– The Sun News

Abandoned N12trn projects

A SURVEY by the Chartered Institute of Project Management of Nigeria   revealed a litany of abandoned projects estimated at N12 trillion nationwide. According to the Director of Administration of the Institute, Mr. David Godswill Okoronkwo, there were at the time of compilation of the survey report, approximately 56,000 abandoned government projects across the country’s geopolitical zones.  A breakdown of the abandoned projects shows that 15,000 of them are in the South-East, 11,000 in the South-South, 10,000 in the South-West, 6000 in the North-West, 7000 in the North-Central, 5000 in North-East, and 2000 in Abuja.

Among the notable abandoned projects  is the Monorail project initiated by the immediate past administration in Rivers State. The project was designed to cover 12 kilometres at the cost of N50 billion, but was abandoned at only 2.6 km. It was designed to ease transportation problems in the state. Other abandoned projects include the Minna Airport City in Niger State, reportedly awarded at the cost of $600 million, Minna five-star hotel, at N19.6bn, and Abia International Hotel, which needs N6bn for its completion. Also listed among the abandoned projects in the report are the $25m expanded Jos Main Market which requires N5bn for rebuilding, and the N41bn Akwa Ibom Specialist Hospital (already completed but allegedly shut down.                            

These abandoned projects need immediate attention and action. Ordinarily, the hefty figure of N12trn ought to have persuaded the relevant governments to accelerate the completion of the projects, or at least finish the most critical ones among them. But that has not been the case, as the relevant governments prefer to award new contracts or re-award the old ones at unrealistic, inflated prices.                        

Six years ago, the report of the Presidential Projects Assessment Committee (PPAC) set up by the former president, Goodluck Jonathan, to look into the cases of abandoned projects, stated that it would cost about N7.78trn to complete 11,886 abandoned projects across the country.        

The report also said that even if government did not start any new projects, it would take more than five years of budgeting at least N1.5trn annually to complete the abandoned ones, provided there are no cost overruns or further delays.

We do not dispute the fact that some of the abandoned projects may be white elephants with little economic value, but sound financial management demands that since government is a continuum, every good project should be completed. Therefore, the willful abandonment of many of these projects is inexpedient. It reduces public confidence in governance.  In all of these, it makes sense to ask: what are the main reasons for the abandonment of these projects? Policy inconsistency, lack of funds and petty politics play a role. Some of the projects were also probably not properly conceptualized. Some may also not fit within the vision of current governments. Some were probably only awarded for parochial reasons.                                  

Also important is that the award of most of the contracts for these projects did not follow due process, in line with the Public Procurement Act. For instance, Section 4(2)(b) of the Act, 2007, states that no contract should be awarded if funds are not available from the outset. It says specifically that procurement “shall be based only on procurement plans supported by prior budgetary appropriation.” It also states that no procurement proceedings “shall be formalised until the procuring entity has ensured that funds are available to meet the obligations and has obtained a Certificate of no objection” to contract award from the Bureau.                                  

Also, section 63 (1) of the Public Procurement Act says that “in addition to any other regulations as may be prescribed by the Bureau, a mobilisation fee of not more than 15 percent of the contract sum should be paid to the local contractor, and 10 percent to a foreign contractor.” However, this provision has mostly been disregarded, as there are instances where mobilisation fees in excess of 50 percent of the total contract sum were reportedly paid to some contractors. In spite of this, we hardly hear of contractors being held accountable when projects are abandoned.

Ordinarily, blame should go to the Federal and State Executive Councils, which initiated these multi-billion naira projects, and the legislators, for their failure to properly perform their oversight function.

Altogether, we urge the Bureau of Public Procurement and other agencies charged with the administration of contracts to address the causes of abandoned projects. There is also the need to appraise how contracts for projects are initiated and awarded at both federal and state levels, to stop this proliferation of abandoned projects.


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August 2018
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