Nigerian infrastructure minister contends with years of under-funding
President Muhammadu Buhari wants to create more jobs by reigniting local industry, mining and agriculture but the dire state of roads and power could hold back those plans.
“As our income from oil prices increased over the last decade, our spending on roads decreased,” the minister, Babatunde Fashola, told reporters on Tuesday. “The Ministry of Works got 13 billion naira for all roads and highways in 2015, although it has contracts for 206 roads covering 6,000 kilometres with a contract price of over 2 trillion naira.”
We have identified a total of 142 (transmission) projects
On Monday, the minister for planning and budget said capital expenditure would be doubled in 2016 versus 2015 and that a $25 billion infrastructure fund was planned.
Low capital expenditure and the non-release of even the scant funds earmarked for such spending in annual budgets has been holding back development for years. Even the capital Abuja, built in the 1980s, is littered with half-built roads and bridges that lead nowhere. The unfinished Goodluck Ebele Jonathan Expressway, named after Buhari’s predecessor as president, has effectively become a parking lot.
Fashola, who was previously governor of heavyweight Lagos state, heads a new ministry merged from three old ones as part of Buhari’s drive for a leaner government.
Companies holding government contracts are used to delayed payments but the situation worsened this year as the crash in global oil prices coincided with an expensive election season.
Nigeria depends on oil sales for the bulk of its government revenues. Money allocated for works in the fourth quarter of 2014 was not released and no capital payments were made until September this year, forcing construction companies to shutter operations and lay off more than 20,000 employees.
Too little had also been budgeted for power, Fashola said, while the recently privatised generation and distribution companies struggle to be profitable partly because of the inconsistent implementation of tariffs.
The central bank bailed out the companies last year with a 213 billion naira loan and another loan is expected to cover their growing debts. Far more investment is needed to upgrade energy infrastructure.
“What we expect to do is to liquidate verifiable and agreed debts that have accrued, approve a market tariff and hold the discos (distribution companies) to a more efficient and fair collection system based on the use of meters,” Fashola said.
Finishing transmission projects will be a priority as the amount of power available is greater than can be transported owing to frequent faults, the minister added. The grid is still state-owned though managed by Manitoba Hydro International.
“We have identified a total of 142 (transmission) projects, of which 45 are 50 percent complete and about 22 can be completed within a year,” Fashola said.
According to a recent government report, about 55 percent of Nigeria’s population have no access to electricity and those that do must make up for constant outages with expensive diesel generators.
Over the years, the lack of power has caused once-flourishing sectors such as the textile industry to collapse. Nigeria has 12,522 megawatts of installed capacity but only 25 percent of that is distributed, owing mainly to grid faults and a lack of gas, the report said.
Fashola said the oil ministry aimed to build new gas pipelines to add another 2,000 MW of power generation within the next 12-15 months.