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N174bn Aviation Debt: Senate Demands Explanation from Ministry

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Following the discovery of the huge debt amounting to over  N174 billion owed contractors by the Aviation Ministry as a result of contracts awarded from 2011 till date, the Chairman, Senate Committee on Aviation, Senator Hope Uzodimma, yesterday demanded full explanation from the supervising Minister for Aviation, Mr. Samuel Ortom, noting that a solution must be sought on how to offload the debt.

Apparently upset by the high debt profile, Uzordinma said: “In all these awards, the Senate committee was not carried along.”

Ortom was however quick to add that he and the Permanent Secretary of the ministry, Mrs. Jemila Shua’ara, assumed office only few months ago and were not in office when the debt was incurred.

Uzordinma, who made the disclosure in Abuja, while on an oversight visit wondered saying: “I have looked at the documents and seen the level of debt. I wonder how this excessive debt will be offloaded by the ministry.”

On the Bilateral Air and Safety Agreement (BASA) contracts, the chairman charged: “You can see that in BASA, we have only N10.6 billion in our purse and an exposure of N36 billion. I know that this account is being handled by the National Assembly and the Presidency, and we couldn’t have given approval to any commitment more than how much we have in that account. So we need a proper reconciliation, because there is supposed to be an approval from the National Assembly before you can spend BASA money.”
He also questioned the rationale for the borrowing of $100 million by the Debt Management Office (DMO) and the Chinese loan of $500 million without approval by the National Assembly.

In response, Ortom said the loans for the upgrading of the  Lagos, Abuja, Port Harcourt and Kano international airports did not need to go through appropriation because it was part of  a counterpart funding arrangement. The Senate was indisposed to the $18.3 million interest which the $100 million had already attracted.

The lawmaker however insisted that the ministry needed approval before embarking on such loan drive: “We also need, under the borrowing plan, an approval from NASS, we didn’t see where National Assembly  million was allocated to be borrowed by DMO, we need the president’s approval to borrow that money and we need the business studies and how you intend to pay the interest.”

While requesting for the full details, he added: “On the terminals, the $500 million loan, we need to see the design, we don’t know the size of the airport, we don’t know where work has started on them.

“For the first time, we just heard phase three and so much money is being allocated to it, where are we going to get the money from. Because looking at our appropriation, we must make provision from the N63 billion appropriation.

“And you said it is about to take off, this has to be stopped because there is no money for it. You don’t just commit government if you are not sure of where the money is going to come from.

“My advice to this ministry, so that they will not embarrass the government, is to do your best to ensure that you don’t unnecessarily and without approval commit government.

We will not support you on that, because we will not be part of an arrangement that will put us into disrepute.”

While acknowledging that he was not part of the ministry when the contracts were awarded, Ortom stated however that all the contracts went through due process before they were awarded.

Admitting the high level of indebtedness, he solicited the understanding of the Senate so as not to stall some of the projects which are now near completion, adding:

“We hope that the synergy between the executive and the Senate will give us the desired result, to take the industry to the next level, on the issue of BASA approvals, we have put our papers together and accordingly forwarded them to the Senate Committee.

Ortom, explained that both the $100 million DMO loan and the $500 million Chinese  loan were based on counterpart funding agreement being handled by the Minister of Finance, Dr. Ngozi Okonjo Iweala. He insisted that the Minister of Finance was aware of the approvals. “She told me that she had the approvals,” the Supervising Minister for Aviation added.

On phase three projects: he said: “The Permanent Secretary and I came into the ministry about the same time, and since we came in, we have not awarded any contracts and we intend not to because of the huge indebtedness that we have.”

On the way to resolve the crisis, he added: “What we have done is to reach out to the Ministry of Finance and the Budget Office, and we have set up and Inter-Ministerial Committee that will look at all the issues based on the interim report which we have,  amounting to an outstanding of N174 billion.

“Those projects that are yet to start, we are going to stop them for now because the funds are not there for now and we have agreed within the ministry that the inter-ministerial committee will look at all these and suspend or prioritise those projects that are of necessity and channels the funds to the appropriate directions.

Article Credit: Thisdaylive

Updated 4 Years ago

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