The Nigerian government has dismissed as “unfounded” speculations that the N100 billion SUKUK Bond it raised last September had been diverted.
The Director General, Debt Management Office, Patience Oniha, who spoke to PREMIUM TIMES in Abuja on Tuesday, said the money is intact at the Central Bank of Nigeria, CBN.
The Minister of Finance, Kemi Adeosun, on October 5 said the fund, which was over-subscribed at about N105 billion, would support the government’s capital spending on 25 road projects in the country’s six geo-political zones.
Mrs. Adeosun spoke at the symbolic public presentation of the cheque for the funds to the Minister for Power, Works and Housing, Babatunde Fashola, in Abuja.
She said each of the zones would get about N16.67 billion for road projects in their respective domains, with North-central and South-south zones accounting for five each, while the North-east, North-west and South-east have four road projects each.
South-west zone would receive funding for the execution of three projects.
However, weeks after the public presentation, the delay in the disbursement of the funds to designated contractors to start work on the projects fueled speculations that the money had been diverted by government to close recurrent expenditure gaps.
The statutory revenue of about N551 billion declared during the September Federation Accounts Allocation Committee, FAAC meeting, which left a huge shortfall from allocation for October salary bill of over N224 billion, may have fueled the speculations that the SUKUK fund had been tapped to bridge the gap.
But, the DG DMO, Mrs. Oniha, laughed off the possibility of any such diversion, saying: “SUKUK funds are not monies that can go into general government funding activities.”
“SUKUK bond is a project-tied funds,” the DG explained. “This is not FGN bonds, or treasury Bills, where government borrows money and disburses in line with regular financial regulations.
“SUKUK bond has a structure and authority domiciled at the CBN, which approves all non-interest transactions. There is a process for disbursement of SUKUK bond fund.
“The process was agreed among the various interest groups, namely the Federal Ministry of Power, Works & Housing (the project owner) and the institutions that disburse funds (Federal Ministry of Finance, Central Bank of Nigeria, CBN, others), and the two trustees, representing the SUKUK owners.”
Mrs. Oniha said the process for disbursement of the funds to contractors was agreed from the beginning, long before the funds were raised, adding that since the money was raised, meetings have been held with the contractors, particularly on their documentation and other processes.
She said with the 25 key projects to be financed with the SUKUK involving construction, it was normal to expect contractors to provide various documents, including milestones, job completion certificates before money was disbursed.
“When one is talking about construction projects, whether it is a house, dam or road, one will need to complete these important processes, in terms of technical designs and other things before disbursement of funds.
“Where we are at the moment is for the contractors to provide the relevant documents and other details required before the disbursement. We are dealing with several contractors. It is not a mass payment,” Mrs. Oniha said.
She assured that the money was intact in the corporate account opened for the SUKUK fund with the CBN.
“There are rules around non-interest banking products. Government cannot use monies for non-interest products to pay salaries, or do any other thing that was not agreed upon or approved for by the Financial Council of Experts at the CBN.
“The money can’t be available to government for general spending purposes, including payment of salary shortfalls,” she emphasized.
Since government wrote to the CBN to open the SUKUK Fund account, Mrs. Oniha said the money went directly into that account without touching government’s general account.
“Government would not even do that. SUKUK Fund was something everyone in government was happy about. The contractors need to understand that SUKUK is not money that government would just release to them without completing all the processes.
“Also, ask the contractors that told you (PREMIUM TIMES) the money had been diverted whether they have even complied with the process, by submitting all the document required from them.”
On possible interest that may accrue as a result of the delay in the disbursement, the DMO DG said the obligor in the transaction was government, although she said the completion of the process was important before the release of the money to contractors.
Although she did not say the exact time the process would be completed, the DG assured that once that was complied with, the disbursement of the money would commence.
“Nobody is happy that the money is not disbursed. It was meant for projects that would impact the lives of the people. This is not Nigeria’s money that people think could be used anyhow. It is borrowed funds that one has to be careful with, to ensure the purpose for which it was raised is realized,” she pointed out.