Fg May Issue Promissory Notes To Contractors In 2017

BEVERLY HILLS, November 14,(THEWILL) –  The federal government is planning to introduce the issuance of promissory notes in 2017 to reduce the huge debts owed local contractors and motivate them for optimal performance at the various project sites across the country.

According to sources, with the level of the federal government's indebtedness to local contractors, a move towards issuing promissory notes to them next year was being considered and would be included in the 2017 budget.

The Minister of Power, Works and Housing, Babatunde Fashola, had earlier disclosed that the federal government owed N1 trillion to road contractors handling over 200 on-going projects across the country.

Also, the Debt Management Office (DMO) indicated that of the nation's N16.29 trillion debt as of June 30, 2016, the domestic debts of the federal government alone stood at N10.61 trillion, up from N8.4 trillion a year ago with the bulk of the federal government's domestic debt owed to contractors.

THEWILL gathered that despite the N209,246,760,165 released to the Ministry of Works, Power and Housing so far from the 2016 budget, the required impact was not being felt as the fund was swallowed by the banks due to the piled up debts.

The source added that it was the release of the second tranche to contractors that inspired some confidence in them that the government was serious about defraying its huge debts to them; hence, promissory notes.

A promissory note is a debt instrument which is discountable at the Central Bank of Nigeria (CBN) and similar to Sovereign Debt Note (SDN), which was issued to oil marketers by the previous administration to encourage them to import petroleum products.

THEWILL recalls that the Goodluck Jonathan administration issued N364 billion worth of promissory notes to contractors in 2012.

Story by Oputah David