BABATUNDE RAJI FASHOLA, SAN
I would like to start by asking the question why Nigeria has bad roads after almost a decade of prolific receipts from oil boom when oil prices were at $100 per barrel.
The answer is partly because we did not invest our money in Roads in the way that the United Arab Emirates, Qatar, Saudi Arabia and Brazil, to mention a few oil-exporting countries, have done.
To the extent that Roads are assets that live for longer periods of time and deliver collective National Benefit in terms of movement of goods and services and contribution to the GDP, clearly, it is doubtful that we got optimum value for those oil incomes between 2007 and 2015.
In other words, instead of investing our oil receipts in Roads, and long-term assets, of infrastructure, we spent the money on recurrent items of expenditure.
This is clearly discernible from the Annual Federal Budgets of that era, where the maximum provision for Capital Expenditure struggled to exceed 20%, when they seldom went beyond the threshold of 15%; and what was ultimately released by way of cash was scarcely ever in excess of 50%.
The result of these, of course was that by 2015 when I took office, there were over 200 roads whose contract values were in excess of N2 trillion and for which payments had only cumulated to about N500 billion.
Some of these roads had been awarded for upwards of 10 (ten) years. Inadequate budget and funding had delayed their completion. Many sites had been abandoned, workers laid off, equipment grounded.
This was where the Buhari Government picked up. With significantly lower oil incomes, we got the contractors back to site one after the other. We raised the budget size from N4 Trillion to N6 Trillion in 2016 and increased capital spending to 30%; which was funded by borrowing to finance the deficit.
For those who wanted roads to be fixed and those who did not want the nation to borrow, there is no middle ground. You either borrow to invest in tomorrow’s infrastructure at today’s prices, or wait until you can do it tomorrow at tomorrow’s price.
Our reality today is that the roads that were awarded 10 years ago and were not funded then have to be funded at today’s prices of money, interest rates, and at today’s prices of cement, iron rod, laterite and labour wages.
Clearly, we lost not only the value of money not properly invested, we lost value in the cost of doing business without good roads. We lost value in productivity by men and machine that became redundant.
While we cannot recover what is lost, we must not lose what is ahead; in this regard, I am happy to say that the Buhari Government is investing wisely and sensibly in the infrastructure that will drive Nigeria’s tomorrow.
From Rail to Ports, Power and Roads, this administration is resolute in its determination to complete ongoing or abandoned projects. Today, there is no State in Nigeria where the Federal Government of Nigeria is not executing one Road Project.
Hon. Commissioner has confirmed in his address Roads being executed in Kebbi. He wants more , the Buhari Government is ready to do more. It is in your hands to bring him back.
Undoubtedly, we have done more with less. This is the meaning of value. But there are other challenges that we must work together to improve upon in order to remove avoidable costs from Road and related infrastructure development.
A – Land issues, compensation, and court cases compound the cost of construction.
- B) Conflicts, security breaches, pose risks to construction workers, which escalates costs in many ways, such as insurance, payment of security personnel, delays to project completion, to mention a few;
- C) The absence of uniform Public Sector Procurement Prices;
- D) Proper project planning, development and supervision;
- E) Post-construction maintenance of scheduled and unscheduled natures to achieve asset life cycle expectation and performance; ( Bridges – Tamburawa, Tatabu, Third Mainland, Niger Bridge, Koton Karfe , Ijora, Isaac Boro).
- F) Dispute resolution mechanisms as a means of achieving cost efficiency in road construction and achieving value for money, must be interrogated;
- G) Government Treasury Operations and Payment Systems, review and reform will contribute to achieving better value for money in Road Development Project.
- H) Increasing local content in Nigeria Road Construction and implementing Presidential Order 5.
Ladies and Gentlemen, these are only some of the items of avoidable costs around which we should have a conversation and a resolution if we are to achieve better value for money.
Each one of them is a full subject of debate in itself.
It is my expectation that many sections of the construction industry will rise up to the challenges inherent in improving each of the areas I have highlighted.
I make myself ready to contribute and participate upon reasonable notice.
Thank you for listening and I wish us very fruitful deliberations.
Being keynote Address delivered by the Hon. Minister of Power ,Works and Housing , Mr Babatunde Fashola SAN at the Council Meeting on Day Four of the 24th Meeting of the National Council on Works held at the Conference Centre of the Kebbi State Government Presidential Lodge, Birnin Kebbi , Kebbi State on Thursday 16th August, 2018.
