The Minister of Works, Engr. David Umahi, has disclosed that the current pressure on the Naira in the foreign exchange market, along with the removal of the fuel subsidy, has considerably altered the federal government’s initial funding projections for completing inherited ongoing road projects across the country.
These economic challenges have contributed to rising costs and budgetary restrictions, thereby making it more challenging for the government to secure adequate resources to continue these critical infrastructure projects without disruptions.
Umahi mentioned that, as a result, the government may have to rethink its financial planning and explore alternative funding options to ensure these essential road projects reach completion within the expected timelines and quality standards.
On Monday, Umahi revealed that the administration led by President Bola Tinubu will now require a total of over N19 trillion to complete the necessary work on these projects.
He provided this update during a media briefing held in Abuja, noting that the revised amount of N19 trillion represents an increase of N3 trillion from the N16 trillion that had been initially estimated for the projects as of August, 2024.
During an earlier press conference on August 23rd, Umahi had stated, “The funding gap required to complete all the inherited projects stands at approximately N13 trillion as of May 2023. By the time all projects are reassessed in line with current market conditions, this cost is expected to exceed N16 trillion.
“This increase in projected expenses is due to factors such as the removal of fuel subsidies and the subsequent floating of the Naira.”
While speaking to the media on Monday, however, the Minister clarified that these financial challenges continue to influence the Ministry’s ability to deliver on project commitments as initially planned.
Umahi explained, “As of May 29th, 2023, Mr. President inherited a total of 2,604 ongoing projects with an initial estimated cost of N13 trillion. Additionally, there was an outstanding debt of N1.6 trillion owed to contractors.”
He added, “When accounting for cost adjustments due to the floating exchange rate, the estimated cost to complete all these projects rises to over N19 trillion.”
The Minister further emphasized that President Tinubu has chosen to maintain progress on all these projects, with the intention of securing financial support from both internal and external sources, including loan arrangements, reflecting his dedication to improving the lives of Nigerians.
According to Umahi, the President has given high priority to the Ministry of Works, recognizing that investment in roads and bridges has the potential to unlock significant economic benefits for the country’s citizens.
He also indicated that the Ministry is prepared to take firm action on certain contracts, specifically mentioning that it would not hesitate to cancel the Abuja-Kano road contract awarded to Messers Julius Berger, should the contractor fail to mobilize to the project site within the 7-day ultimatum that has been issued. The ultimatum is set to expire on Wednesday.
Umahi elaborated that negotiations between the Ministry and the contractor had been ongoing for approximately 17 months, and the government has now decided that these negotiations must conclude, prioritizing timely project delivery for the public’s benefit.