Tunde Otegbeye, a public commentator, goes on an excursion of recently built roads by Governor Dapo Abiodun of Ogun state
The immediate past administration of Senator Ibikunle Amosun in Ogun State boasted sometime in March 2019 that it would not abandon any of the on-going projects in the state. The then governor said that he would work till the last day in office to ensure the completion of the many projects scattered across the state. The helmsman got applauded.
Like some of his (Amosun) ilks, little did the people of Ogun State realise that the promise subsequently turned out to be a mirage.
As it turned out, many of the projects, including roads, not only remained uncompleted when he left office on May 29 2019, but were totally abandoned by contractors, who had not been adequately mobilized for the jobs, contrary to what the people had been made to believe.
It also came to be known that claims of full payment for the roads construction and rehabilitation did not follow due process, while the projects were also neither properly initiated nor passed through the appropriate quarters, especially the office of the State Attorney-General and Commissioner for Justice, and civil engineers in the Ministry of Works for validation.
By tradition, at the formative stage, the immediate past administration had dispatched a letter to the State House of Assembly in September 2012, just barely a year in office, requesting to be granted permission to obtain a N7.5billion loan from five banks. The loan, tagged ‘internal loan’, was to be used in financing the construction of eleven major roads across the state. The request was granted without any stress whatsoever after it was debated by tbe House members in a motion tagged “House Resolution 114/2012”.
Action was simulated and a round tour of the state purportedly to inspect the roads needing rehabilitation and reconstruction, especially the roads that required proper drainage was embarked upon.
Despite all this, however, the administration of Prince Dapo Abiodun, which succeeded the Amosun administration on May 29, 2019, met deplorable state of roads across the state, indicating that the approved N7.5 billion loan had either been diverted or expended on shoddy jobs.
Obviously overwhelmed by the state of the roads but unperturbed nonetheless, Prince Abiodun pledged his administration’s best effort to complete all the on-going road projects inherited from his predecessor, despite the financial strain. He said the decision of his administration was informed by the fact that leaving the abandoned roads would not only amount to a wastage of tax payers’ funds but would also be detrimental to the growth of the state.
In addition to the burden of the deplorable state of the inherited roads, Abiodun also asked each of the state’s local governments to submit a list of rural road that was of priority to their economy for immediate rehabilitation.
The first year of Abiodun administration has witnessed massive road rehabilitation and construction across the three senatorial districts of the State. Among the roads currently being rehabilitated are Itokin-Ibefun-Ijebu Ode, Iperu-Ilisan, Sango-Ojodu Abiodun, Ilaro-Owode and Abeokuta-Sango-Ota-Lagos, while Osi-Ota-Awolowo-Navy-Kola road and Balogun Kuku road in Ijebu Ode have been completed. Also, the reconstruction of Opako Bridge in Adigbe, Abeokuta and many other township roads have been completed. Governor Abiodun has also directed the contractor handling the long-abandoned 32-kilometre Akute-Ajuwon-Alagbole road to return to site for the completion of the project, which is supposed be a joint effort by the governments of Ogun and Lagos states.
A total of 50 roads have been completed so far in the senatorial districts, with two of them fitted with lights. There are also 19 on-going road projects across the state, entrenching the Prince Abiodun’s ‘accessibility’ principle.
It is worthy of note that the Sagamu-Siun-Abeokuta road was awarded through Direct Labour where all the materials and labour are sourced locally through local suppliers, thereby creating employment opportunities in the state. Yet, a couple of years ago, the same trunk ‘A’ road was awarded by the past administration at a prohibitive cost of over N60 billion to Chinese companies, a situation that could have denied the locals, employment opportunities, even as it turned out that the Chinese contractors also abandoned the work sites shortly after the expiration of the administration, citing debt owed them for previous jobs done.
In addition, the Epe-Ijebu Ode road, currently being constructed with a 14-lane, Toll Plaza and 17 culverts and bridges, is planned to be on concession to private investors through the Public Private Partnership (PPP); thereby generating significant sustainable revenue for the state, aside creating jobs and developing the economy of the region.
