The Petroleum Trust Fund, headed by former President, Gen. Buhari, has confounded all its critics. As a development agency, it has succeeded spectacularly where all others failed. Pini Jason has the details.
The one silver lining to emerge from the
current heavy economic cloud must be the performance of the Petroleum (Special)
Trust Fund (PTF). In October 1994, General Sani Abacha hiked the pump price of
petrol from N3.25 to N11 per litre, promising, with Decree 25, to set up a
Petroleum Trust Fund to distribute the gains from the increase on social and
infrasturctural projects. The board of the fund, headed by former Head of State,
Major-General Muhammadu Buhari, was eventually inaugurated on March 21, 1995.
The Fund began with an initial capital of
about N60bn in 1996. Its all encompassing mandate includes the rehabilitation of
roads and waterways, educational and health institutions, providing textbooks
and stationary, procuring essential drugs and vaccines, providing water supply
systems, reviving crumbling agricultural sectors, connecting outlying areas to
the national electricity grid, extending railways and telecommunications and
ensuring consistent food supply.
The huge budget and all-embracing mandate earned PTF some criticisms. Some
dubbed it "the alternative government," accusing it of duplicating the
responsibilities of other existing government agencies. There was for instance
an initial conflict about who should be tarring which road, between PTF and the
Federal Ministry of Works and Housing.
Yet, for once, other Nigerians began to hope that here was an agency that
took its work seriously. The question was: could it carry out its entire
mandate, or even a part of it? Everyone waited to see what would happen.
Initially PTF awarded contracts for the rehabilitation of 12,000km of
federal highways (including drainages) nationwide, and between 25-100km of urban
road in major cities such as Gusau, Benin, Funtua, Zaria, Enugu, Kaduna, Aba,
Lagos, Lokoja, and Port Harcourt. A N27.3bn contract was awarded for road
rehabilitation in the first quarter of 1996. The sum of N1.328bn was awarded to
53 pharmaceutical companies for the supply of drugs, while the importation of
vaccines cost N229.9m. As at December 31, 1997, funds available to PTF stood at
N115.1bn.
One thing even the most uncharitable critic of PTF will admit is that it
has evolved a new way of doing things. This is true to its mission statement
which is 'to establish and operate an open, modest and efficient organisation
for the purpose of achieving the honest and timely execution of carefully
designed socio-economic projects.'
Right from its inception, the Head of State directed the fund to operate a
lean bureaucracy. It depends therefore largely on consultants supervised by
Afri-Projects Consortium, the management consultant to PTF. This policy has
created jobs and boosted the confidence of Nigerian professionals such as
architects, engineers and quantity surveyors.
In many other ways, PTF has thrown a lifeline to dying sectors of the
economy. Most of Nigeria's pharmaceutical companies were failing, and the
foreign multinationals were divesting. But through its drugs procurement
programme, PTF has turned the balance sheet of most of them into profit.
Equipment and car leasing companies are also benefitting from the multiplier
effects of PTF operations.
Banks and insurance companies have also benefited. Nigeria has a history of
contractors collecting mobilisation (advance) fees and not carrying out the
contract. But not with PTF. Every advance payment up to N10m must be guaranteed
by a PTF-approved bank, while other advance payments are covered by performance
bonds issued by similarly approved insurance companies. This method, apart from
increasing solvency through cash deposits, has created business for banks and
insurance companies.
One of the insurance companies that has benefited from PTF as a provider of
performance bonds is The United Nigeria Insurance Company (UNIC), a composite
insurance company which provides both life and non-life insurance. The total
assets of UNIC stood at N979m while it grossed premium income of N916m and
settled claims of N263m in 1996. With a staff of 552 spread all over its
nationwide branch network, UNIC is today one of the leading insurance company in
Nigeria.
Another company that has done good business with PTF is IPWA plc, formerly
International Paints (West Africa) Ltd. IPWA is today one of the biggest and
most diversified paint manufacturers in Nigeria. The company product range spans
automotive paints, building paints, industrial coatings and marine coatings.
Others are packaging coatings, protective coatings and wood finishes.
Most PTF contractors, specialist advisers and consultants lease and use
computers, fax machines, printers and photocopiers. This has provided a new
market for computer companies like Leading Edge Ltd., headed by Mr Tony Edoro,
the managing director. Leading Edge is foremost in cloning computers with parts
from diverse companies such as US Micro-Generation, IBM Direct, Merisel and
Gateway. According to Mr Edoro, a widely experienced computer systems engineer,
the advent of PTF has been good for Leading Edge. The company's turnover has
grown from N50m in 1995 to well over N100m in 1997.
Apart from energising several sectors of the economy, PTF is also setting
the pace in another direction. In the words of Mr Salihijo Ahmad, of
Afri-Projects Consortium, the twin objectives of PTF are to "rehabilitate
infrastructures and reorientate the people." This the fund does through its
insistence on transparency even though some critics still accuse it of
lopsidedness in project execution and selection of consultants and contractors.
In a country dogged by lack of
transparency, PTF is the first, and perhaps the only public institution in
Nigeria to publish its annual accounts. Last year, when he presented the annual
report and accounts of 1996, Gen. Buhari promised to present the 1997 accounts
before the end of the first quarter of 1998. He fulfilled that promise.
The 1997 account of PTF shows that it
disbursed N24.3bn on roads, N21.2bn on security, N7.8bn on health, and N3bn on
other projects. Other disbursements include N2.2bn on water supply, N936m on
food supply and N476m on education. It realised a total of N1.049bn from various
investment activities.
Reviewing the success story of PTF, Gen.
Buhari said: "We have consolidated our execution of the take-off projects for
the previous year and increased our intervention within the sectors. There is no
doubt that the years ahead will witness even more intervention, as reports of
some of the studies commissioned are received and project execution
commenced."
The fund has embarked on community
education to sensitise and enlighten communities of its activities. The idea is
to bring recipients closer to the objectives of the fund, so that they can
participate in project identification and selection as well as eventual PTF
projects in their areas.
One aspect of the overall project that
the public has raised an eyebrow over is the Armed Forces PTF. According to Gen.
Buhari, PTF is under instruction to allocate 20% of its funds to the armed
forces, and another 1% to the Federal Capital Territory. The allocation to the
Armed Forces is probably a continuation of a practice that started during Gen.
Babangida's time when he used to allocate excess revenue from the projected
price of crude directly to the commanding officers. But what worries critics of
PTF is that the military is not accountable to anyone regarding its utilisation
of funds. Moreover, critics question the wisdom of allocating such a huge chunk
to the military (who also usually takes the lion's share of the budget) over and
above food supply, education and health. Apart from roads, the allocation to all
other sectors does not add up to the Armed Forces PTF allocation.
Nobody knows how long PTF, a purely
intensive intervention agency, will last or whether there will be a place for
such an agency under a democratic set up. That decision, Gen. Buhari said, will
be up to Nigerians. For now his preoccupation is to rehabilitate infrastructure
and reorientate the people towards a new, effective and efficient way of
executing uninflated contracts without kickbacks and without consuming
mobilisation fees. Said Gen. Buhari to PTF contractors: "If you perform well,
you get a hand shake. If you perform badly, you get a handcuff."
NewAfrican
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