Mathematics, Geography & Socio-Economics of Completing Port Harcourt Road Project in Aba

How Competitive Bidding Could Have Saved $25m

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– John Okiyi Kalu

On Thursday, 12th October 2023, the government of Abia State led by Mr Alex Otti gathered members and supporters of Labour Party in the state to celebrate what they tagged the “Flag-off of the Reconstruction of Port Harcourt Road Aba by Julius Berger Construction Company (JB)” even though in reality, it was the recommencement of work along that stretch of road that was started by the Ikpeazu administration.

While Governor Otti, in his elaborate written address during the occasion, did not mention the cost of the work which he stated would be completed in 18 months, his spokesman had during a preceding radio program monitored in Umuahia same day confirmed that the job was re-awarded to JB at more than N30bn (Thirty Billion Naira) for what the governor stated was a 6.7km urban road.

For the avoidance of doubt, it was not Abia State Government that voluntarily revealed the over N30bn cost of the Port Harcourt Road, Aba, project, instead, the independent review of the PDP-led opposition in the state forced the government to admit on record that they actually awarded the project for at least N30bn. Indeed, the Otti adminstration possibly believed I was the person who leaked the cost, hence, the hiring of social media thugs to attack me.

GEOGRAPHY

Contrary to what bloggers and skit makers have been fed by the Otti administration, Port Harcourt Road, Aba, is not same as the federal road from Port Harcourt to Aba.

The Port Harcourt road, Aba, under focus starts from Ngwa road by Asa, inside Aba and ends at Asa Nnentu spare part market, Aba. It was previously awarded in 2017 by the Ikpeazu administration for reconstruction as a 6-lane road with two wide gutters that will discharge drainage waters at Umuagbai pond, and with a total length of 5.9km.

I have read materials published by the Otti administration to the effect that the total length is 6.7km. May be we take 6km as an average for the purposes of this review but suffice it to state that about two years ago, representatives of African Development Bank (AfDB) also measured same road as being 5.9km and it is in their book as such.

If we apply the same pricing template used for JB, the difference in length of almost 1km may have cost the state additional N5bn.

On the other hand, Aba-Port Harcourt Express Road is a segment of Enugu-Port Harcourt Expressway that starts from Asa Nnentu in Aba to Oyigbo in Rivers State at the Imo River boundary. It is a federal highway of about 33.7km.

For emphasis, Alex Otti or Abia State Government is not completing or reconstructing Aba-Port Harcourt express road. That road is a federal road that was previously awarded to the China Civil Engineering Construction Corporation (CCECC) by the President Goodluck Jonathan government in 2015, but the contract failed as far as the Aba segment is concerned. Minister David Umahi who visited Abia recently promised on record to get the work recommenced within record time, and we are trusting on his promise.

MATHEMATICS OF THE PROJECT

Before I go into the mathematics of the projdct, please permit me to share some fun facts to guide you.

Hartland Construction Company that the Ikpeazu administration hired for Port Harcourt Road Aba project in 2017 is a grade A rated contracting company that delivered the Okigwe to Umuahia segment of the Enugu-Port Harcourt Express road for the federal government of Nigeria. They are currently contracted by same government, to deliver Umuahia-Ikot Ekpene federal road. They were also working for the World Bank and Abia State Government led by Dr Okezie Ikpeazu to deliver a number of roads including Ngwa and Obohia roads in Aba.

Similarly, Julius Berger, an equally A-rated construction company is working for the federal government at different locations in Nigeria but without any presence in Abia State as of May 2023. They have now been hired by Governor Otti to complete the project started by Hartland along Port Harcourt Road Aba. But the government is yet to inform citizens on any exit arrangement between the state government and Hartland that enabled the legal take over of the project by JB.

