Managing Director of the Nigeria Sovereign Investment Authority, NSIA, Mr. Uche Orji, has expressed shock over the allegation by Edo State governor, Comrade Adams Oshiomhole, that N140 billion was spent on the consultancy for the Second Niger Bridge.
The MD disclosed in Abuja, yesterday, that only $2.21 million dollars (about N340 million, using the then exchange rate of N154/$1) was spent on the consultancy for that project.
this on-going controversy may put the construction of a Second Niger Bridge on hold until the integrity of the bridge is sorted out, the Federal Government said, yesterday.
Reasons ranging from the actual cost of the bridge, non- issuance of the Certificate of Compliance, non-compensation of the host community and non- adherence to due process in the award of the contract were also responsible for the stoppage.
The Director-General of Infrastructure Concession Regulatory Commission, ICRC, Aminu Diko disclosed this after a private meeting with President Muhammadu Buhari at the Presidential Villa, Abuja.
The DG, while briefing State House Correspondent, stated that the bridge was one of the issues discussed at the meeting.
Noting the importance of the road that linked the South East and South West, Diko, however, asked the people to be patient with the government.
He said: “The Second Niger Bridge is one of the projects that we discussed with the President. We did say it is in the commission for regulatory oversight. We have been discussing the transaction with the Ministry of Works. But before it can be finalized, the commissioner has to give a Certificate of Compliance, but we have not even done that because we have seen a lot of issues that we are uncomfortable with. We are talking with the Ministry of Works for them to correct them.
“The communities around that area are clamouring that their lands have been taken and that they have not been compensated adequately. As a matter of fact, we got a letter from Onitsha Traditional Council complaining that they have not been adequately represented in this transaction.
“We are not saying that something has not been done properly, but we need to be convinced that these few problems are sorted properly.
“We will also talk about the actual cost of the bridge, eventually we have asked the ministry of works to review it and justify how much the project should cost. For the Second Niger Bridge, there will be a lot of studies that need to be done on the integrity of the bridge itself which will take time. It is not something we can see being completed in the next six months.
“I will like us to be patient about it. We know that it is a critical road. We also know how Nigerians suffer during festive holidays and we hear people sleep on that old bridge. The time has come for us to bring succour Nigerians.”
Present status of the bridge
Asked to comment on the president status of the bridge, the DG said he was not in the know. “I have no idea about the status of the project. What I need to tell Nigerians is that PPPs take a long time to mature. There is a difference between the project which you have money in your pocket or in your account and you just bring it out and tell somebody to go and do it.
“But when it is PPP transaction, you first engage a number of people. You have bankers, lawyers, engineers. They all collaborate to form consultancy for that transaction,” he said.
Initial cost of project -$700m
According to the NSIA Managing Director, Mr. Uche Orji, the cost of consultancy for the Second Niger Bridge was less than one per cent of the cost of the project which was way below global standards.
A document he made available to Vanguard, yesterday, indicated that “the project was initially estimated to cost N108billion excluding duties and VAT, (if duties and VAT are included, the project cost is N117.9billion). This was equivalent to $700million at the then prevailing exchange rate of N154/$. The final project cost would naturally be affected by exchange rate fluctuations and other variables.
“Total consultancy services cost so far is less than one per cent of the estimated project cost. Whilst there is no standardized benchmark for transaction costs, the European Investment Bank’s Economic and Financial Report No. 3 of 2005, indicates that, on the average, the level of transaction cost for the procurement phase of PPP projects is over 10 per cent of the capital value of the relevant project in Ireland, the Netherlands,Portugal, and the United Kingdom,” Mr. Orji said.
The MD said that NSIA’s technical consultants on the project were instrumental in value engineering of the project and reducing the initial cost to the current level.
He said that NSIA had put in place a multi-stage approval process for all disbursements, under which all payments involving construction are made only after approval by a third-party engineering firm, which matches work completed against amounts due.
Mr. Orji said that the Federal government made a commitment of N30 billion out of which it had released N18.3billion so far of which N10.4billion had been disbursed on early construction works.
According to him, “the NSIA assembled a team of Nigerian and international advisers with proven capabilities and global experience in PPP infrastructure projects to ensure the project got first-class advisory services. These consultants were engaged through a rigorous and competitive procurement process.”