FG contractor debt payment plan emerges as N1.7tn is budgeted in 2026 to clear unpaid 2024 capital project liabilities

The Federal Government of Nigeria has budgeted N1.7 trillion in the 2026 Appropriation Bill to settle outstanding debts owed to contractors for capital projects executed in 2024.

Also read: Army warns over fake COAS accounts

The allocation, captured under a line item titled “Provision for 2024 Outstanding Contractor’s Liabilities”, signals official acknowledgment of delayed payments that have triggered protests and growing pressure from contractors and civil society groups.

Budget documents show that the provision is aimed at addressing unpaid obligations that accumulated amid revenue shortfalls and delayed capital releases during the 2024 fiscal year.

The move follows sustained agitation by indigenous contractors, who in 2025 warned that unpaid federal obligations had crossed N2 trillion, severely disrupting business operations across the construction and infrastructure sectors.

Members of the All Indigenous Contractors Association of Nigeria staged protests in Abuja, citing an inability to service bank loans obtained to execute government projects.

The protests were temporarily suspended after assurances from government officials, though payments remained partial.

Minister of Works David Umahi had earlier pledged to clear verified arrears before the end of 2025.

However, fiscal constraints limited disbursements, prompting the inclusion of the N1.7tn allocation in the 2026 fiscal plan as a corrective measure.

In addition to the main provision, the Federal Government also earmarked N100 billion under a separate line item titled “Payment of Local Contractors’ Debts and Other Liabilities”.

Analysts say this allocation may cover legacy debts, smaller verified claims, or obligations pending full audit clearance.

The combined N1.8 trillion provision forms part of the N23.2 trillion capital expenditure framework in the proposed 2026 national budget, which seeks to accelerate infrastructure delivery while resolving past financial obligations.

Nigeria’s contractor debt challenge has remained a persistent fiscal issue, worsened by partial cash backing of approved projects and underperformance in revenue targets.

Speaking with journalists in December 2025, the National Secretary of the All Indigenous Contractors Association of Nigeria, Babatunde Seun Oyeniyi, said members were owed over N500 billion for completed and commissioned projects.

He accused government officials of delaying payments despite repeated assurances.

Oyeniyi said contractors were shown payment warrants without corresponding cash releases, describing the situation as unsustainable for businesses already burdened by debt.

The FG contractor debt payment plan contrasts with earlier claims by the Federal Government that over N2 trillion in outstanding capital obligations from the 2024 fiscal year had been cleared.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, had said in August 2025 that all verified obligations were being processed, with attention shifting to 2025 capital releases.

By December 2025, President Bola Tinubu expressed strong displeasure over the backlog of unpaid contractors and directed the creation of a high level committee to verify claims and fast track repayments.

Officials say the 2026 budget provisions are expected to be disbursed in phases, based on certified claims emerging from the verification exercise.

Also read: Army warns over fake COAS accounts

The total proposed 2026 national budget stands at N58.47 trillion, with N23.2 trillion allocated to capital expenditure, N15.9 trillion to debt servicing, N15.25 trillion to recurrent spending, and N4.09 trillion to statutory transfers.