Presidential panel queries N328bn contracts

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Presidential panel queries N328bn contracts

By Fidelis Soriwei, Abuja
Saturday, 17 Sep 2011
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President Goodluck Jonathancrackcrackcrackcrack

The Federal Executive Council on Wednesday began the first in a series of deliberations on the report of the Alhaji Ibrahim Bunu-led Presidential Project Assessment Committee, which made startling discoveries on a regime of monumental waste of government resources in the award and execution of public contracts.

Most of these contracts have been abandoned because of poor execution or inadequate planning.

Though the FEC is yet to conclude discussions on the report, a perusal of the findings of the 20-member committee showed that many of the projects that were publicly lauded might end up as huge waste of public funds.

“The committee has found that (a) lack of initial proper planning for projects result in wastage, abandonment and the failure to meet project goals,” the report read in part.

Besides, the report deplored the insertion of projects at the National Assembly during budgeting, noting that political and personal considerations outweighed national interest in the award of contracts.

Specifically, the projects the panel said lacked proper planning and might end up being white elephants include the dredging of the River Niger; Alaoji Power Plant at Aba, which is being carried out under the National Integrated Power Project; the construction of 18 silos and dams across the country; the N62bn Millennium Towers Abuja; the Mogadishu flyover Abuja; and the National Library, Abuja.

The report, exclusively obtained by SATURDAY PUNCH, said the dredging of the lower Niger Lot 04, which was awarded to Van Oord Nig. Ltd. at N12.5bn, lacked the support of road network and railway infrastructure needed to make it a worthwhile economic project

A total of N3.7bn has been paid to the contractor.

Also, the panel said commensurate planning that would have made it possible for the citizenry to derive optimum benefit from the mega project was not done.

Specifically, the committee noted the absence of road networks in the communities along the dredging project, which could be utilised to evacuate goods by road from the Baro port to other parts of the country.

According to it, without the construction of the Lapai-Katcha-Baro Road, the dredging of the Niger will be of little or no benefit.

It said, “There was no evidence to show that at the conceptualisation of this project, enough planning and coordination was done to ensure that maximum benefit is derived from the project.

“‘For example, Baro, which is on the most Northern part of the dredging project, has no road to link it with Katcha, Lapai and other parts of Niger State and the railway line passing through Baro is not functional.

“So when goods are transported by river to Baro, they cannot be transported…”

On the Alaoji Power Project in Aba, Abia State, which costs $123m, the committee observed that the plant would not be able to work at full capacity as the prevailing situation would ensure its under-utilisation.

According to the report, the pipeline manufacturing companies built by the Shell Petroleum Development Company in the 1960s to supply gas to manufacturing firms in Aba lack the capacity to render the expected level of service to the gigantic project.

It explained that the existing pipeline for the supply of gas in Aba had a diameter of 12 inches, which lacked the capacity to serve the Alaoji Power Plant, with a capacity to generate 1,074MW of electricity.

The planners of the power project, the committee noted, did not take into consideration the capacity of the existing pipeline, which could only transport enough gas for the first two units of the plant.

It explained, “The whole plant requires a high pressure pipeline of 24 diameters. This should have been envisaged at the project planning stage but there is no evidence to show that this was done.”

On the N48bn contracts awarded to construct 18 silos and complete the two existing contracts on silos construction to increase the national farm produce storage capacity from 300,000 to 1,000,000 tonnes, the committee again said the right planning was not done.

The contracts were awarded purportedly in line with the United Nations Food and Agricultural Organisation’s recommendation to increase the storage capacity for farm produce in the country.

The FAO, according to the committee, had recommended a three million-tonne storage capacity for a country of 150 million people.

However, in spite of the huge cost of the construction, the committee discovered that only 40 per cent of the 300,000 storage capacity was in use, when the government acceded to the purported demand to award contract for the construction of the additional silos to increase the national storage capacity for farm produce.

The report read, “In 2009, N48bn worth of contracts were awarded to construct 18 silos and complete two abandoned ones to increase farm produce storage capacity from 300,000 metric tonnes to 1,000,000 metric tonnes.

“The Federal Government has paid N26bn out of the total contract sum for the silos located in Zamfara, Kebbi, Borno, FCT, Ekiti, Imo, Bayelsa, Kano, Katsina, Sokoto, Yobe, Adamawa, Taraba, Bauchi, Kogi, Nasarawa, Ogun, Osun, Anambra and Akwa Ibom states.

“The contract for the silos were said to be awarded in compliance with United Nations Food and Agricultural Organisation recommendation of three million tonnes storage capacity for a population of 150 million people.

“At the time of award of the contracts, there was no evidence of proper planning for the project as only 40 per cent of the existing 300,000 metric tonnes capacity was in use.”

Furthermore, in spite of the fact that the existing 201 dams and reservoirs were underutilised, a huge amount had been spent on new dams and the rehabilitation of the facilities.

Some of them include the contract for the construction of the Auna (Kotangora) Earth Dam Irrigation Project at N11.3bn out which N3bn has been released to the contractor; Galma Dam at a cost of N11.7bn with N10bn paid; Gurara Multipurpose Dam Lot A-water transfer to FCT for N54.3bn with N39bn paid Kampe (Omi-Dam) Irrigation Project, Yegba West, at N15.2bn and others.

Between 2008 and 2010, the government awarded various dam construction contracts at a total cost of N211bn and paid N86bn to the contractors executing the projects.

The committee condemned the situation where projects executed in the country were “procurement driven rather than tailored towards the developmental needs of the nation.”

It was the position of the committee that political and personal considerations played critical roles in the prioritisation of projects.

It condemned the practice, which allowed for the introduction of projects at the stage of budget approval in the National Assembly.

“Such projects cannot be properly situated in the larger national development context and be properly prioritised with regard to budgetary allocation; these projects will usually be accommodated in the budget to the detriment of ongoing projects for which continuous allocation and funding are essential,” the report said.

The committee said that major projects were not initiated with a view to achieving the motive for their establishment.

It blamed project variations and delay, increased pricing, and abandonment of projects to observed failure to ensure a strict compliance with “standard practice on option analysis.”

For instance, the committee noted that the Millennium Towers in Abuja was awarded at the cost of N62bn without a critical appraisal of the environmental content of project.

It listed the Mogadishu flyover – also in Abuja – awarded at a cost of N5bn and the National Library Complex, Abuja, awarded at the rate of N17bn, among projects awarded without adherence to standard practice.

The Bunu panel, which submitted its report last March, had noted that 11,886 projects or contracts were being undertaken by government at a cost of N7.7trn.

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