.Says FG can invest available N9bn pension funds on road sector
To address the humongous infrastructure deficit in the country, the Minister of Works and Housing, Mr. Babatunde Fashola has appealed to the National Assembly to facilitate the approval of a N10 trillion National Infrastructure Bond to especially attend to the road infrastructural needs. Rallying the support of the legislature, the minister it is obvious that annual appropriation would be grossly inadequate to fix the decay in Nigeria roads and other infrastructural facilities.
Babatunde Fashola On Thursday Fashola was at the National Assembly to defend the ministry’s 2020 appropriation before the joint session of Senate and House of Representatives committees on Works. FG Pledges Full Support for AFRIMA as Nigeria Hosts 2019 Edition He said it is expedient that the Ministry and the Debt Management Office work out details of a N10 trillion infrastructure bond to be submitted to the National Assembly for approval.
Assuring the lawmakers of a well thought out plan, the minister said: “I have done an envelope size of say N10 trillion; that does not mean we want to raise N10 trillion this year but if we launch such an instrument with a very competitive coupon rate backed by law as a very secure investment that people can put their money. “I think that is one way to entice and inspire agencies like the pensions fund to invest money in a secured Government backed instrument.
They are investing in Treasury bills because it is Government instrument and it is secured. The issue is the money of workers in that bond must never be lost. That is the whole idea. “If Government backs it any time we need to raise money like N10 trillion over four or five years, any period we need to fund project, we issue a demand for subscription and raise N2 trillion and the more important thing is it is not a proven concept but just my idea is that we should disaggregated the sizes of investment that people can make.” Fashola further suggested the utilisation of about N9 billion floating in the pension funds to tackle infrastructural shortcomings.
He said: “Equally important is the issue of pension fund that you mentioned. We have well over N8 trillion to N9 trillion. Not all of it is available for investment in the road sector. Quite a number of it is already in treasury bills. We are told the money is available if there is assurance that it will be repaid and equally important is the PPP arrangement and we feel it is a way of relieving government of the burden of road construction.
“We have well over 500 roads in the country and we required close to about N10 trillion to complete these projects without bringing new ones and that is the entire budget of this country. If we can get private sector to come in and invest in our infrastructure”.
Fashola told the committee members that the ministry is currently undertaking a total of 540 highway projects at an estimated sum of N4.8 billion spread over the six geopolitical zones in the country. He further explained that some of the 540 ongoing projects are categorized in accordance with special funding mechanism as follows: Highway projects financed with Presidential Infrastructure Development Fund (PIDF), Highway Projects Financed with the Sovereign Sukuk Fund, Highway Project Financed Under Tax Credit and Highway Projects Funded from Multilateral Loans.
According to him, the alternative sources of funding the nation’s road projects could be through the Sukuk. “The Federal Government has tried Sukuk and I don’t see why it should not be repeated especially we approaching November, it is the month we float the process.
On the 2020 budget, the Minister explained that his Ministry and its Parastatals proposed an estimated sum of N287.1 billion. A breakdown of the proposal shows that Capital budget is N197 billion; Main Ministry (Works) N171.5 billion; FERMA N22.8 billion; Overhead N15.9 billion and Personnel cost-N12 billion.
He lamented that the major challenge of the ministry lies in the insufficient budgetary provision and releases for completion of its projects unscheduled. He noted that the total amount outstanding for payment to contractors for duly certified and approved works as at October 15th 2019 is the sum of N321,137,955,706,279.05 billion in 2018 and N53,319,919,988.45 in 2019 respectively.
Source: dailytimesng
