Market News

By Damilola Aina

The Minister of Works, David Umahi, has said the government is constructing the Lagos-Calabar coastal highway at a total cost of N4bn per kilometre and not the N8bn per km reportedly claimed by former Vice President Atiku Abubakar.

This indicates that the total project will be completed at the cost of N2.8trn.

The minister also dismissed claims that the project didn’t follow the due procurement process, stating that the contract was awarded on a counter-funding basis and not on a Public-Private Partnership as widely claimed.

Umahi disclosed this information when he appeared as a guest on the Television Continental News Hour programme on Wednesday in Lagos.

Last week, the presidential candidate of the Peoples Democratic Party in the 2023 general election, Atiku Abubakar, questioned President Bola Tinubu administration’s decision to allegedly award the contract to Gilbert Chagoury’s Hitech without competitive bidding, daring the president to disclose the full cost of the Lagos-Calabar highway project.

He also wondered why the Tinubu administration released N1.06tn for the pilot phase, or six per cent of the project, which begins at Eko Atlantic and is expected to terminate at the Lekki Deep Sea Port.

But responding in a statement on Tuesday, Umahi explained that despite the soaring costs of materials in the construction industry due to commodity price inflation and supply chain disruptions, the ministry is committed to prudence, promising to reveal the true cost.

However, in the interview, Umahi confirmed that the project would be completed within eight years, stating that with the use of concrete pavement on the four-lane carriageway, the project costs N4bn per km.

He also explained that although N1.06tn was appropriated, the full amount had not been disbursed.

The minister explained, “People are just building castles without knowledge and they don’t know figures, I will run the figures for you. We are going to compare the cross-section of the one the former vice president mentioned that was renegotiated for $11.1bn for 700 km. So you have to now ask what was there to be constructed. And what was there to be constructed is the only available design from NDDC. They had designed the entire 700 km but we are not following exactly that pattern or right of way. We have a different modification. The original design had two carriageways on each side of the road with four lanes.

“And in the middle, they did not provide for the train track. It’s just going to be a water-collecting basin. But the coastal road we are constructing has a total of 10 lanes, you know, not only that it has a total of 10 lanes, it also have what we called shoulders. And the total shoulders can be put at about 23 metres. So when you put the total concrete pavement we are doing, it’s about 59 metres. When you put the total flexible pavement that he quoted it’s about 23 metres.

“And so when you run the figures, you now find out that under his calculation, it is giving you about over N19bn per kilometre. Now if you divide it by the 23 kilometres that they are doing, it is about 2.225 times a standard superhighway carriageway, which is N11.55bn. Whereas what we are doing, if you divide it, you get N5.167bn, So when you now divide using our 1.067, you get about N4bn/km. If you go back to what he has quoted, you will get over N8bn. So using concrete, which should be more expensive because of the kind of terrain we have, and using flexible pavement, which shouldn’t stand the coastal route, you will find out that our cost is N4bn instead of the N8bn claimed by the former vice president.

On the mode of the construction process, the former Ebonyi governor explained that the administration never envisaged the project under a Private Public Partnership arrangement but under an Engineering, Procurement, Construction and Finance programme as currently used on the Abuja- Markurdi road project.

He said, “This administration never envisaged the project under Private Public Partnership. It has always been under engineering, procurement, construction and finance. And so under this kind of arrangement, as you have on the Abuja to Makurdi road project, the federal government is required to pay a certain amount for counterpart funding. And so in this particular project of Abuja to Makurdi, which is being handled by China Harbour, the government is paying 50 per cent counterpart funding. Then you have also from Makurdi to 9th Mile in Enugu state, where we are also paying 50 per cent counterpart funding. So, there’s a marked difference between PPP and EPC plus F. And in this particular project, there will be a negotiated counterpart funding of between 15 and 30 per cent

“When I was a governor, I had the African Development Bank fund a project through counterpart funding and I used some of the money to build some sections of the road. So part of what we are constructing under sections one, two and three currently funded by the federal government will fall under the percentage counterpartfunding. When we finalise the negotiation, it will be between 15 per cent and 30 per cent.

But findings by our correspondent showed that the statement is contrary to claims made by the minister on September 23, 2023, when he unveiled the design plan for the project.

Speaking to journalists, the minister also said Hitech Construction would fund the project under the Public-Private Partnership model.

Umahi said, “Let me announce that this project is under PPP. The Hitech group are going to look for the money. They have already found the money and that is the good news because we don’t waste our time talking and holding meetings and wasting resources.”

“We are engaging seriously because we have seen the financial capacity and capability of Hitech and this project is going to be delivered in phases. Any section that we complete, we will toll it and then business and transportation will start.”

Continuing, the works minister said the constructing company was only invited by the ministry based on their pedigree to construct the roads, adding that there was no public bidding process for the project.

“We followed all procurement acts and the act permits the Federal Ministry of Works to invite a company that has specialised skill in a particular work. For instance, we have some problems on the Third Mainland Bridge with some underwater works and whom did we invite? We invited Julius Berger because they have the skill to the exclusive rights of theirs and we submitted a bid for it and we negotiated and awarded the job. Of course, we ran through the Bureau of Public Procurement and of course also to the Federal Executive Council. So it followed due process,” Umahi concluded.