The Federal Government has earmarked a massive N1.8 trillion to settle outstanding payments owed to contractors handling federal capital projects, according to details contained in the 2026 Appropriation Bill currently before the National Assembly.
A breakdown of the proposal shows that N100 billion has been specifically set aside for payments to indigenous contractors, a move aimed at stabilising the construction sector and restoring confidence among local firms battered by delayed payments. The funds are expected to cover projects executed under the 2024 fiscal year.
Highlights of the budget proposal indicate a renewed focus on clearing inherited liabilities while sustaining funding for new and ongoing capital projects. Analysts say the provision signals government’s acknowledgement of mounting pressure from contractors who have repeatedly protested non-payment.
Major Rail Projects Take Centre Stage
Beyond debt settlement, the 2026 budget places strong emphasis on rail infrastructure development. The Federal Government has proposed N102.3 billion as counterpart funding for Phase One of the Lagos Green Line Metro Rail project under the Ministry of Transportation.
The 68-kilometre Lagos Green Line is designed to run from the Lekki Free Zone to Marina, linking key commercial and residential hubs such as Victoria Island, Lekki and Ajah.
An additional N68.5 billion has been allocated for consultancy services tied to the Lekki–Ijebu Ode–Ore–Kajola rail line and the coastal rail corridor connecting Badagry, Apapa and Tin Can Island ports. These funds will support feasibility studies, project preparation and advisory services.
The budget further provides N29.04 billion for ongoing and planned railway modernisation projects nationwide. This includes the completion of the Abuja–Kaduna railway, further works on the Lagos–Ibadan rail line, rehabilitation of the Itakpe–Ajaokuta rail corridor, construction of 12 station buildings, and track-laying works at auxiliary rail facilities in Agbor.
According to the proposal, the same allocation will also fund the design, manufacture and installation of rolling stock, as well as the supply of spare parts and maintenance equipment. Provisions were also made for signalling and telecommunications systems on the Itakpe–Ajaokuta–Warri rail line, alongside acoustic sensing security surveillance systems for the Abuja–Kaduna corridor.
In addition, the government plans feasibility studies for new standard-gauge rail lines and the engagement of transaction advisers for the concession of the Abuja–Baro–Itakpe, Aladja–Warri Port and Kano–Maradi rail projects.
Contractors’ Anger and Mounting Pressure
Industry estimates as of June 2025 suggest the Federal Government owed local contractors between N200 billion and N400 billion, largely due to delayed budget releases, cash flow constraints and procurement bottlenecks.
National President of the All Indigenous Contractors Association of Nigeria, Jackson Ifeanyi, previously described the delays as a “grave injustice,” accusing the government of commissioning completed projects without settling contractors’ bills.
He warned that many contractors financed projects through loans based on assurances of prompt payment and could no longer absorb the economic strain caused by persistent delays.
The tension peaked in December 2025 when contractors blocked the main entrance of a federal ministry, disrupting activities and forcing the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, to meet with protesters. Although some payments were later made—helping to ease tensions before the Christmas holidays—the total amount disbursed was not disclosed.
Broader Economic Implications
Beyond transportation, the 2026 capital budget prioritises spending on roads, power, agriculture, housing, education, health, water resources and defence, reflecting a broader strategy to stimulate economic growth and strengthen social services.
Analysts believe the proposed settlement of contractors’ debts could calm frayed nerves in the construction sector and prevent further disruptions to infrastructure delivery, especially as political activities gather momentum ahead of the 2027 general elections.
If fully implemented, the N1.8 trillion provision could mark a turning point for indigenous contractors who have long complained of being sidelined despite playing a critical role in Nigeria’s infrastructure development.