President, Federation of Construction Industry (FOCI), Chief Vincent Barrah, on Thursday, stated that lack of adequate funding and regulatory excesses were major problems hampering the growth of the construction sector.
Speaking at the association’s 68th Annual General Meeting (AGM) in Abuja, Barrah also blamed regulatory overbearance on the part of the Federal Ministry of Works for the lack of ample construction activities on federal roads.
He accused the Minister of Works, Senator. David Umahi, of operating contrary to the Standard Conditions of Contracts (SCC).
Barrah said projects awarded many years ago were not yet completed due to lack of funds.
He said the delay in the duration of project execution had been impacted by inflationary trends that necessitated Variation of Prices (VOP) to take care of current price of materials as periodically published by the Bureau of Public Procurement (BPP) as well as the Materials Price Index published by Federation of Construction Industry (FOCI).
He said the VOP remained a major sticking point between the minister and contractors, as the former had failed to appreciate the need for price adjustment.
He said most contractors were merely on site without any activities as a result of the disagreement with the ministry.
Barrah added that projects were not completed on time due to funding gaps, thereby yielding to inflation.
The FOCI president said, “The condition of roads are usually bad during the rainy season, but this year has gotten worse because most construction companies are not actively working on their sites due to major challenges the companies are having with the ministry of works.”
He added, “The challenges are the recent various policy pronouncements by the ministry, which are not in line with the Standard Conditions of Contracts (SCC).
“The dictation or imposition of contract prices by the ministry of works is not acceptable because it is not in line with the SCC.
“Ignoring economic realities and necessary realistic updates of unit rates on existing contracts, and ignoring VOP as well. When you ignore these indices, how can the companies work?”
Among other things, the FOCI president said non-contractual termination of contracts by the ministry due to its inability to fund projects was unacceptable, adding that “Standard Conditions of Contract should apply.”
Barrah explained, “We wrote a letter to the Honourable Minister, Senator David Umahi, and had meetings with him twice. We also wrote to the Ministry of Justice and the Bureau of Public Procurement (BPP) for their intervention. Till date, all efforts by FOCI to resolve these issues have not yielded the desired result.
“The result is the continued worsening of conditions of roads in the country and, of course, laying-off of workers because you cannot continue to retain and pay workers when you are not working and the works you have done, certified works, are not paid.”
Barrah said the astronomically high inflation rate, which had continued to erode consumer real income and effective demand, aside from shrinking the working capital of businesses, coupled with exchange rate above N1, 600 to a dollar, amid other myriads of challenges, had made the “last one year nothing but very challenging”.
He said, “The continuous upward review of fuel price and the further unification of the exchange rate have created market distortion and the ease of doing business in Nigeria.
“While we are not totally against fuel subsidy removal, a plan ought to have been put in place to mitigate the immediate negative effect on consumer income.”
On the imposition of non-realistic new rates by the ministry, Barrah said the association sought to involve all the stakeholders to ensure an amicable resolution of the issues in line with the existing provisions of Standard Conditions of Contract, especially as it affected existing contracts, to move the construction industry forward.
“However, the federation is highly disappointed because till date, we are yet to have a meaningful resolution on the issues raised,” he said.
James Emejo
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