary institutions.

This augmentation is intended to enable these institutions to implement wage awards in alignment with State and Local Government workers’ salaries.

In addition to addressing salary arrears, the relief programs extend to pensioners, with the approval of payments totaling N1.5 billion for two months’ pension arrears.

Moreover, an increase in the monthly gratuity payment to state pensioners and local government pensioners will provide additional financial support, totaling N200 million monthly.

The relief initiatives also encompass agricultural and small-scale business sectors.

The allocation of funds for food production and livestock transformation projects underscores the government’s commitment to enhancing food security and economic sustainability at the grassroots level.

Governor Oyebanji emphasized that these relief programs are part of the state’s concerted efforts to mitigate the adverse effects of the economic downturn and foster shared prosperity.

The comprehensive nature of the initiatives reflects a proactive approach towards addressing the challenges faced by Ekiti State residents.

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Government

President Tinubu Orders Immediate Settlement of N342m Electricity Bill for Presidential Villa

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power project

President Bola Tinubu has directed the prompt settlement of a N342 million outstanding electricity bill owed by the Presidential Villa to the Abuja Electricity Distribution Company (AEDC).

This move comes in response to the reconciliation of accounts between the State House Management and the AEDC.

The AEDC had earlier threatened to disconnect electricity services to the Presidential Villa and 86 Federal Government Ministries, Departments, and Agencies (MDAs) over a total outstanding debt of N47.20 billion as of December 2023.

Contrary to the initial claim by the AEDC that the State House owed N923 million in electricity bills, the Presidency clarified that the actual outstanding amount is N342.35 million.

This discrepancy underscores the importance of accurate accounting and reconciliation between entities.

In a statement signed by President Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga, the Presidency affirmed the commitment to settle the debt promptly.

Chief of Staff Femi Gbajabiamila assured that the debt would be paid to the AEDC before the end of the week.

The directive from the Presidency extends beyond the State House, as Gbajabiamila urged other MDAs to reconcile their accounts with the AEDC and settle their outstanding electricity bills.

The AEDC, on its part, issued a 10-day notice to the affected government agencies to settle their debts or face disconnection.

This development highlights the importance of financial accountability and responsible management of public utilities.

It also underscores the necessity for government entities to fulfill their financial obligations to service providers promptly, ensuring uninterrupted services and avoiding potential disruptions.

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Abuja Electricity Distribution Company Issues Ultimatum to 86 Government Agencies Over N47bn Debt

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Power - Investors King

The Abuja Electricity Distribution Company (AEDC) has issued an ultimatum to 86 government agencies, including the Presidential Villa, owing a collective debt of N47 billion.

The notice comes as a response to the prolonged failure of these agencies to settle their outstanding electricity bills.

According to the public notice released by the AEDC management, some of the highest debts are attributed to prominent entities such as the National Security Adviser (owing N95.9 billion), the Chief of Defence staff barracks, and military formations (indebted to the tune of N12 billion).

Also, several ministries, including the Ministry of the Federal Capital Territory and the Ministry of Power, have sizable outstanding bills.

The AEDC has expressed its frustration over the inability of these government bodies to honor their financial obligations despite previous attempts to facilitate payment.

In response, the company has warned of imminent disconnection of services if the outstanding debts are not settled within 10 days of the notice.

The outstanding debts are attributed to various factors including the devaluation of the naira, cash scarcity resulting from demonetization programs, high inflation rates, removal of fuel subsidies, and foreign exchange challenges.

These financial burdens have adversely impacted the operations of the AEDC, contributing to a loss of N99 million in foreign exchange alone.

As the deadline for payment approaches, government agencies are under pressure to address their outstanding debts to avoid service disruptions.

The AEDC remains steadfast in its commitment to ensuring that all entities fulfill their financial obligations, underscoring the importance of prompt payment for uninterrupted electricity services.

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