By Tochukwu Bliss, Abuja
Amid paucity of funds and competing needs, the Federal Government has said it will engage on contract review and cost augmentation on the inherited ongoing projects
Minister of Works, David Umahi, during an interactive meeting with the contractors at the Ministry’s headquarters, in Abuja, according to a statement by hi Special Adviser (Media), Uchenna Orji
Mr. Umahi was quoted as saying the review became necessary in view of the geometric rise in cost of contract elements caused by the inherited challenging economy.
Discrediting reports that such projects had been abandoned, he reminded that: “It was Mr. President, out of his very exceptional magnanimity, that directed that all inherited projects should be made alive through appropriation.
“He promised that he was going to be looking for ways to fund the projects, even outside the budgetary provisions, through the National Assembly.”
He continued, “What we are doing now is to review the projects in line with availability of funds and make a proposal to FEC.
“If such a project has attained about 80% completion, then we make a proposal to FEC that in subsequent appropriation, money should be made available, and such projects should be made a priority, so that it could be completed.”
According to the Minister, neither the President nor Federal Executive Council (FEC) directed that inherited projects should be stepped down.
He further explained: “The Federal Executive Council noted that the review we are doing, and in some cases, a few new contracts that we are seeking approval to award, that there is a very large disparity between either the increase in contract costs or the project cost, between what we are looking for and the available funding.
“The subject matter in fact was not about the unit cost, because we are very satisfied as a Ministry with the costs that we have offered to you, which are actually the unit cost in line with the realities of the market prices. Some of these projects were awarded 18 years ago, some 10 years ago, 5 years ago.”
Mr. Umahi reiterated the federal government’s determination in bringing funding and budgeting innovations that would fast-track road infrastructure development.
He informed that FEC had directed the Federal Ministry of Works to work with the Federal Ministries of Finance, and Budget & National Planning to put forward proper budgetary estimates for the 2025 financial year for those projects that were not appropriately budgeted for but have attained probably 80% completion to be completed and delivered.
However, he said that projects with huge procurement costs but have little appropriation and with little completion milestones would be reviewed in line with section 51 of the Special Conditions of Contracts.
On the issue of Variation on Price (VOP), the Minister said: “All projects we awarded in 2024 will not attract any VOP. And we’ve made it a policy that such projects cannot get any variation.
“However, within the course of the year and the project execution, if there are issues (God forbid) that do change the basic market prices of construction materials to a certain extent, we will revisit the issue of VOP. And it will not be selective.”
If such a project has attained about 80% completion, then we make a proposal to FEC that in subsequent appropriation, money should be made available, and such projects should be made a priority, so that it could be completed.
Alternative funding
In another development, Mr. Umahi has concluded discussions with Julius Berger Plc on alternative financing structures for the construction of the Lokoja-Shintaku bridge in Kogi State.
He said this is part of the creative solutions to the financing gaps in road infrastructure development and the innovative perspective of thinking outside the box.
Also, in attendance at the meeting, which held at the Minister’s office, Abuja, were the Business Development Strategist, Filipe Nuno Lopes, and development partners – Deutsche Bank represented by the Director, Structured Trade & Export Finance Middle East & Africa, Humaya Harati, and the bank’s Chief Country Representative Nigeria, Andreas Voss.
The Minister expressed the hope that with the immense financing capacity, relationships, and lengthy records of the firm in arranging financing for projects in the African continent, the project target will be accomplished.
He also emphasized the need for the timeline for the procurement process to be streamlined so that construction of the project can commence and be completed in record time.
The representative of Julius Berger and team lead, Mr. Filipe, assured that with the certificate of no objection issued by the Bureau of Public Procurement (BPP) to the single source procurement of the bridge from Julius Berger Plc, the Lokoja-Shintaku project would be moved forward.
The meeting was said to have been successful, as it advanced discussions around project development and potential funding options.
