Amid speculation that the N100 billion SUKUK Bond raised in September has been diverted, the federal government on Tuesday dismissed such claims as unfounded.
The Director General, Debt Management Office, Patience Oniha, who spoke exclusively to PREMUM TIMES in Abuja, said the money was intact in the appropriate account opened for it at the Central Bank of Nigeria, CBN.
On October 5, the Minister of Finance, Kemi Adeosun, said the fund, which was over-subscribed at about N105 billion, will be used to finance the construction of 25 key road projects across the county’s six geo-political zones.
Mrs. Adeosun spoke at the symbolic public presentation of the cheque for the funds to the Minister of Power, Works and Housing, Babatunde Fashola, in Abuja.
She said each of the zones was to benefit about N16.67 billion for road projects in their respective domains, with North-central and South-south zones accounting for five projects each, while the North-east, North-west and South-east have four road projects each.
The South-west zone is to receive funding for the execution of three projects, she said, while listing each of the roads to be constructed in the regions.
However, over a month after the public presentation, no money has been disbursed to contractors to start the construction works. The delay in the disbursement of the funds fuelled speculation the money may have been diverted by government to close recurrent expenditure gaps.
Total statutory revenue of about N551 billion declared during the September Federation Accounts Allocation Committee, FAAC, meeting left a huge shortfall of N224 billion from allocation for October salary bill. This may have fuelled speculations that the SUKUK fund was handy to bridge the gap.
But, the head of the DMO, Mrs. Oniha, laughed off the possibility of such diversion, saying: “SUKUK funds are not monies that can go into general government funding activities.”
“SUKUK bond is a project-tied fund,” 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. She added that since the money was raised, meetings have been held with the contractors, particularly on their documentation and other processes.
She said considering the nature of the 25 key projects to be financed with the SUKUK, it was normal to expect contractors to provide various documents, including milestones, technical design 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 said speculations about possible diversion of the funds by government to pay salaries were unfounded, assuring 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 emphasised.
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 documents required from them.”
On possible interest that may accrue as a result of the delay in the disbursement, the official said the obligor, and therefore the beneficiary, in the transaction was government.
Although she did not say the exact time the process for the disbursement will be completed, she assured that once the contractors fulfil the requirements, 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 realised,” she said.