Nigeria: Govt to float N600 billion bond to offset construction debt
Discussions have reached an advanced stage between the Federal Government and the Federation of Construction Industry (FOCI) to settle the outstanding debt of about N600 billion owed to construction companies in the country.
Engineer Wolfgang Goetsch, the Managing Director of Julius Berger disclosed this at the company’s annual investors’ forum in Lagos.
Goetsch said: “The whole construction company is ruining under the heavy burden of debt. The entire equity and free funds of these companies are lying with the Ministry of Finance or the Federal Inland Revenue Service (FIRS) as outstanding payments on contract or tax refunds.
“The government today understands that if these past due obligations are not paid, these companies cannot inject new funds in any project awarded today.” He further disclosed that, the government has agreed that the old debt payment would also bear interest since most of the companies took loans to finance these constructions and have continued to pay default interest on the outstanding amounts to the banks.
He said: “Under the leadership of FOCI, we are having fruitful discussion with the Federal Government and in three months, we should finalise, so that bonds can be issued. We had same process in 2005 and 2011.”
The government would likely issue a 5-10 bond to the construction companies which is expected to have a positive impact on the balance sheet of the construction companies. “