- Lagos-Ibadan Road: Fashola Wants Full Funding by FG
The Minister of Power, Works and Housing, Mr. Babatunde Fashola, told the House of Representatives on Tuesday that adequate funding by the Federal Government remained the most viable option to complete the Lagos-Ibadan Expressway.
He said this was also applicable to the 2nd Niger Bridge.
Fashola argued that the two projects were “very critical” to the country’s economy and could not be left to the lengthy processes involved in negotiating a Public-Private Partnership arrangement as a funding alternative.
To achieve adequate funding through budgetary appropriation, the minister noted that the support and understanding of the National Assembly was priceless.
The minister warned that the delay in the completion of the Lagos-Ibadan Expressway could begin to impact negatively on the economy in the coming years.
“In a few years’ time, our economy will feel the impact of the non-completion of this road. It is in our best interests to give it the desired attention,” he stated.
Fashola appeared in Abuja before the House Committee on Works chaired by Mr. Toby Okechukwu.
The committee is investigating the “nature of the contract and/or concession arrangement on the Second Niger Bridge and the Lagos-Ibadan Expressway.”
The House had resolved to probe the funding of the two projects, following conflicting accounts over an existing PPP and direct budgetary funding.
But the minister explained that the PPP arrangement he met when he assumed office in 2015 was not leading the country anywhere.
He stated that it was beset by litigation, which meant that the projects would continue to be stalled had he not stepped in to advise the government to continue to fund them.
Fashola added that while a PPP would seem attractive, he had come to realise that developers in Nigeria did not have the financial capacity to support major projects like the Lagos-Ibadan Expressway and the Second Niger Bridge.
He told the committee that this was the reason why he advised the government in 2015 to take full control of the funding, pending when all the disputes over the concession would be resolved.
The minister said this was the reason N31bn was put in the 2017 budget to speed up work on the Lagos-Ibadan Expressway, but regretted that it was the same National Assembly that slashed it to N10bn.
Fashola said, “In 2017, we put N31bn there, but it was scaled down to N10bn, perhaps because it was thought that the money was too big for a section of the country.
“Promises were made (by virement) that the money would be returned, but till date, no money has come to us.”
For 2018, the minister said N9bn was proposed for the shorter section of the road being handled by Julius Berger.
He added that another N11.5bn was proposed for the longer section where the RCC was working, bringing the total proposal for 2018 to N20.5bn.
On the Second Niger Bridge, Fashola told the committee that N5.05bn was proposed for 2018, though he confirmed that no PPP funding arrangement had been finalised for the project by the government.
He informed the lawmakers that while a PPP arrangement signed in 2007 for the two projects seemed laudable, the truth was that it was imposed on Nigeria by the administration of former President Olusegun Obasanjo.
Fashola added, “The Infrastructure Concession and Regulatory Commission advised against the concession in 2007, but the government said you either do it or get fired.
“These were facts I got to know when I arrived on the scene in 2015. They will bring out their files and you will see. This is the truth.”
Members of the House, including Mr. Pattegi Ahman and Mr. Mohammed Bago, said they were in support of the government increasing the allocations to the Lagos-Ibadan Expressway.
The total cost of the road is put at N167bn.
Members argued that unless more money was put into the road, at the current N20.5bn per year, the project would drag for another 10 years.
“At this funding pace, it will be at least another eight years to complete the road,” Okechukwu noted.
Meanwhile, at a separate session on a bill seeking to fund the Federal Road Maintenance Agency from the Consolidated Revenue Fund, Fashola opposed the idea.
He said FERMA was already being funded through appropriation by the National Assembly, adding that all that was required was to increase the allocations in the budget.
The session was chaired by Mr. Jerry Alagbaso.
Manufacturing Firms Borrowed N570bn from Banks in 2020 – CBN
Manufacturing firms borrowed a total of N570bn from Nigerian banks last year amid the economic fallout of the COVID-19 pandemic.
Banks’ credit to the manufacturing sector rose to N3.19tn as of December 2020 from N2.62tn at the end of 2019, according to the sectoral analysis of banks’ credit by the Central Bank of Nigeria.
The sector received the second biggest share of the credit from the banks after the oil and gas sector, which got N5.18tn as of December.
“The manufacturing sector, which is the engine of sustainable growth, is still struggling with the debilitating impact of the pandemic and is yet to recuperate,” the Director-General, Manufacturers Association of Nigeria, Mr Segun Ajayi-Kadir, said in January.
MAN, in a January report, revealed that most manufacturers said commercial banks’ lending rates were discouraging productivity in the sector.
The report said 71 per cent of Chief Executive Officers interviewed “disagreed that the rate at which commercial banks lend to manufacturers encourages productivity in the sector.”
It said the cost of borrowing in the country remained at double digits even amidst the reforms meant to culminate in lower rates to engender the country’s economic recovery process.
The report said, “Special single digit loans offered by development banks are still hard to leverage as conditionalities to assess the loans through commercial banks are often overwhelming and laden with additional charges that will eventually make the interest rate double digit.
“Seven per cent of respondents were, however, of the opinion that the rate at which commercial banks lend to manufacturers encourages productivity in the sector while the remaining 22 per cent were not sure of the impact of the rate of lending on productivity in the manufacturing sector.”
The report showed that 64 per cent of respondent disagreed that the size of commercial bank loan to manufacturing sector had encouraged manufacturing productivity.
It said the very high presence of the government in the money market, particularly through the sale of treasury bills, had been crowding out the private sector from the market.
Nigeria Earns Extra N318.4 Billion as Crude Oil Hits $67/Barrel
FG Generates Additional Income of N318.4 Billion as Crude Oil Hits $67/Barrel
The Federal Government earned an additional N318.36 billion in February following the surge in crude oil price above $60 per barrel.
Brent crude oil, against which Nigerian oil is priced, average $60 throughout the month of February.
In March, it rose to $67 per barrel.
According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, Nigeria’s crude oil price was retained at $40 per barrel for 2021.
However, she said the nation is presently producing below its 2.5 million barrel per day capacity at 1.7mbpd. This, she said includes 300,000bpd condensates.
“Although Nigeria’s total production capacity is 2.5mbpd, current crude production is about 1.7mbpd, including about 300,000bpd of condensates, which indicates compliance with OPEC quota,” the finance minister stated.
Going by the number, Nigeria is producing 1.4mbpd of crude oil without condensates, but with an additional $20 revenue when compared to the $40 per barrel benchmark for the year. It means the Federal Government realised an additional income of N318.360 billion or $20 X 1.4mbpd X 30days in the month of February.
Crude oil jumped to $68.54 per barrel on Friday following OPEC+’s decision to role-over production cuts.
Nigeria, Morocco sign MOUs on Hydrocarbons, Others
The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.
Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.
The statement said Nigeria would also produce ammonia and export to Morocco.
“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.
The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.
Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.
He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.
He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.
“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.
According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.
Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.
The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.
The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.
Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.
He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.
“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.
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