In Nigeria, it is estimated that 60% of the cost of road construction comes from materials while the remaining 40% is labour related. The major materials required for road construction in a state like Abia should include asphalt, cement, iron rods for gutters, laterite, granite and sharp sand. Of course, bitumen in asphalt is mostly imported and remain the one material that will be most affected by fluctuations in forex, hence price of Asphalt materials are subject to international price of crude oil. It is instructive to note that some local companies in Nigeria and Abia State also have asphalt plants.

Cement is locally manufactured by companies like Dangote, BUA and Ibeto. while sand, stones and laterite are mined locally within Abia or neighboring states.

Mathematics of the Project

Now follow my mathematical thoughts and see where it leads.

Analysis A.

As at 2017, the Ikpeazu adminstration awarded reconstruction of Port Harcourt road Aba project to Hartland Nig Ltd at the cost of N9,882,752,246.4 (Nine Billion, Eight Hundred and Eighty Two Million, Seven Hundred and Fifty Two Thousand, Two Hundred and Forty Six Naira, Forty Kobo) only for a six lane road with BRT and drains (gutters) with a discharge pipe to Umuagbai pond.

I. According to exchange-rates.org, the average USD exchange rate to Naira in 2017 was 333.72

II. Therefore N9.88bn in 2017 was equivalent to USD29.6m

Analysis B

Between April and October 2023, Alex Otti hired Julius Berger to complete the reconstruction of Port Harcourt Road, Aba, with the drains already established and valued at 40% of the total project, at the cost of N30bn. Note that while the government has admitted that the opposition was right about the amount, they did not release any actual figure hence we have to work with N30bn.

The details given by Governor Otti on record is that the project is a 6-lane road with drains on both sides. That is similar to the Ikpeazu design but without information on storm water channeling or BRT. As of the time of doing this analysis, I do not know if the existing drainage will completely be destroyed and redone or any other addition or subtraction will be effected to the original design approved by Abia State Ministry of Works in 2017.

I. According to exchange-rates.org, the average USD exchange rate to Naira in 2023 is 588.89

II. Using that average rate, N30bn amounts to USD50.9m

III. The difference in dollars between the awards is therefore $21.3m (Twenty One Million, Three Hundred Thousand Dollars Only).

For those who love to denominate contracts in dollars, the 2017 contract was valued at USD31,624,807.19 if one applies the May 2017 spot exchange rate while the 2023 contract is valued at USD38,684,719.54 using the October 12th spot exchange rate.

The difference is USD7,059,912.3 or N5.5b

Socio-Economics of the Project

Before awarding this project to Julius Berger, the Alex Otti government admitted that there was no competitive bidding or advertisement, and that they had to source funds through virement because there was no equivalent budgetary provision for the project in 2023. The question the mathematics of the project raises is that IF THERE WAS COMPETITIVE BIDDING, WOULD THIS PROJECT HAVE COST ABIANS N30BN?

 

A section of the Port Harcourt road, Aba.

 

Whatever led to the difference in measurements of the same road from 5.9km to 6.7km may also have cost the state additional USD6,446,987.69 using the costing template of 6km for N30b or N5b per km.

It is interesting to note that Setraco, Hartland or any other Nigerian grade A construction company would spend at least 40 percent of the project amount to pay our local labor in Abia including carpenters, iron benders etc but JB will remit funds abroad.

For a government that made heavy media noise around buying some Innoson Vehicles, the question is why use Innoson vehicle to conserve forex and in the same breath starve our artisans and local economy in Abia State by using JB to export forex? The hard work on the Port Harcourt road project is design, flood control and drains which were already done before the emergence of Otti’s administration.

On Governor Otti’s claim of shoddy job done by previous administration, need I remind him that Ukaegbu, Umuola, Kamalu roads etc are 8 yrs old and still standing. Aba road and Osaah-Umuagu Isingwu road, both in Umuahia; Azikiwe and Ngwa roads, in Aba etc cannot be said to be shoddy jobs.

