N257B Abuja Road Contract Inflated By Over N2B - Reps

Source: SAINT MUGAGA - thewillnigeria.com

ABUJA, July 06, (THEWILL) - The House of Representatives ad hoc committee investigating the construction of Outer Northern Express Way, Kubwa (ONEX) and Abuja Airport road contracts has alleged that the four contracts for the expansion of Abuja Airport expressway and Kubwa road were inflated by over N2 billion even as the contractors insisted that the discrepancies were computer errors.

Chairman of the committee, Hon. Abdulrahaman Suleiman Kawu who disclosed the discovery said these discrepancies exists in virtually all the four contracts awarded for the expansion of Abuja roads by the FCDA.

The committee at its investigating hearing held today discovered that while the construction firms quoted lower amounts, the contracts were instead awarded at inflated cost by the Federal Capital Development Authority (FCDA).

The two contracts whose cost was said to have been inflated are the Outer Northern Expressway Lot I awarded to Dantata and Sawoe at the cost of N66.831 billion was actually quoted at N66 billion just as the Outer Northern Express way Lot II quoted at N81.914 billion was awarded at N81.513 billion

But while defending the contracts before the committee, managing director of Julius Berger (Nig) plc, Mr. W. Geotch said the contracts went through a transparent process and nothing was inflated. He admitted that what the committee discovered were just ‘computer errors’ from the FCDA. Also concurring the position of Julius Berger, the representative of Dantata and Sawoe agreed the differences in the amount bid and awarded was the printer’s devil.

Meanwhile, the Debt Management Office (DMO) has explained that it proposed the raising of funds for the project through the issuance of Federal Government bonds because the Federal Government bonds was more desirable than to provide for the 60 percent financing proposed to be financed by the contractors repayable within four years at an interest rate of 23 percent.

Director general of DMO, Dr. Abraham Nwankwo made the clarification during an interactive forum with members of the House of Representatives Ad-hoc Committee on the construction of Onex and Abuja Airport Road, today in Abuja.

The contracts for the project which is in four lots, was awarded to the three contractors at total contract sum of N257, 167,337,985 billion by the Federal Executive Council (FEC) on April 29, 2009.

It was initially awarded based on a planned 60:40 Private-Public contribution with the Federal Capital Development Authority (FCDA) funding 40 percent of the contract cost during a period of the construction ranging from 24 to 30 months while the 60 percent portion was to be funded by the contractors through their respective banks.

Nwankwo noted that since it is essentially a social infrastructure development project, the federal government was required to explore appropriate sources that ensure that funding of the project meets the stipulated borrowing guidelines.

He added that the nature of the project could hardly be considered a commercially oriented unless it was seriously repackaged in way that enabled it to generate revenue.

"An evaluation of the contractors’ funding sources showed that the project could hardly be considered as Public Private Partnership (PPP) arrangement, but rather a contractor financing scheme, which required an FGN guarantee to cover their borrowings from the commercial banks at an interest rate of about 23 percent.

"In essence, the contractors’ contributions imply that FGN was to take an expensive loan liability to be serviced from the national budget", he added.

Nwankwo further explained that the President therefore directed the DMO to source part of the tranche funding of N46.50 billion in 2009 while the sum N62 billion was to be sourced in 2010 and N46.50 billion in 2011 totaling N155 Billion for the completion of the project.