Deborah Akinyosoye
The Federal Government said no ministry, department, or agency (MDAs) should issue contract award letters without securing authority to incur expenditure (AIE) from the Minister of Finance, in a move that would make public procurement more rigorous.
The new system, which is to serve as proof of the availability of funds, is to ensure that payment is made immediately after projects are completed. It is also to ensure that government funds are channelled only to priority projects of the government while ensuring transparency and accountability in the implementation of capital budgets.
Earlier report shows that the government has been grappling with poor project funding, with some contractors queuing endlessly for payment long after delivering their jobs.
Minister of Finance and the Coordinating Minister of the Economy, Wale Edun, yesterday, in Abuja, said AIE was a condition for finalising a contract. He spoke at the opening of a one-day stakeholder engagement with permanent secretaries/accounting officers of MDAs on the implementation of the 2025 capital budget, organised by the Office of the Accountant-General of the Federation (OAGF).
He said the new approach to contract award was in line with the government’s cash management and bottom-up cash planning policy, where contractors are paid directly without an intermediary.
Edun said the policy was meant to make the system of payment more rigorous, transparent and accountable with suppliers, contractors and service providers directly. He added that the insistence on the issuance of the warrant/AIEs was to serve as evidence of funds available for the contract.
The minister said while the reform policies of the current administration is already yielding positive results such as the increased funds going to the states and the economy growing by over three per cent, the target of the administration is to have the economy grow by seven per cent per annum steadily and inclusively to ensure that millions of Nigerians are lifted out of poverty.
“That starts here with effective, honest, transparent and efficient spending. We are putting measures in place to fund the extended 2024 and 2025 capital budgets as they fall due, particularly in the priority projects of the government,” he noted. He charged the participants, saying it is their responsibility to prudently manage the limited resources that are allocated to their MDAs as well as optimise revenue realisation as they fall due. He said they must put necessary controls in place to avoid discretionary spending.
The minister added that the current administration would continue to honour its obligations to contractors provided requests for payment followed due process.
The Accountant-General of the Federation, Samseldeen Ogunjimi, expressed concerns over the activities of some MDAs, who he said award contracts solely on budgetary provisions without recourse to extant laws and regulations.
“There is also a high propensity to award new contracts rather than completing ongoing projects, transferring funds to vendors’ accounts even before the contracts are executed and expending the independent revenue generated without necessary approvals,” he said.
He warned that the government would not fold its hands to watch institutions and individuals saddled with responsibilities disregard extant laws and regulations in the award and execution of the capital budget.
“Henceforth, warrants/AIEs will be issued to MDAs before legal commitment to serve as evidence of funds available for the award of contracts or processing of payments for ongoing or completed projects.
“You are to ensure that no letter of award is issued, contract signed or that you enter into any financial obligation unless the corresponding warrants or AIEs covering the full or committed portion of the contract sum have been duly released,” he said.
Responding to the concerns raised by some of the participants that they have already awarded contracts for 2025 capital projects before the new order, the AGF assured that the contracts that have already been awarded and have gone through the necessary processes would be funded by the government.