FG needs N16trn to complete inherited road projects – Umahi

The Minister of Works, Mr. David Umahi, has stated that the Federal Government requires over N16 trillion to complete road projects inherited from previous administrations. Umahi made this announcement during a briefing on the ministry’s achievements under President Bola Tinubu’s Renewed Hope Agenda on Thursday in Abuja.

He detailed that the current administration inherited 18,932.50 kilometers of ongoing road projects, encompassing 2,064 contracts. As of May 2023, the total value of these projects was N14.42 trillion, with N4.73 trillion certified, N3.12 trillion paid, and N1.61 trillion outstanding. Umahi explained that the funding gap to complete these projects was approximately N13 trillion in May 2023 and is expected to exceed N16 trillion due to current market conditions, including the removal of fuel subsidies and the floating of the naira.

Umahi noted that these projects have been delayed for five to eight years and are now being reviewed to align with current economic realities. This review does not include new projects under the Renewed Hope Agenda or the four legacy projects.

He also highlighted that traditional funding methods, primarily annual budget provisions, have proven insufficient for addressing highway development challenges. To overcome this, the ministry has explored alternative funding sources, including the Presidential Infrastructure Development Fund (PIDF), Sovereign SUKUK bonds issued by the Debt Management Office (DMO), and the Road Tax Credit Scheme involving major companies like NNPCL, NLNG, Dangote, BUA, MIN, Mainstream Energy Solutions Ltd., and GZI Industries. Other funding mechanisms include multilateral loans, Public-Private Partnerships (PPP)/Highway Development Management Initiatives (HDMI), and the new Renewed Hope Infrastructure Funding model.

Umahi reported that the SUKUK fund has supported 82 projects with a total investment of N100 billion in 2017, with subsequent investments of N100 billion in 2018, N162.55 billion in 2020, and N210.56 billion in 2021. For 2022, N110 billion was approved, and N250 billion was allocated for 2023. Additionally, the Federal Executive Council (FEC) approved N2.59 trillion for funding 65 highway projects under Phases I and II of the NNPCL Funding, covering 6,358 kilometers. The revised contract sum due to inflation is N5.288 trillion, with a funding gap of N2.702 trillion. To date, NNPCL has paid N840 billion, with an outstanding amount of N1.750 trillion.

The ministry has introduced the Highway Development and Management Initiative (HDMI) under the Public-Private Partnership Unit (PPP) to attract sustainable investment and funding for road infrastructure and optimize the use of assets along the Right of Way (ROW). HDMI aims to introduce order, accountability, and profitable management in federal highway operations, with private sector partners recouping their investments through toll and non-toll revenues.

Umahi also outlined four legacy highway projects under the Renewed Hope Agenda designed to enhance road connectivity and socio-economic development across Nigeria. These projects include the Lagos-Calabar Coastal Road Corridor (750 km), Sokoto-Badagry Road (1,068 km), Calabar-Abuja Superhighway (482 km), and Akwanga-Jos-Bauchi-Gombe Road (439 km). The ministry’s mandate under the Renewed Hope Agenda encompasses the planning, design, construction, and maintenance of federal road infrastructure nationwide.