The House of Representatives has asked the attorney general of the federation and minister of justice, Lateef Fagbemi, the minister of finance, Wale Edun and his works counterpart, Engr David Umahi, to transmit all guarantees and credit enhancement instruments for the Lagos-Calabar Coastal Highway for approval.
This was sequel to the adoption of a motion of urgent public importance moved by the member representing Gwer East/Gwer West Federal Constituency of Benue State, Hon. Asema Achado at plenary yesterday.
Recall that the 700km highway, awarded at a cost of N4bn per kilometre will cost the nation a total of N15 trn. When completed, the highway is expected to connect Lagos to Cross River State, passing through Ogun, Ondo, Delta, Bayelsa, Rivers, and Akwa Ibom states.
Moving the motion, Achado bemoaned the contingent liabilities accruing to the federal government on the project which violates Section 22(3) of the Debt Management Office (Establishment) Act of 2023.
According to extant law; “the Minister shall not guarantee an external loan unless the terms and conditions of the loan shall have been laid before the National Assembly and approved by its resolution. The guarantees issued to cover the debt financing component of this project do not have the approval of this National Assembly.”
The lawmaker argued that; “the Federal Ministry of Works has executed an engineering procurement construction finance contract, in favour of Hitech Construction Company Nigeria Limited, for the delivery of the 700km Lagos to Calabar coastal road and rail project estimated at a rate of N4.33bn per kilometre, using reinforced concrete technology for a carriage width of 59.7metres, to include 10 lanes, shoulders and rail with additional designs of service ducts, street lights, drainages and shore protection.”
He said the project has the prospect of providing easy access for the movement of goods and services across the nation and a financing structure, as announced by the Minister of Works, which requires the Federal Government to provide 15 per cent to 30 per cent co-financing.
The lawmaker noted that the private sector counterpart is to provide the balance, and toll the road when completed for a minimum period of 15 years, to ensure full recovery of all debts and equity applied for the delivery of the project.
Achado insisted that the procurement strategy of the project may have violated the Public Procurement Act 2007, Section 40(2) which requires that where a procuring authority adopts to use restrictive tendering approach
“It should be on the basis that the said goods and services are available only from a limited number of suppliers and contractors and as such, tenders shall be invited from all such contractors who can provide such goods and services,” he said.
The lawmaker maintained that the procurement strategy adopted by the Federal Ministry of Works for the award of the contract violates Section 4 of Infrastructure Concession and Regulatory Commission Act 2905.
It states that: “All approved infrastructure projects and contracts for financing, construction and maintenance must be advertised for open competitive public bid, in at least three national dailies.”
“Section 5 of the Act further clarifies that “Any direct negotiations with only one contractor could be allowed, only after exhausting the provisions of Section 4,” Achado added.
He further raised alarm over a possible creation of contingent liabilities for Nigeria because while promoting the project, the Ministry of Works provided a rate per kilometre for the planned works but failed to provide the private partners’ financing sources, structure and competitiveness.
It further resolved to set up an ad-hoc committee to investigate the procurement process of the contract for the Lagos-Calabar Coastal Highway project and report to the House within four weeks.
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