Issues in the N15.6 Trillion Highway

Last Thursday, former Vice President Atiku Abubakar doubled down on his allegation that the Lagos-Calabar Coastal Road project is “a highway to fraud”. The Peoples Democratic Party (PDP) presidential candidate in the 2023 general election was countering claims by the Works Minister, Dave Umahi, whom he accused of dishonesty. “Umahi had announced that Hitech would fully fund the project, and based on this, there was no competitive bidding. He (Umahi) then said that Hitech could only raise just 6% of the money for the pilot phase. This smacks of deceit,” Atiku stated.

Shortly before Atiku’s response, Umahi had announced that the road project would cost N15.6 trillion ($13bn at an exchange rate of N1,200/$1), with an additional rail through the road to be costed separately. “The total budget of all 36 federation states for 2024 is about N14 trillion. If you add that of the FCT, the entire budget of all sub-nationals is N15.91 trillion,” Atiku argued, wondering why a single road project by the federal government would cost more than the budgets of all the subnational governments put together. He raised other posers. “Umahi had said in September 2023 that Gilbert Chagoury’s Hitech had the money to construct the highway and would be PPP (Public-Private Partnership). Hitech was to build, operate, and transfer it back to the Nigerian government after years of tolling. It was based on this proposal that Hitech was picked. Why did Umahi then turn around to claim that it was not to be a PPP but that the government would pay 15%-30%?”

Incidentally, until Atiku’s intervention, I was also under the impression that the road would be constructed without any financial commitment from the federal government, based on what is in the public domain. While flagging off the project last September, Umahi had told Nigerians that the deal with Hitech Construction was on a PPP model. “Let me announce that this project is under PPP. The Hitech group are going to look for the money. They have already found the money and that is the good news because we don’t waste our time talking and holding meetings and wasting resources,” Umahi announced on 23 September 2023. “We are engaging seriously because we have seen the financial capacity and capability of Hitech, and this project is going to be delivered in phases. Any section that we complete, we will toll it and then business and transportation will start.”

But Umahi is now changing his story. “This administration never envisaged the project under Private Public Partnership. It has always been under engineering, procurement, construction and finance,” Umahi said last week. “And so, under this kind of arrangement, as you have on the Abuja to Makurdi road project, the federal government is required to pay a certain amount for counterpart funding.” The Minister then went on to cite some technical jargon to rationalize why a multibillion-dollar highway is shrouded in so much opacity.

Whereas the National Assembly approved

N500 million for the project in the 2024 budget, according to Atiku, the federal government has released N1.06 trillion to the company, even when the total cost remans a matter of speculations. “If N15.6 trillion is for the road component alone, then the total cost could be far higher when the railway is included. We want to know the cost of the railway,” Atiku countered as many Nigerians compare the cost with similar highways in other countries. “The essence of competitive bidding is so that Nigerians can get the best value for money. It is so that you can compare prices and pick the company that can afford the project. It is wrong for him (Umahi) to have concluded that only Hitech could handle this project when such a project has been done by other reputable firms in the United States, China and South Africa.” The former vice president claimed that the Hitech promoter, Gilbert Chagoury has a business relationship with President Bola Tinubu. “Until I exposed the dubious nature of this project, no member of the National Assembly thought it wise to investigate. The total cost was never made known until now. The fact that there was no bidding was never made known until I blew the whistle.”

While Atiku may be directing his attacks at Umahi, it is obvious that his main target is President Tinubu. In the process, the former vice president has raised several fundamental questions. But for me, one suffices: the credibility of the Bureau of Public Procurement (BPP) under the current administration. It’s beyond scandalous that the BPP has no say on a project of this magnitude that ordinarily provides opportunities for international bidders to drive the cost down through superior technology, experience, and expertise.

The objectives of establishing the BPP are contained in Section 4 of the Public Procurement Act (PPA). These include establishing pricing standards and benchmarks, as well as ensuring the application of fair, competitive, transparent and value for money standards for the procurement of public assets. Section 16(1)b of the PPA clearly provides that all procurements shall be conducted by open competitive bidding. But the BPP has since become irrelevant, with tales of compromised officials all over the place in Abuja. Meanwhile, on 19th January 2022, then Secretary to the Government of the Federation, Boss Mustapha, issued a circular which provides that for works costing over N1.5 billion, the procurement method to be adopted shall be International/ National Competitive Bidding.

There are just too many issues that do not add up on this Lagos-Calabar Highway project. As of today, Nigeria is not yet very experienced in the construction of concrete roads, so we need to know more about the capacity of Hitech in that regard. Then there is the issue of ‘Right of Way’. I am aware that some of the major power transmission projects awarded since the Obasanjo administration are still being stalled due to Right of Way acquisitions. One then wonders how the Right of Way for a road of 700 kilometres was acquired within a matter of weeks. I have no expertise in road construction, but should there not be an environmental impact assessment on this major project that was designed and awarded within seven months? More disturbing is that Umahi has been speaking more like the project engineer for Gilbert Chagoury than a Works Minister who should be promoting and defending the interest of Nigerians.

The Coastal Road Project is a necessity no doubt. And it is one that I would love to see constructed because the economic benefits are immense. I also have nothing against any company getting the contract. But the process of engaging Hitech as contractor for the road is against all international best practices. Perhaps it is time to scrap the BPP and we just go back to the era where government officials just award contracts without following any process.