Abuja’s Airport Runway Inflated contracts reviewed downward

The Presidential Projects Assessment Committee (PPAC) has reviewed the contract for the construction of the Nnamdi Azikiwe International Airport,  Abuja,  second runway,  slashing off N13.5 billion from the original contract sum of N64 billion. The project will now cost N49.6 billion. Recall that an expert in the aviation industry, Mr. Olumide Ohunya condemned the controversial second runway of the Nnamdi Azikwe International airport, Abuja saying that the construction of the runway was inflated by $200 million.

Ohunayo said it is mind boggling!

Chairman of the FG committee, Mr. Ibrahim Bunu, disclosed the downward review to State House correspondents yesterday after submitting an interim report on its activities to President Goodluck Jonathan.

The contract, which was awarded to Julius Berger in January this year, has generated a lot of public interest.
The Committee on Aviation in the House of Representatives recently recommended that the contract be revoked.
Bunu said his committee reviewed the entire project design and contract scope before arriving at the cost reduction.
Apparently satisfied with the report, the president has also directed that the tenure of the committee be extended to May 29, next year.

The House of Representatives Committee on Aviation conducted a public hearing on the said inflated Abuja second runway contract awarded by the Federal Aviation Authority of Nigeria [FAAN] without an engineering design and bill of quantity.

The House Committee also gave a damning verdict, citing breach of procurement procedures and inflation of contract sum.

Managing Director of FAAN, Richard Aisuebieogun told the Committee that the Bureau of Public Procurement [BPP] scaled down the cost to N63.5 billion from N72 billion before the contract was awarded to Julius Berger, which designed the new runway for a completion period of 24 months. 

According to Ohunayo, the airport does not even require an additional runway considering the level of traffic it’s currently accommodating. He said stakeholders still have not learnt their lessons from seizing opportunity of office to award unnecessary contracts for their selfish interests.

Ohunayo said “The second Abuja runway project cannot be a priority because the present runway is below optimum usage. This is coming barely a year after the N19.4 billion safe tower-gate scandal which is still pending in court, with accompanying soap opera. We need to be conscious and watch during the investigative period.”

Ohunayo added that the Director General of the Nigerian Civil Aviation Authority (NCAA) Dr. Harold Demuren recently complained of the difficulties in fast tracking world bank sponsored projects, because the World Bank, are practically negotiating and paying for projects directly instead of giving the agencies the money, which naturally shows lack of trust in public accountability and ultimately slows down implementation due to the long process of verifying, negotiating, approving and disbursing financial resources for the ongoing works.

He said if aviations chief and minister continue to follow this line, the industry might see public and corporate support for infrastructure and other development turning to apathy.

Ohunayo however stated that “I just hope it’s a false alarm that will not go beyond allegation. If proven, it is a clear case of a first degree in engineering being tantamount to first class degree in engineering graft.”

A resolution of the House on March 3, 2010 mandated the committee to probe the controversy surrounding the award of the contract after the debate on a motion by Dino Melaye, alleging sharp practices and violation of the BPP Act by officials of the Ministry of Aviation and all agencies connected with the contract.

At the public hearing, the committee established abuse of BPP Act and gross inflation of the contract when compared to similar contracts executed by the Akwa Ibom, Gombe, and Katsina State Governments.

Director General of BPP, Engr. Emeka Eze who was represented by Engr. Nebo Olisa Emordi, a director in the bureau informed the committee that the Federal Ministry of Aviation, under the immediate past Minister Engr. Babatunde Omotoba recommended restrictive tendering for the contract.

He added that Julius Berger appeared to be the most competent of the last two companies shortlisted for the project, and that BPP issued the ‘no objection certificate’ on the sum of N63.5 billion recommended by the ministry, against the sum of N72 billion prepared by Julius Berger.

FAAN’s Director of Airport Engineering Services, Engr. Dunomah Saleh in his presentation said FAAN’s in-house evaluation of the project had estimated the cost at around N26 billion, although, he admitted that the site of the runway was not visited, while bid document was given to the contractors as a guide in the preparation of their proposals.

Former minister Omotoba, stated that the ministry was alarmed at the price of N83.4 billion submitted by Julius Berger.

Omotoba explained that the ministry recommended restrictive tendering, based on the Procurement Act.

Chairman of the Committee, Bethel Amadi pointed out sections of the BPP Act that were breached in the contract by FAAN and the ministry.

He blamed the BPP for certifying the project when only N4 billion was appropriated for it in the 2009 budget, while further alleging that FAAN deleted three of the companies that bided for the project.

The pertinent question to ask is: was due process followed in the award of the contract for the Abuja second runway project? Restricted tendering was used by the Bureau of Public Procurement (BPP) in order to fast-track the process and gain time. Also design and construction as one contract was adopted.

