Minister of Works, Engr David Umahi, said the federal government has taken steps to “restructure the monstrous contract price variation clause,” which has hindered project execution for years.
Umahi maintained that, as Works Minister, he has adopted more effective measures to end delays in project delivery by contractors in the country.
The minister stated this in a press release issued and made available to newsmen on Wednesday by his Special Adviser on Media and Publicity, Mr. Uchenna Orji.
According to Umahi, the federal government has adopted workable measures to end the unnecessary delays in the execution of road infrastructure projects by contractors as part of the strategic infrastructure development master plan of the Renewed Hope administration of President Bola Tinubu.
He expressed the urgency of thinking realistically, creatively, and innovatively to overcome the funding challenges that face road infrastructure development in Nigeria.
“When the Renewed Hope administration came on board on 29th May 2023, Mr. President inherited over 2,600 ongoing projects from the past administration amounting to over N15 trillion, out of which only about N2 trillion was certified and paid.”
“And so we now have ongoing projects of N13 trillion, including budgetary projects, NNPCL, SUKUK, Presidential Initiative Development Projects, other Tax Credit Scheme Projects of NLNG, MTN, Dangote, BUA, Mainstream, and projects under EPC + F, PPP,” the Minister narrated.
He stated that the aftermath of the fuel subsidy removal and forex fluctuations drastically affected the contract cost elements and pricing, which Variation on Price (VOP) could not remedy, especially for jobs awarded many years ago, where VOP on contracts was sometimes hitting 500%.
He further stated that in seeking a solution, the Ministry sought and got Mr. President’s approval to allocate an envelope in the 2024 budgetary provision to keep all the inherited projects alive, believing that more funding for such projects could come from thinking outside the box.
The new projects under the 2024 budget include the constituency projects of the National Assembly, which also have poor budgetary allocations.
In addressing the challenges of funding, price variation, and delays in project delivery, the Minister said he has introduced responsive approaches adopted as the Ministry’s measures to overcome the challenges of road infrastructure development in Nigeria.
“Such measures include but are not limited to reviewing the VOP clause to ensure workability in line with economic realities, making it a policy that all contractors handling two carriageway projects (with the exception of the 3 legacy projects) must first complete one side of the two carriageways and thereafter continue with the second part subject to the availability of funds, and advancing funds after the award of the contract subject to conditions contained in the bid document.”
“Other measures adopted were that contractors must have a timeline for project delivery, and every contractor shall have a duty to maintain the road under construction until the entire project is completed and delivered.”
“A deadline shall be given for all ongoing projects, and over time, all projects that have no funding shall be stood down, but projects will be selected Zone by Zone or State by State for funding. In applying these measures, he emphasized that all contractors will be treated equally.”
“One thing that is our policy is that no contractor in the Ministry of Works will be treated differently. Whether you’re an indigenous contractor or a foreign contractor, insofar as you can turn cement to the right grade and place it rightly. You’re a good contractor; we check, and it’s good,” he explained.
The minister noted the various projects completed by contractors and other major ones to be ready for commissioning from July 2024. He directed the Directors in charge of each geo-political zone to officially and publicly commission the various projects completed in their respective Zones.
He also directed that committees made up of the Ministry’s Engineers and Media correspondents be set up to pay inspection visits to the respective zones to assess the level of project performance in all the federal government projects being handled by the Federal Ministry of Works under the Renewed Hope administration.
Nigerian govt to rejig monstrous contract price variation clause – Umahi