In furtherance of the Dapo Abiodun administration’s resolve to explore road construction and rehabilitation to provide employment, the Governor has since assented to the Ogun State Road Management Amendment Bill, which paved the way for the Ogun State Public Works Agency (OGPWA) that has in turn resulted in unprecedented massive road rehabilitation and construction being witnessed across the state.
As confirmed by the state’s Commissioner for Works and Infrastructure, Engr. Ade Akinsanya, last month, the governor has ordered contractors handling all uncompleted projects inherited from the immediate past administration to return to work without further delay, after fresh funds were released to the effect.
While underscoring the importance of the roads, the governor also revealed on his Twitter handle on July 2, 2020 thus: “The viable road, connecting Abeokuta to Yewa and Oyo State, had caused hardship to residents, business owners and road users. So it became extremely important for our administration to return construction workers to site.”
Furthermore, he twitted: “This economically significant road is just one out of the many sites where work has resumed, including Kuto, Elega, Panseke-Adigbe, Adatan and Owode-Ilaro. I made a pledge to the Ogun State people to look beyond politics and focus on their welfare, and this informs our readiness to complete all the projects abandoned by the last administration and littered across the state on the mantra, “Building Our Future Together”.
From the foregoing, therefore, it should be said that it is a matter of embarrassment that the last administration had bequeathed abandoned projects, despite their economic and social importance to the development of Ogun State.
It would be recalled that the last administration had in September 2016 requested the Ogun State House of Assembly for the approval to access N14.16 billion budget support facility from the Presidency, to enable his government to meet its financial obligations.
Yet, decayed infrastructure welcomed Prince Abiodun to the Government House upon assumption of office, including projects that were hurriedly constructed and hastily commissioned in the twilight of the administration of his predecessor, without recourse to civil engineering procedures. A major project was the Judiciary Complex at Kobape Road in Abeokuta, which was purported to have been commissioned by President Muhammadu Buhari, with the last administration saying the cost of construction had been fully paid for. But the building was not only soon after certified as flawed based on engineering procedures, but also uninhabitable.
It is already on record that the Abiodun administration inherited a whopping financial liability of N221.55 billion, excluding over N200 billion in contractors’ liabilities. The N221.55 billion financial liabilities as at May 2019 comprise of domestic loan of N107.6 billion external loan of N32.2 billion; gratuity of N51.04 billion; contributory pension of N26.20 billion; and leave b1onus of N4.51 billion.
Details of the contractors’ liabilities are currently the subject of the Contract Review Committee, which is expected to publish its findings on completion of the review.
When the present administration assumed office, the germane question on the lips of discernible minds, then was, how will the new government source money to pay all these liabilities? And how would the civil servants who had worked many of their productive years serving the state be able to get their gratuity and entitlements when they retired as there was no provision made for them?
Due to its total commitment to accelerated development, however, the Abiodun administration has so far spent N15 billion to service the loans inherited from the Amosun administration. This burden, coupled with the level of recurrent expenditure, has forced the present administration to establish a long term financial plan for infrastructure that would drive the state’s economic revival and place the state in a good stead for revenue generation, even while implementing reforms to reduce Recurrent Expenditure.
Some of the loans obtained by the immediate past administration between 2015 and 2017 are Restructured Term Loan; Salary Bailout to State and Local Governments; Infrastructural Loan (Excess Crude Account); Special Socio-Economic Development Intervention Loans; and Commercial Agriculture Credit Scheme.
The first step among many initiatives towards an efficient and sustainable financial management for the state was the loan restructuring and refinancing proposal approved by the House of Assembly on March 25, 2020, even as the world battled with the devastating effects of COVID-19 pandemic, which has led to shut down of business activities and supply chain disruptions with significant reduction in federal government statutory allocations and internally generated revenue.
The lawmakers unanimously agreed that granting Governor Abiodun’s request would allow the government to meet the shortfall in the price of crude oil at the international market.
