Poor Earnings, Procurement Hampering Effective Implementation of 2016 Budget


Omololu Ogunmade in Abuja

The federal government on Tuesday restated that the execution of capital projects in the N6.06trillion 2016 budget had been hampered by the poor release of capital votes caused by poor revenue generation and rigid procurement procedures.

This disclosure was made by the Minister of Budget and National Planning, Senator Udoma Udo Udoma, while appearing before the Senate Committee on Appropriation to explain how the government has been implementing the budget.

On Wednesday, the Secretary to the Government to the Federation (SGF), Babachir David Lawal, made a similar disclosure before the Senate, stating that government earnings had fallen by 40 per cent due to low oil prices and attacks by militants on oil and gas facilities in the Niger Delta.

Udoma revealed that the government has only released N235.9 billion out of the N1.5 trillion budget for capital expenditure, representing 15 per cent of the total capital vote.

According to him, the six months requirement for the procurement process for execution of new projects as provided in the Public Procurement Act had also made the implementation cumbersome and complicated.

“No new project is ripe for any capital releases because of the six months of procurement process including advertising and so on. It is only existing projects which already met the criteria for the various procurement stages that are qualified for capital releases,” he said.

He also said the overall revenue realised in the first quarter was only 55 per cent of the projected  revenue which according to him, was caused by the unrest in the Niger Delta as well as the difficulties faced  by importers in accessing forex.

“The bulk of the problem of low revenue generation came from militant agitations in the Niger Delta which affected oil production which prevented us from reaching the 2.2 million barrels projection even though the price is going up.

“At a point, production went down to one million barrel but  right now, we have been informed by the Minister of Petroleum that it is going up again to about N1.9 million barrel but that the  revenue will come in three months time because the generation of today is not the revenue of today but of three months time,” Udoma said.

However, Udoma assured the committee that the hindrances notwithstanding, most of the new capital projects captured in the budget would still be executed bearing in mind that the duration for implementation of the budget has been extended to May next year by the National Assembly.

He also disclosed that besides N235.9 billion released for execution of capital expenditure, another N871.4 billion, representing 50 per cent of N1.7 trillion budget for  personnel expenditure had been released while N52.9 billion of the N218.3 billion for overhead had also been released. 

“The National Assembly gives us till May next year to carry out the capital expenditure and we still have 10 months of capital spending to do. Nevertheless, out of the capital votes for ministries, departments and agencies (MDAs), out of N1, 587, 598, 122, 028, we have released N235, 916, 566, 642 ( 15 percent).

“In personnel releases, the budget was N1, 723, 819, 398, 198  but what we released was N871, 459, 760, 939 which comes to about 50 percent. This is the way it should be because we are already in July and we have done six months which is half of the year. For overhead, the budget is N218, 368, 364, 886 and we have released N52, 913, 047, 226 (25 percent),” he added.

In his remarks, the committee chairman, Senator Danjuma Goje, said the committee would continue to monitor the implementation of the budget in the remaining 10 months.