Whereas the ongoing work by the Otti administration along College road, Aba, where landlords have already threatened to sue the contractor, is what should be called shoddy along with the 200m Cemetery market road, Aba that failed one week after Otti commissioned the project with fanfare.

In any case, a man who does not have any road project that has survived up to a year should be careful in talking about shoddiness when speaking to projects done by the same Governor Okezie Ikpeazu that brought back an Abia-born Engineer from United States of America to innovate and start the use of rigid pavement (cement) technology in road construction in the state and the region. Unlike Dave Umahi and others, Otti has not considered borrowing from this technology in any of his awarded projects.

Let me also address those who base their argument on opposition lacking the moral right to scrutinize this road project on the basis that the previous administration did not complete that particular road project.

Truth be told, the road is important to Aba people but there are other equally important roads within the city such as Aba-Owerri road, Ngwa road, Faulks road etc that were reconstructed by the previous administration.

If resources were available, the same administration would have evidentially completed the same Port Harcourt road, because it obviously considered it important enough to award the contract, partially funded the project up to 40% execution including establishing gutters and waterways. The work was also awarded to a Nigerian wholly owned grade A construction company, Hartland, the same construction company the federal government is using to reconstruct a segment of the Enugu-Port Harcourt federal highway as well as the Umuahia-Ikot Ekpene federal road.

If a government awards a contract, funds take off and implementation of the project up to 40% stage, it is a clear indication that it intends to fully execute the work but limited by non-availability of funds.

Even the contract awarded to Julius Berger might also suffer cash flow challenges usually occasioned by unforeseen economic adversity unless the state government has fully paid for it. That will not mean that the government does not intend to complete the project.

Every resident of Aba, including me, want this road completed. So, we pray that the fortunes of the state and the nation will continue to improve. However, the question must be asked: if you are hungry, and decides to patronise a restaurant where you are served very delicious meal but afterwards slammed with a bankrupting bill of N100m for the food, won’t you at least ask questions?

The other major issue around the sociology of this project is conflict of interest or its likelihood. There is evidence that the current Chairman of Julius Berger, Mutiu Sunmonu is also the Chairman of Signature Bank purportedly owned by Alex Otti. There were rumors that Signature bank is yet to meet the statutory N25b capitalization and branch spread requirement of the Central Bank.

If this is the case, then our Governor will need to explain to us why it is a company headed by his closely linked business associate that has now been excused from the due process of awarding such a humongous project in flagrant contravention of extant procurement laws of Abia State and Nigeria. The code of conduct the governor subscribed to at inauguration would have been grossly violated if this is the case.

This is more crucial because we need explanation on why we are paying $25m above what the original cost of the project was in 2017 even after more than 40% of the work has been done.

Assuming the same contract was advertised by the Otti adminstration and possibly awarded to a good local contractor at N400m/km, the 6 lanes of the 6km road will amount to N14.4bn, and if the ministry of works is allowed to subtract the value of work already done, Abia state under Otti would most likely have spent less than N10bn to complete the project and use the remaining N20bn or $25.8m to do much more for Ndi Abia. .

I don’t know if you see me as a trouble maker or simply as someone reminding Governor Alex Otti of his commitment to the people, but suffice it to drop a quote from him during his inaugural address:

“We appreciate everyone’s right to hold and express an opinion, but you must also accord other citizens the right to do the same. No one should stand in the way of the legitimate aspirations of others. Ours shall be a government of law and order.”

Speaking further. Governor Otti said “Transparency, accountability, and public trust shall be at the centre of everything we do. We will run a responsible and honest government and lead by example. We will not tolerate any form of corruption or stealing of public property. Gratification and kickbacks are totally forbidden in this government.”

We are asking questions and nobody or group can intimidate us.

-Nwandugbom John Okiyi Kalu, former Commissioner for Ministries of Information, and Trade & Investment in Abia State writes from Aba

 

Chief John Okiyi Kalu is a former Abia State Commissioner for Information  and the immediate past Commissioner for Trade and Investments.

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