Contractors that have executed contracts with the Federal Ministry of Agriculture and Rural Development have appealed to the ministry and the Federal Ministry of Finance to resume the payment of their retention funds.
A retention fund is a form of security provided for any construction contract as limited security for the due performance of the contractor’s obligations under the contract.
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At the completion of the project, the contractor gets a percentage of the total fund, and when a final certificate indicating that the contractor has fulfilled all obligations the remaining balance is paid to him.
The retention fund constitutes a 5 per cent deduction from the total contract sum kept in a separate account by the ministry and paid to the contractor after six months of the completion, verification and certification of the project(s).
Upon completion, the contractor applies through the procurement department of the ministry which then writes to the permanent secretary for consideration and approval to the Ministry of Finance for payment.
Sources alleged that the ministry stopped paying the retention funds, which legally belongs to the contractors since last year, and has not communicated to the contractors the reasons behind that.
Sources at the ministry, however, said the payment was stopped because of lack of funds.
They said it was a collective responsibility of the management of the ministry to stop the payment due to paucity of funds.
“The 5 per cent might be our only profit in the project. If you stop paying, it will affect us. This is why we are appealing to the ministry, including the Federal Ministry of Finance, because we understand the Ministry of Finance executes the payment.
“We are not in any way fighting the ministry, but ours is to appeal that this 5 per cent be released to us.
“Ideally, six months after you finish the project, the state where you execute the contract sends a report to the headquarters and the headquarters sends a team for verification.
“Once this is done, six months after, you apply to the permanent secretary through the Procurement Department for the release of this 5 per cent and the ministry doesn’t need to verify anything again to authorize the payment of the money. But since last year this has not been done,” a contractor who sought anonymity stated.
When Daily Trust contacted the Director of Information in the ministry, Mr. Theodore Ogaziechi, on the position of the ministry regarding the retention fund payment, he referred our reporter to the office of the permanent secretary.
Responding to a text message, the Permanent Secretary, Dr Ernest Afolabi Umakhihe, claimed ignorance of the matter and referred further enquiries on the matter back to the Director of Information.