Nigeria faces N19.9tr future liabilities

A staggering estimate of N19.9 trillion in contingent liabilities looms over Nigeria from 2024 to 2026, as a result of non-performance or breach of the contractual obligations under the Joint Venture Agreements.

To block these revenue leakages and wastages of public resources, the National Assembly has announced its resolve to commence the process of amending the Fiscal Responsibility Act (FRA), 2007.

A statement issued by a coalition of Civil Society Organizations under the GIFT cluster of CSOs commended the National Assembly on the move to review the laws governing these agencies, saying such will ensure compliance with extant financial reporting standards and block wastages and corruption in public finance.

Nigeria’s Joint Venture Agreements, specifically within the oil, gas, and power sectors exposes the country to financial risks and potential international legal battles.

Some revenue-generating agencies in the country have entered into Joint Venture Agreements, imposing a hefty monthly commitment of $40 million with the “Take or Pay” clause.

What that means is that Nigeria must pay the agreed amount regardless of whether the products or services are utilized.

The terms of these Joint Venture Agreements leave the country exposed to potential international arbitration proceedings. In cases where contractual obligations are not met, Nigeria may face legal disputes, potentially leading to hefty penalties or compensatory payments.

Speaking on the development, Oke Epia, Executive Director of OrderPaper and Faith Nwadishi, Executive Director of Centre for Transparency Advocacy (CTA), in the statement on Sunday said “the latest move by the legislature aligns with its objective and recent public awareness and stakeholder engagement efforts on needed policy reforms in public finance management.

They said that “the amendment of the FRA will, amongst other things, address the issues of accountability, transparency, and lack of prudence in public finance, and also empower the Fiscal Responsibility Commission to stand up to its responsibility in checking wanton disregard for the provisions of the law by MDAs of the Federal Government.

“Through our GIFT Nigeria project, designed to catalyze reforms around Transparency, Accountability, and Good Governance (TAGG) vis-à-vis Public Finance Management (PFM) and supported by the United States Agency for International Development (USAID) under the Strengthening Civic Advocacy and Local Engagement (SCALE) project by Palladium, we have advocated vigorously for an amendment of the FRA 2007 to bring about enduring solutions to the public finance management challenges plaguing the country.

“We, however, urge the 10th National Assembly to go beyond mere expression of commitment to actually achieve the desired objective of amending the FRA, unlike its predecessor, which failed to pass the amendment bill after several efforts by stakeholders, including the GIFT cluster and civil society organisations to make it do so” the CSOs said.