Six contractors were said to have been nominated for consideration and approval by BPP. These were: PW Nig Ltd; Julius Berger Nigeria Plc; R.C.C.; China Harbour Construction Company; Arab Contractors and Impresit Bakolori. After its initial assessment of the contractors, the BPP recommended four of these companies based on their records; essentially the fact that they are the only ones fully mobilized in Abuja. The recommended companies were Dantata and Sawoe; Reynolds Construction Company (RCC); P.W. Nig Ltd and Julius Berger Nigeria Plc. The approved contractors were therefore asked to come forward and purchase the brief bid documents. Several meetings were held with all the four contractors above to clarify areas of doubt and give additional information. Contractors were shown the location of the proposed second runway. Contractors were allowed access into the site in order to collect data for the preparation of both technical and financial proposals.

As we have also learnt, at the close of the bidding, only two companies, P.W Nig Ltd and Julius Berger Nigeria Plc responded. Further, the two proposals were opened and analysed in-house by the Federal Aviation Authority of Nigeria (FAAN) and meetings were held with the two contractors in order to clarify some issues about their submissions.

After the meetings and adjustments, the figures came to the following:

PW Nig. Ltd – N30 billion

JBN Nig Plc – N72.9 billion

The initial figures at opening of tender documents actually stood at:

PW Nig Ltd – N29billion

Julius Berger Nigeria Plc – N72 bilion

The analysis and these figures were forwarded by FAAN to the BPP. And rightly, the BPP promptly suggested that the bid documents be given to a consultant to review the entire submission, including FAAN’s proposals. The FAAN then nominated five consultants to the BPP for approval. The CVs and brochures were also submitted to the BPP. The consultants suggested were:

a.) Rubicon Eeronautics

b.) Aviation Systems Int. Ltd.

c.) Catamaran Nig Ltd.

d.) Ove Arup and Partners Nig. Ltd.

e. Endev Associates

Information available to us indicate that the BPP suggested that the review be carried out by Ove Arup and Partners with their foreign partner, Arup Aviation International. The FAAN then engaged Ove Arup to carry out further analysis. All documents were therefore submitted to them. Several meetings were held between contractors, Ove Arup and FAAN on the analysis. JBN’s cost came down to N65.5 billion after the optimisation of the technical proposal. The same optimized proposal was given to PW Nig. Ltd. by Ove Arup, to cost. But PW Nig. Ltd. Wrote, saying that “the new scope of work was more than double their own original scope and that they cannot execute the project within the original proposed construction period”.

The consultant Ove Arup and Partners therefore finalised and recommended JBN for the design and construction of the second Runway at N65 billion. This recommendation was forwarded to the BPP for issuance of “No Objection Certificate”.The BPP after due consideration and further review issued a certificate of “No Objection” for the design and construction of Abuja second runway in favour of Messrs JBN Nig. Plc. at the total cost of N63.584 billion. A council memo was therefore prepared by the Federal Minister of Aviation for the approval of the contract. The FEC at its meeting on 16 December 2009 approved the design and construction of Abuja second runway to Messrs Julius Berger Nigeria Plc. The contract was awarded to JBN Plc and agreement was signed subsequently.

Yesterday the president’s Special Adviser on Media and Publicity, Mr Ima Niboro, who briefed newsmen at the end of PPAC meeting with Jonathan, said the committee’s final report would “be part of the handover note to the new administration that will come on board”.
Bunu told newsmen that the reduction in the project cost would neither affect its quality nor the supporting facilities to be provided for the new runway. “What we did is providing the necessary requirement in a new approach which gave saving,” he said.
He explained that the Committee reviewed the entire design and the scope of the contract by re-orientating the location of the run way.
For example, he said, the runway, which was originally 4.5km long, has now been reduced to 4.2km long.
The readjustment of the location, reorientation and review meets international requirements of International Civil Aviation Organisation (ICAO) standard, he stated.

“Similarly, we shifted from the original position of the runway to a location which gives stronger earth stability and also which requires less sand filling,” he said.
He added that the shifting brought the proposed runway nearer to the existing one, “ and this has resulted in reducing the taxi way and each time you reduce the length of the runway or taxi way you are reducing the electrical, drainage and lots more so concurrently you make savings in so many ways.”
He further dislcosed that this strategy has substantially reduced the scope of earth work and construction work.
Niboro said the President was happy with the committee for saving the country about N13 billion, pointing out that “these are some of the roles this committee is meant to play”.

Niboro said apart from project assessment, the committee is also to look into the cost of doing business in the country.
“The president is worried that procurement in Nigeria is considerably higher”. 
He added that he therefore wanted the Bunu Committee to get involved in procurement especially those procurements that are below the radar procurement that does not necessarily go through the Bureau of Public Procurement (BPP).
He said, “A lot of procurements are happening in the Ministries, Departments and Agencies (MDAs) that don’t come to BPP  and many of those procurement, I think there is a need to look at them because the 2010 budget is already in deficit and the president feels there will be a lot of savings made if we look into those projects because there are lots of things that are there that we believe if a second look is taken, we will make tremendous savings.

“So the committee is going to get involved in this process and these are the reasons why their tenure has been extended so that they can have time to do a thorough job for this administration’.