THE Federal Government has pledged not to revoke any inherited contracts “ in the interest of Nigerians”. Minister of Power, Works and Housing, Mr Babatunde Raji Fashola who made the pledge on behalf of the government at the opening ceremony of a 3-day Nigerian Pension Industry Strategy Implementation Roadmap Retreat, said that the norms of reversing projects of previous government was wrong and not n the best interest of Nigerians.
Fashola stated that it is always not in the best interest of the Nigerian citizenry to revoke contracts inherited.
Contracts cancellation “Newly formed governments begin a review of all contracts signed by their predecessors, cancel or frustrate them even when they are performing. What I am saying is that contracts cannot be terminated or frustrated on trumped up reasons simply because a new government does not like the affiliation of the holder of the contract,” he stated.
On the effect of contracts cancellation or revocation, the Minister declared that “it weakens the economy, it frustrates enterprise and leads to poverty and unemployment through job losses, loans taken from banks are endangered and the knock on effect is more than we often can see on the horizon, because the bad word spreads around the global investment community very quickly like wildfire”. “The previous government has done something wrong, they did not adequately protect the interest of the people and so on. Yes it may be the case sometimes, that the past government did not act in good faith, or even compromised or was even negligent. The answer is not cancellation, if the contract is performing.
The answer is renegotiation,” the Minister said. According to him, the best a new government can do rather than expose a number of people tied to those contracts to the labour market by cancellation of contracts, “is to invite the holder of the contract, confront him with evidence of compromise, bad faith or recklessness, and this is easy to get if there is diligence, and you propose new terms”. “It is a practice that is particularly prevalent on the African continent and I argue that in some part contributes to our continental deficiency of infrastructure.
What they do inadvertently, is to create a climate that diminishes the sanctity of contracts, negatively affecting the ease of doing business,” the former Lagos State Governor opined. “I am not saying that government must not terminate non-performing contracts. Indeed these are rights that are standardly provided in all well drawn contracts. This I think will enhance the reputation of the state or country or continent for honouring contracts and it is music to the ears of investors. Even then , I say, it must be sparingly resorted to, once the contract has been signed and is performing,” he posited. Productive activities Continuing, the Minister said, “For over three decades, we have mouthed the need to diversify our economy in order to open up more sectors for productive activities, income, economic growth and jobs. But we failed to follow through because of oil resources.
It was quick and bountiful income even though there were boom and burst cycles. But today’s reality is that we are in another cycle of burst. Oil prices have crashed from over $100 per barrel and is now hovering around $30 per barrel and there is a real chance that it will fall lower. Every time the cycle burst, we scampered, and promised to diversify, we take tentative steps, we feel pain. We do not endure, and it is easy to escape because not too far on the horizon is a boom in oil prices and we go back to an old life,” Fashola lamented.