By Ezrel Tabiowo Abuja
Th e Senate has called on the federal government to pay N2 trillion being owed local contractors in the country. Adopting a two-prayer motion sponsored by Senator Oluremi Tinubu (APC, Lagos Central) and fi ve others, the Senate urged the federal government to appraise its indebtedness to the local contractors.
It also urged the government to propose a framework/ repayment plan for servicing of the debts. Tinubu explained that the nation’s economy is experiencing diffi cult times caused by a slump in oil prices, with the result that a negative GDP (it shrank by 0. 36 per cent in the fi rst quarter, 2.06 per cent in the second quarter, and 2.24 per cent in the third quarter) was recorded in three consecutive quarters of 2016, adding that there had been an increase in the rate of unemployment and increase in prices of goods. According to her, the CBN’s report on the federal government’s indebtedness to the local economy and its eff ects in protracting the current economic situation indicate that further delay in servicing these debts may adversely aff ect business organisations. Also, the lawmaker said “many businesses are indebted to banks,” and referred to a publication contained in Th e Guardian of Tuesday, January 10, 2017, which alleged that banks were being owed over N465 billion by oil importers alone.
Tinubu said it was further alleged in the report that the mounting debts owed to the banks was as a result of failure of the federal government to pay outstanding subsidy arrears before entering into the new oil pricing regime. Citing another publication contained in the Nation newspaper of Wednesday, January 26, 2017, the lawmaker said banks’ bad loan was put at N856.9 billion; with the upstream oil and gas, general commerce, manufacturing and power sectors accounting for a signifi cant portion.
Warning that the situation could spell doom for the banking and the fi nancial services sector, Senator Tinubu advised that “the inability to repay subsisting bank loans may aff ect the purchasing power of these petroleum marketers, thus creating scarcity
of petroleum products.” She said: “Th e alleged failure to pay debts owed to pharmaceutical companies and the impact this may have on the health sector. Th is is contained in a publication by the Nation newspaper on Monday, February 6, 2017. “Th e data released by the Debt Management Offi ce put Nigeria’s domestic debt as at June 30, 2016 at over N10 trillion. Local contractors’ debt is estimated to amount to an additional N2 trillion. “Settling these local debts will ensure that aff ected businesses stay afl oat through increase in the circulation of money in order to bring the current economic recession to an end.”
