Ongoing discussions between the Federal Government and the Federation of Construction Industry (FOCI) on the settlement of the outstanding debt of about N600 billion owed construction companies in the country has got to the nth degree.
This intimation was revealed recently by the Managing Director of Julius Berger, Engineer Wolfgang Goetsch, during the company’s annual investors’ forum held in Lagos.
He stated that: “The whole construction company is being run 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.
According to him, the present government fully understands that if these debts are not paid, it would be extremely difficult for these companies to inject new funds in any project awarded today.”
He added that the government has agreed to be magnanimous in such a way that the old debt payment would also incur interest due to the fact that most of the companies took loans from banks to carry out some of the expensive construction projects and have continued to pay default interest on the outstanding amounts to the banks.
“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 are expected to have a positive impact on the balance sheet of the construction companies,” he noted.