The Federal Executive Council (FEC) yesterday approved the utilisation of funds nearing N3 trillion accrued in the country’s pension scheme for the development of infrastructure in the country.
The pension assets managed by Pension Fund Administrators (PFAs) as the October 2012 stood at N2.8 trillion, and are largely invested in federal and state government bonds, fixed securities, the stock market and other secured instruments within the ambit of investment guidelines issued by the National Pension Commission (PenCom).
The contributory pension scheme which came into effect following the Pension Reform Act 2004, the operators have said, would require infrastructure bond guaranteed by the Federal Government before it could be used for infrastructural development.
A top executive of the Pension Fund Operators Association of Nigeria (PenoP) who spoke to BusinessDay last night, said PenoP was not aware that FEC gave such approval.
The source, who preferred not to be named, said the Federal Government could not authorise the use of pension funds which belonged to private individuals for infrastructure development. “It is not government money; it belongs to some people.
“What the government can do, is to provide infrastructure bond that is guaranteed, and if attractive, then we can invest in it, but with caution”, the source said.
The source further observed that emphasis must be on protection of the fund and return on investment, such that it would be available to its owners when they retire. “It is not charity money and must be guarded properly.”
BusinessDay learnt that following the approval, the pension fund authority is expected to provide a substantial part of the fund to the road infrastructure sector, as part of efforts to tackle the problem of near collapse of federal roads.
Minister of Works, Mike Onolememen, who gave the hint at the opening of a four-day public hearing on the urgent need to address the deplorable state of federal roads across the country, and a Bill for an Act to provide for the maintenance of public infrastructure 2011 and for other matters connected therewith’, added that about N2 trillion would be required to fix all federal roads across the country in the next four years.
Proposed alternative ways of funding the project, include adoption of annuity contracts for key arterial routes; borrowing from multilateral agencies for key highway infrastructure; floating of road bonds for highway projects; and viability gap funding (through proposed road fund).
Others still, are implementation of five percent fuel surcharge; user-related charges (tolling, heavy-user charges for haulage companies, mining, etc,) and conventional public/ private partnership (PPP) finance for road infrastructure.
The minister who expressed concern over the inadequate annual budgetary provision for road projects, argued that “the average budget of about N100 billion for road development is grossly inadequate for the nation’s 35,000 kilometres of federal road network and for a country that budgets N300 billion and N150 billion for its Central Bank, and Deposit Insurance Corporation respectively.
“What is needed is about N500 billion yearly in the next four years to fix the country’s ailing road infrastructure and bring it in sync with road infrastructure development in other thriving nations in the world.”
He decried government’s failure to provide intervention fund to the road sector, while other sectors such as banking and agriculture were given adequate funding. He further said that there was an urgent need for provision of alternative funding for road development.
He further explained that from the sum of N1.74 billion owed on interim certificate for the Lagos-Otta Highway, only N742.5 million was provided in the 2012 Appropriation, adding that inadequate budgetary provision “often leads to delays and abandonment of road projects across the country.
“From past experience, budgetary provisions are not fully released. In 2011, out of a budgetary provision of N130 billion for highway projects, only N88.7 billion was released, with a shortfall of N41.3 billion and in 2012, out of a total budgetary provision of N143 billion, only N110 billion was released.”
Onolememen assured that the Transaction Advisor for the Second Niger Bridge project under PPP model would soon complete his service, which would culminate in the award of the project early in 2013.
While declaring the public hearing open, Aminu Tambuwal, Speaker of the House of Representatives, who was represented by Samson Osagie, Minority Whip, expressed displeasure over statistics on road accidents, which showed that Nigeria has the second highest road traffic accident fatalities among 193 countries in the world.
He said “there are data showing that Nigeria records 152 deaths for every 100,000 people, making road accidents the third highest killer in our country. Eighty per cent of injuries in Nigeria are traffic accident related.”
Tambuwal, while calling for alternative funding for road projects, said Nigeria loses N80 billion annually to deplorable roads across the country.
Speaking earlier, Ogbuefi Ozomgbachi, chairman House Committee on Works, lamented that despite the N1.414 trillion appropriated by the National Assembly for the road sector from 1999-2012, a substantial percentage of the country’s road network remains in varying degrees of distress, and pot-hole ridden.
Ozomgbachi maintained that the poor state of the roads undermined national economic growth and caused loss of lives and properties arising from road accidents, as well as armed robberies.
He said “the Federal Road Safety Commission statistics for accidents in the first half of 2012 put the figure at 1,936 fatalities and a substantial part of it is attributable to the poor state of our roads.”