[size=14pt]Firms blame N2bn fraud on ‘computer errors’[/size]
Wednesday, 07 July 2010 02:03 PDF
By Mohammed Isa

The House of Representatives ad-hoc committee investigating the construction of Outer Northern Express Way, Kubwa (Onex) and Abuja Airport road contracts yesterday accused the Federal Capital Development Authority (FCDA) of inflating the contracts by over N2 billion.
This is just as the contractors surprised the committee members by defending the FCDA administration, saying the huge discrepancies were due to ‘computer errors.’
The committee, at its investigation hearing held yesterday, discovered that while the construction firms quoted lower amounts, the contracts were instead awarded at inflated costs by the FCDA.
The House of Representatives had, at its plenary session of May 18, 2010, passed a motion, mandating the investigation of Onex and Abuja Airport Road projects, awarded at the cost of N257, 169, 337, 985.00.


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 N81.513 billion, was awarded at N81.914 billion.

Chairman of the committee, who is also the Deputy Minority Leader of the House, Rep Abdul’Rahman Suleiman Kawu, said the committee discovered that such discrepancies exist in virtually all the four contracts awarded for the expansion of Abuja roads by the FCDA.

However, 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 denied that they were inflated, insisting that what the committee ‘discovered’ were just ‘computer errors’ from the FCDA.
Toeing the same line, the representative of Dantata and Sawoe Company agreed the differences in the amount bidded and awarded derived from “printer’s devil”.


Also speaking, the Director-General of Debt Management Office (DMO), Dr. Abraham Nwankwo, explained that it proposed to raise funds for the projects through the issuance of Federal Government bonds because the bonds, are cost-effective than the 60 percent financing proposed by the contractors, to be repayed within four years at an interest rate of 23 percent.
The contracts for the projects, which are in four lots, were awarded to the three contractors at a 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 commercially oriented, unless it was seriously repackaged in a 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.

http://www.peoplesdaily-online.com/index.php?option=com_content&view=article&id=9255:firms-blame-n2bn-fraud-on-computer-errors-&catid=109:cover&Itemid=181

Interesting!