Nigeria is currently exposed to N13.9 trillion contingent liabilities, a report by the House of Representatives’ joint committees on Finance, National Planning and Economic Development and Aid, Loans and Debt Management yesterday, has revealed.
The report was on the 2024-2026 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP).
The clerk of the House Committee on Finance, Barrister Oscar Okoro, said the report would be laid at plenary yesterday.
A contingent liability is described as a potential loss which may occur in the future, depending on the outcome of a specific event. Potential lawsuits, product warranties and pending investigation are some examples of a contingent liability
The committee’s report noted that the contingent liabilities are a result of various agreements signed on behalf of the Federal Government by various Government-Owned Enterprises (GOEs)/Ministries, Departments and Agencies (MDAs), and some states but guaranteed by the government.
The amount of the liabilities is 11.3% of Nigeria’s total public debt, which the Debt Management Office (DMO) put at N87.38 trillion as of the second quarter of this year.
The report said some revenue-generating agencies were involved in joint venture (JV) agreements, especially in the oil and gas sector, where Forward Sales Agreements were executed for upfront payments for future product delivery without recourse to the National Assembly.
It said 12 agencies were listed as being behind the cumulative contingent liabilities incurred. The agencies were named as the Federal Mortgage Bank of Nigeria, the Federal Capital Development Authority (Katampe Infrastructure Project), the Nigerian Ports Authority (Lekki Deep Seaport), the Nigerian Export-Import Bank, the Nigeria Mortgage Refinance Company Plc, the Nigeria Bulk Electricity Trading Plc (Payment Assurance Facility and the Power Sector Contingent Liabilities Put-Call Option Agreement and the Power Sector Contingent Liabilities-Partial Risk Guarantees).
The report listed other MDAs and the liabilities as: “Legacy FGN exposure from PHCN successor companies, NNPC – AKK Gas Pipeline Project, Family Homes Fund Limited (FHFL), pension arrears for MDAs and others”.
The report added, “However, it was observed that most of these agreements were never brought to the National Assembly for consideration, hence these agreements were domiciled and subject to international Laws or legal systems”.
