Biodun556:
VANGUARD NEWS
October 25, 2023
Port Harcourt Road and socio-economic costs of its completion
Abia state governor Alex Otti
Gov. Alex Otti
By John Okiyi Kalu
ON Thursday, October 12, 2023, the government of Abia State, led by Mr. Alex Otti, gathered members and supporters of the Labour Party in the state to celebrate what they tagged the “Flag-off of the Reconstruction of Port Harcourt Road Aba by Julius Berger Construction Company, JB,” even though in reality, it was the recommencement of work along that stretch of road that was started by the Ikpeazu administration.
While Governor Otti, in his elaborate written address during the occasion, did not mention the cost of the work, which he stated would be completed in 18 months, his spokesman, during a preceding radio programme monitored in Umuahia the same day, confirmed that the job was re-awarded to JB at more than N30 billion for what the governor stated was a 6.7km urban road. For the avoidance of doubt, it was not the Abia State government that voluntarily revealed the over N30 billion cost of the Port Harcourt road, Aba, project; instead, the independent review of the PDP-led opposition in the state forced the government to admit on record that they actually awarded the project for at least N30 billion.
Geography: Contrary to what bloggers and skit makers have been fed, Port Harcourt road, Aba, is not the same as the federal road from Port Harcourt to Aba. The Port Harcourt road, Aba, under focus starts from Ngwa Road by Asa, inside Aba, and ends at Asa Nnentu spare part market, Aba. It was previously awarded in 2017 by the Ikpeazu administration for reconstruction as a six-lane road with two wide gutters that will discharge drainage waters at Umuagbai Pond and a total length of 5.9 kilometres.
I have read materials published by the administration to the effect that the total length is 6.7 kilometres. Maybe we take six kilometres as an average for the purposes of this review, but suffice it to state that about two years ago, representatives of the African Development Bank, AfDB, also measured the same road as being 5.9 kilometres, and it is in their book as such.
If we apply the same pricing template used for JB, the difference in length of almost one kilometre may have cost the state an additional N5 billion. On the other hand, Aba-Port Harcourt Express Road is a segment of the Enugu-Port Harcourt Expressway that starts from Asa Nnentu in Aba to Oyigbo in Rivers State at the Imo River boundary. It is a federal highway of about 33.7 kilometres.
For emphasis, the Abia State Government is not completing or reconstructing the Aba-Port Harcourt express road. That road is a federal road that was previously awarded to the China Civil Engineering Construction Corporation, CCECC, by the Goodluck Jonathan government in 2015, but the contract failed as far as the Aba segment is concerned. Minister David Umahi, who visited Abia, recently promised on record to get the work recommenced within record time, and we are trusting in his promise.
Mathematics of the project: Before I go into the mathematics of the project, please permit me to share some fun facts to guide you. Hartland Construction Company, which the Ikpeazu administration hired for the Port Harcourt Road Aba project in 2017, delivered the Okigwe to Umuahia segment of the Enugu-Port Harcourt Express road for the Federal Government. They are currently contracted by the same government to deliver the Umuahia-Ikot Ekpene federal road.
Similarly, Julius Berger is working for the Federal Government at different locations in Nigeria but without any presence in Abia State as of May 2023. They have now been hired by Governor Otti to complete the project started by Hartland along Port Harcourt road, Aba. But the government has yet to inform citizens of any exit arrangement between the state government and Hartland that enabled the legal takeover of the project by JB. In Nigeria, it is estimated that 60 per cent of the cost of road construction comes from materials, while the remaining 40 per cent is labour-related.
The major materials required for road construction in a state like Abia should include asphalt, cement, iron rods for gutters, laterite, granite, and sharp sand. Of course, bitumen in asphalt is mostly imported and remains the one material that will be most affected by fluctuations in forex; hence, the price of asphalt materials is subject to the international price of crude oil. It is instructive to note that some local companies in Nigeria and Abia State also have asphalt plants. Cement is locally manufactured by companies like Dangote, BUA, and Ibeto, while sand, stones, and laterite are mined locally within Abia or neighbouring states.
Analysis A. As of 2017, the Ikpeazu administration had awarded the reconstruction of the Port Harcourt road Aba project to Hartland Nig Ltd. at a cost of N9,882,752,246.4 only for a six-lane road with BRT and drains (gutters) with a discharge pipe to Umuagbai pond.
Therefore, N9.88bn in 2017 was equivalent to USD 29.6m.
Analysis B. Between April and October 2023, Alex Otti hired Julius Berger to complete the reconstruction of Port Harcourt road, Aba, with the drains already established and valued at 40 per cent of the total project, at a cost of N30 billion. Note that while the government has admitted that the opposition was right about the amount, they did not release any actual figures; hence, we have to work with N30 billion. The details given by Governor Otti on record are that the project is a six-lane road with drains on both sides. That is similar to the Ikpeazu design but without information on storm water channelling or BRT. As of the time of doing this analysis, I do not know if the existing drainage will be completely destroyed and redone or if any other addition or subtraction will affect the original design approved by the Abia State Ministry of Works in 2017.
