₦3.6tr Rail Contract Bypasses FEC Approval

Coastal rail line

The ₦3.6 trillion (US$12 billion) standard coastal railway line contract awarded before the 2015 elections did not follow regulations guiding contract award, a House of Representatives committee has revealed in an interim report.

Daily Trust report continues:

The contract was awarded by the government of former President Goodluck Jonathan to the Chinese construction giant, CCECC.

The rail line is to run from Calabar, through the president’s native village of Otuoke in Bayelsa State to Lagos.

However, the interim report of the House Ad-hoc committee, which is investigating railway contracts from 2010 to 2014, has unearthed serial breaches of the Public Procurement Act and other laws.

The committee, chaired by Rep Johnson Ehiozuwa (PDP, Edo), was set up to investigate the activities of the Federal Ministry of Transport, the SURE-P programme and the management of Nigerian Railways Corporation from 2010 to 2014.
A scrutiny of the 20-page report, exclusively obtained by Daily Trust, shows that almost 40 railway contracts reviewed were breached in one way or the other.

The anomalies range from multi-billion contracts awarded without competitive bidding; contractors without verifiable cognate railway experience or using the names of international companies to secure contracts but executed without their involvement.
The report is also replete with evidence of contracts awarded without proper documentation and at inflated costs, as well as contract manipulation without the involvement of the Board of the Nigerian Railway Corporation.

In the case of the ₦3.6 trillion costal rails the report revealed that there was no competitive bidding even as the cost was inflated.

Also, there was no cogent feasibility study or independent technical assessment or advice and no front end engineering design (FEED) or even preliminary design, the report said.

It is mandatory for major contracts to get the approval of the Bureau of Public Procurement (BPP), but in this case the bureau had refused to approve the contract because the cost was inflated and there was no funding plan.
 Contracts also routinely must be approved by   the Federal Executive, but the council was bypassed this time around.

The Jonathan government allegedly went ahead and signed the contract even without the approval of both the bureau and the FEC, the report said.
“FMT (Federal Ministry of Transport) entered into a commercial contract with CCEEE/CRCC on November 19, 2014. The award did not obtain a ‘no objection’ certificate from the BPP due to the absence of a verifiable funding plan”, the report stated.
It added: “It was not presented to FEC (Federal Executive Council) and there was no constitutional approval for this contract; indeed the contract was signed a week after the BPP refused a ‘no objection’ certificate and insisted it was overpriced.”
This, according to the report, is contrary to the preamble in the contract document which claims that all due process steps were complied with and that the BPP issued a no objection certification no: BPP/DG2014/2162 dated November 12, 2014.
“An examination of the records indicates that a letter bearing the same reference number and same date was written to the Minister of Transport by the BPP giving reasons a no objection certificate could not be issued”, the report stated.
The report said the preamble clauses in the contract document further disclosed that the former President   (Goodluck Jonathan) granted anticipatory approval for the award of the contract vide a letter with reference number: Pres/99/MT/203 dated November 17, 2014.

“In the absence of sight of the purported presidential letter, no comment can be made on its adequacy save that, there is no provision in the Procurement Act for anticipatory approvals,” the report stated.

The CCECC had told the committee that work was yet to commence and that no payment had yet been made.

However, the committee feared that certain caveats in the contract may not adequately protect the current government from financial liability if it decides to stop the contract or is unable to find the US$12bn required to fund it.

Other railway projects

The report also provided the status of other railway projects awarded between 2009 and 2014. These include the Kaduna to Idu standard gauge contract also awarded to CCECC on October 22, 2009 at the cost of US$849million for a period of 4 years. Its consultancy was awarded to TEAM for US$318million.

However, work did not begin until February 2011. On May 13, 2015, there was a variation in cost shooting the total sum to US$1.04billion while the completion date was extended to December 31, 2015, a date which has not been achieved, the report noted.

While the Ministry of Transport told the committee CCECC had to date been paid US$769.8million, the contractor said it had received US$792million.

Also, the committee report revealed that site operations were yet to commence on the Lagos – Ibadan standard gauge contract which was awarded to CCECC on August 28, 2012 to be executed in 36 months. The contractor claimed it was yet to receive any money in respect of the contract which is about 40 months late.
Among past chairmen of the NRC who were invited by the ad-hoc committee to explain their roles in the award and implementation of the contracts were: Alhaji Bamanga Tukur (2014-2015); Alhaji Kawu Baraje (2011-2013); Ambassador Ladan Shuni (2011) and Alhaji Bello Mohammed Haliru (2009-2011).

While Alhaji Bello was said to have failed to attend the committee’s hearing, Tukur and Shuni were said to have attended. “Each took turn to disown any involvement in the award of contracts at the NRC. Ambassador Shuni ...also denied the existence of any report in respect to any such investigation”, the report said.

Although the committee described its interim report as “report of an investigation in progress” and offered no recommendation, a member of the committee who spoke with Daily Trust in confidence said: “This is only a tip of the iceberg because we have not even started the technical review to look into the execution of the contracts. 

“All we have reviewed so far are the contract documents and not the physical work to see whether the work has been done or not, if it is true when they tell us that they have completed 90% of the work and paid the contractor. What we know is that the contractors have all but one disappeared into thin air,” it said.