Swift reforms initiated to boost revenue, which include renewed Land Use and Amenities Charge; reorganization of the Ogun State Signage & Advert Agency; ongoing transformation of the Ogun State Internal Revenue Service and implementation of digital initiatives in revenue generation and payments, were also implemented to help diversify revenue base as well as block leakages, while enhancing robust financial transparency and accountability.
According to economic pundits and financial analysts, as it is obtainable the world over, it is important for the state to develop a robust financial plan which will cater for short, medium and long-term financial requirements of the state in the foreseeable future. By its very nature, bank loans are short term and expensive and can only cater for recurrent spending. It would be unwise to fund long term infrastructure projects with short term bank loans. As infrastructure projects tend to boost economic activities and generate revenue for the long term, global best practices and conventional wisdom suggest that these long term infrastructure projects are best funded with matching long term bond instruments and financing structures with up to seven-year maturity, relatively lower interest rates and improved regulatory oversight and accountability to ensure judicious utilization of the funds.
An infrastructure bond of this nature requires many stringent regulatory requirements, which ensures that the state pays back through rigorous analyses to evaluate credit rating (done by independent credit agencies), revenue potential and debt service requirements and consider the proportion of the total loan to the balance sheet of the state or its GDP.
On all these measures, Ogun State will have to pass the Debt Sustainability Test, without which the regulators such as the Securities and Exchange Commission (SEC), the Federal Government Development Management Office (DMO), Pension Commission (PENCOM) and the Central Bank would not approve the bond. Lagos is adjudged to be a modern city with lots of infrastructure. For a state generating N30 billion per month internally, it still resorts to the capital market to access infrastructure bond. Lagos State is on its third Bond Programme since 1999, out of which several Bond Series or Issues have been raised by each of the past governors in the state from Babatunde Fashola to the incumbent Babajide Sanwo-Olu who has just raised N100 billion from the earlier programme established before his administration. Virtually all the south west states have raised Bonds to fund their Infrastructure Deficits.
A Bond Programme only establishes the limit of all the Series or Issues that can be raised, it does not mean that the entire Programme will be raised at once or in a financial year as it is subject to the financial capacity of the state at any point. As in the case of Lagos, A Bond Programme can sometimes be utilized in two administrations of four years each. The advantage of establishing a Programme is that it makes any Issue to be less costly and less time consuming from a regulatory perspective thereby making it more efficient to access the capital market.
The World Bank facility called the Ogun State Economic Transformation Project (OGSTEP) is a Programme for Result (P4R) facility which is not an outright loan disbursement but a facility based on the performance of key objectives as a pre-condition before the facility is disbursed. In addition, given the enormous governance requirements prior to facility disbursements to a state, a Project Preparatory Advance (PPA) is given and in the case of Ogun State, $5 million was disbursed in 2017. The money was meant to put in place governance structures and documentation protocols and requirements that will enable the processing and approval of the real facility. As at May 2019, about 20% activity had been performed, which was the reason the facility was not approved. Kaduna State that commenced the process at the same time with Ogun State had since obtained the World Bank facility on satisfactory performance of all the conditions. Having worked assiduously for over six months, the World Bank facility was approved for Ogun State only in January 2020. It speaks to the transparency and accountability of the Abiodun Administration that it got approval in six months what the immediate past administration could not get in two years. It is also important to note that the World Bank facility covers Enabling Business Environment, Education and Capacity Building, Agriculture Value Chain and Public Sector Transformation, all of which are geared towards building human capacity, output and productivity as well as efficiency of government processes. No single amount has been disbursed or will be disbursed from the facility until the performance of the stipulated conditions.
However, one of the campaign promises made by Abiodun to the people of Ogun State was to provide infrastructure to all parts of the state. He specifically promised to rehabilitate and reconstruct the Ogun State segment of Ijebu-Ode-Epe road, not only to bring the needed relief to the people, but also to engender economic development for the state.
So far, he has kept the promise which places premium on integrity with the ultimate aim to allocate resources on projects that have direct and positive impacts on the administration’s mantra of “Building our Future Together” in the belief that full socio-economic benefits cannot be enjoyed by the people in the absence of good road network across the state.
Otegbeye, a public commentator, wrote from Ilaro, Ogun state