I. According to exchange-rates.org, the average USD exchange rate to Naira in 2023 will be 588.89.
II. Using that average rate, N30bn amounts to USD50.9m.
III. The difference in dollars between the awards is therefore $21.3 million.
For those who love to denominate contracts in dollars, the 2017 contract was valued at USD 31,624,807.19 if one applied the May 2017 spot exchange rate, while the 2023 contract was valued at USD 38,684,719.54 using the October 12th spot exchange rate. The difference is USD 7,059,912.3, or N5.5b.
Socio-economics of the project: Before awarding this project to Julius Berger, the Otti government admitted that there was no competitive bidding or advertisement and that they had to source funds through virement because there was no equivalent budgetary provision for the project in 2023. The question the mathematics of the project raises is: If there was competitive bidding, would this project have cost Abians N30bn?
Whatever led to the difference in measurements of the same road from 5.9km to 6.7km may also have cost the state an additional USD 6,446,987.69 using the costing template of 6km for N30b or N5b per km. It is interesting to note that Setraco, Hartland, or any other Nigerian grade A construction company would spend at least 40 percent of the project amount to pay our local labour in Abia, including carpenters, iron benders, etc., but JB will remit funds abroad.
For a government that made heavy media noise around buying some Innoson vehicles, the question is: why use Innoson vehicles to conserve forex and, in the same breath, starve our artisans and local economy in Abia State by using JB to export forex? The hard work on the Port Harcourt road project is design, flood control, and drains, which were already done before the emergence of Otti’s administration. On Governor Otti’s claim of shoddy work done by the previous administration, I need to remind him that Ukaegbu, Umuola, Kamalu roads, etc., are eight years old and still standing. Aba road and Osaah-Umuagu Isingwu road, both in Umuahia; Azikiwe and Ngwa roads, in Aba, etc., cannot be said to be shoddy jobs.
Whereas the ongoing work by the Otti administration along College Road, Aba, where landlords have already threatened to sue the contractor, is what should be called shoddy, along with the 200-metre Cemetery Market Road, Aba, that failed one week after Otti commissioned the project with fanfare. In any case, a man who does not have any road project that has survived up to a year should be careful when talking about shoddiness while speaking to projects done by the same Governor, Okezie Ikpeazu, that brought back an Abia-born engineer from the United States of America to innovate and start the use of rigid pavement (cement) technology in road construction in the state and the region. Unlike Dave Umahi and others, Otti has not considered borrowing from this technology in any of his awarded projects.
Let me also address those who base their argument on opposition lacking the moral right to scrutinise this road project on the basis that the previous administration did not complete that particular road project. Truth be told, the road is important to Aba people, but there are other equally important roads within the city, such as Aba-Owerri Road, Ngwa Road, Faulks Road, etc., that were reconstructed by the previous administration.
If resources were available, the same administration would have evidentially completed the same Port Harcourt road because it obviously considered it important enough to award the contract and partially funded the project up to 40% of its execution, including establishing gutters and waterways. The work was also awarded to a Nigerian wholly owned grade A construction company, Hartland, the same construction company the Federal Government is using to reconstruct a segment of the Enugu-Port Harcourt federal highway as well as the Umuahia-Ikot Ekpene federal road.
If a government awards a contract, funds take off, and implementation of the project reaches the 40 per cent stage, it is a clear indication that it intends to fully execute the work but is limited by the non-availability of funds. Even the contract awarded to Julius Berger might also suffer cash flow challenges, usually occasioned by unforeseen economic adversity, unless the state government has fully paid for it. That will not mean that the government does not intend to complete the project. Every resident of Aba, including me, wants this road completed. So, we pray that the fortunes of the state and the nation will continue to improve. However, the question must be asked: if you are hungry and decide to patronize a restaurant where you are served a very delicious meal but afterwards slammed with a bankrupting bill of N100m for the food, won’t you at least ask questions?
We need an explanation for why we are paying $25 million above what the original cost of the project was in 2017, even after more than 40% of the work has been done.
Assuming the same contract was advertised by the Otti administration and possibly awarded to a good local contractor at N400m/km, the six lanes of the 6km road will amount to N14.4bn, and if the ministry of works is allowed to subtract the value of work already done, Abia State under Otti would most likely have spent less than N10bn to complete the project and use the remaining N20bn or $25.8m to do much more for Ndi Abia. I don’t know if you see me as a troublemaker or simply as someone reminding Governor Alex Otti of his commitment to the people, but suffice it to drop a quote from him during his inaugural address: “We appreciate everyone’s right to hold and express an opinion, but you must also accord other citizens the right to do the same. No one should stand in the way of the legitimate aspirations of others. Ours shall be a government of law and order.”
Speaking further. Governor Otti said: “Transparency, accountability, and public trust shall be at the centre of everything we do. We will run a responsible and honest government and lead by example. We will not tolerate any form of corruption or theft of public property. Gratification and kickbacks are totally forbidden in this government.” We are asking questions, and nobody or group can intimidate us.
https://www.vanguardngr.com/2023/10/port-harcourt-road-and-socio-economic-costs-of-its-completion/amp/
Biodun concentrate on what is happening at Ibadan and leave abia and Alex otti alone. The people of abia still love there governor. Abi na ur papa money dem dey use build the road ? What is wrong with some of you yoruba clowns ? |
