The Federal Government has introduced a new policy requiring contractors to provide an active Advance Payment Guarantee (APG) and a performing performance bond before receiving payments from the Ministry of Works.
An APG ensures that funds advanced to contractors are used for the project, while a performance bond guarantees the contractor will complete the project as agreed.
This new payment policy aims to enhance accountability and quality in road construction across Nigeria.
Minister of Works, David Umahi, announced the policy during the Lagos-Calabar Coastal Highway Stakeholders’ Meeting on Sunday, 23rd February 2025, in Lagos. He explained that the policy is designed to secure funds for repairs if contractors fail to address defects within the liability period.
Umahi emphasized that the new policy would be implemented for all ongoing and future projects under the Ministry of Works.
“Any payment made by the Ministry of Works will now require an active Advance Payment Guarantee (APG) and a performing performance bond. This ensures that if a contractor fails to fix defects within the liability period, we will have the resources to carry out the repairs,” Umahi stated.
The minister made the announcement while giving an update on RCC’s ongoing work on Section 2 of the Lagos-Ibadan Expressway, which faced significant failures on the Ibadan-bound lane.
The minister provided updates on the ongoing Lagos-Ibadan Expressway construction, which is divided into two main phases with multiple sections.
Phase 1 includes Section 1, constructed by Julius Berger, spanning about 43 km with three lanes dualised. Although minor failures were recorded, Umahi noted that they had been successfully repaired without major delays.
Additionally, a 48 km stretch to Ore will be reworked, with the contract anticipated to be awarded by March. According to Umahi, completing this phase will conclude the Lagos-Ibadan Expressway project at the Ibadan axis.