Sukuk Fund: Contractors petition EFCC over nonpayment of N130bn allocation

Contractors handling the Sukuk roads across the country have petitioned the Economic and Financial
Crimes Commission, EFCC, the Minister for Finance, as well as the Minister for Works on corruption been perpetrated by sta몭 of the Ministry of Works.
The petition largely dwells on the diversion of federal government approved funds meant for them by sta몭 of the ministry of Works.
Over the years, the international and domestic capital markets, in exploring various forms of funding options, have facilitated the prominence of ethical­based debt instruments known as ‘Sukuk’. Sukuk is a sharia­compliant bond­like instruments used in Islamic finance. It involves a direct asset ownership interest, while bonds are indirect interest­bearing debt obligations

Since the traditional Western interest­paying bond structure is not permissible, the issuer of a sukuk essentially sells an investor group a certificate, and then uses the proceeds to purchase an asset that the investor group has direct partial ownership interest in. The issuer must also make a contractual promise to buy back the bond at a future date at par value.
in 2017, the federal government took advantage of Sukuk to access funds for capital expenditure
particularly on the development of roads, rails, power, and agriculture projects when it was in dire need of funds having been hit hard by recession the previous year and was still struggling to find its feet.
Although the Osun State government first opened the floodgate for Sukuk issuance when in 2013 it accessed the Ijarah Sukuk funds for the sum of N11.4 billion, approximately $27.5 million, used for the construction of 26 schools, the Sukuk initiative was greeted with mixed reactions when the Buhari­led administration attempted to access it. But it trudged on regardless.
In 2020, the Minister of Works and Housing, Babatunde Raji Fashola received a sovereign Sukuk
Symbolic Cheque of N162.557 billion for the construction of roads across the country from the Minister of Finance, Budget and National Planning, Zainab Ahmed. Similarly, the Debt Management O몭ice (DMO) also raised the sum of N130.557 billion from investors in June 2022 strictly dedicated to the financing of road projects in the Revised 2022 Appropriation Act.

But curiously, a large part of these money is still in the account of the Ministry of works and housing and is yet to be disbursed to the contractors it was earmarked for. This is the basis for the petition. The petitioners lamented that the money earmarked and approved for 2022 projects is yet to be paid to them as sta몭 of the Ministry of Works deliberately refuse to remit money allocated to them but instead place this money in accounts over a period of time, where it will generate interest for the sole purpose of creaming o몭 the accrued interest on the money before they are being paid. They added that just like the current fraud case in the Ministry of Power, billions of naira approved by President Muhammadu Buhari for the repair and maintenance of roads across the country are being kept in secret accounts in readiness for illegal diversion by top o몭icials of the Ministry. According to the petitioners, these sta몭 are simply waiting for a change of government in other to unleash the looting of the ministry account by themselves. They lamented that the absence of checks and balances leaves them vulnerable to the antics of the permanent secretary and some top o몭icials in the ministry who
are not eager to pay them. But despite the fact that the Ministry of Finance already approved payment of all the money to the contractors, the contractors claim they are yet to receive a dime

This is particularly true as in January 2023, the Federal Government through the Ministry of finance presented a cheque of N130 billion to the Ministry of Works and Housing and that of the Federal Capital Territory for road construction. When enquiries were made in the Ministry of Finance to find out why the money collected on loan by the government of Nigeria was kept without disbursing to the contractors, a member of sta몭 who prefers to remain anonymous said the Honourable minister has already approved payment of the money to the contractors and can therefore not explain why the Ministry of Works and housing has refused to pay the contractors.

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When the same enquiries were made in the Ministry of Works and Housing, the ministry revealed that it was processing payment for the 2022 approved SUKUK funds. When told that interest on the loan (money) the ministry was withholding would yield higher interest, the sta몭 said he couldn’t answer to that that as only the minister and the permanent secretary could respond appropriately.

Sources:Thestreetjournal.