The Nigerian federal government has mandated all FG-owned Ministries, Departments, and Agencies to remit five percent retention fees deducted from contractors’ payments at the Central Bank of Nigeria.
The government through the Office of the Accountant General of the Federation disclosed this in a memo signed by the Accountant General of the Federation, OluwaToyin Madein, tagged OAGF/CAD/026/Vol.V/896. The memo said the move became necessary following complaints over non-payment of retention fees by MDAs upon completion of projects by contractors.
reports that 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. Accordingly, upon completion of the project, 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.
it has become necessary to issue these guidelines. “The five percent retention fees deducted from contractors’ payments shall henceforth be remitted to the retention fees account domiciled at the Central Bank of Nigeria. “The purpose is to safeguard the funds, pending the expiration of the six months defect liability period, after which the MDA could apply for the payment of the money to the contractors).
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