N3.6tr rail contract bypasses FEC approval

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The N3.6 trillion ($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.

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 N3.6 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 $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 $849million for a period of 4

years. Its consultancy was awarded to TEAM for

$318million.

However, work did not begin until February 2011.

On May 13, 2015, there was a variation in cost

shooting the total sum to $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

$769.8million, the contractor said it had received

$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 (2011-1013);

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.