• Contractors, school authorities disagree on delay
By Henry Umahi , [email protected]
A few years ago, the Imo State University (IMSU), Owerri, awarded some contacts under the Tertiary Education Trust Fund (TETFund). Some of them were to be completed last year. Today, they are still ongoing. The reason, it was alleged, is that money is not being advanced to the contractors as at when due, even as TETFund had made the funds available to the school. It is alleged that funds meant for the execution of the projects were lodged in fixed deposit accounts to yield interests for some persons to the detriment of the project and/ or the university. Sources disclosed that TETFund had released about N800million for payment to contractors handling various infrastructural projects in the university.
Speaking under the condition of anonymity, one of the contractors volunteered that the refusal of the university to pay them despite the availability of funds had made them to abandon the project sites.
The projects
IMSU invited interested contractors in 2014 to bid for the construction of various buildings at its Owerri campus under the “TETFund 2011/2012/2013 Consolidated Projects.” There are five prerequisites to TETFund’s “Due Process Requirements,” including: “Advertisement in, at least, two national newspapers and the Federal Tenders Journal stating criteria/conditions upon, which interested bidders would be assessed for pre-qualification and these are usually in line with the provisions of the Public Procurement Act 2007.
“Pre-Qualification evaluation of the Technical and Financial capabilities of Expressers of Interest (E.O.I); Tender Action whereby successfully pre-qualified were formally communicated and made to pay N100, 000.00 per lot (or multiples of that if they bid for more than one lot) for Tender Documents to arrive at their bidding price; and Bid Evaluation whereby bids were opened and validated bids were evaluated and analysed professionally to decide on the most responsive and best evaluated bid.”
Subsequently, contracts were awarded to about five construction companies to construct the Faculties of Business, Education annex, Science, Medical Centre as well as the completion of a structure that had been abandoned. Interestingly, it was learnt that a contractor who had abandoned a project in the school sometime ago was awarded another contract.
In January 2015, formal agreements were signed between the university and the successful construction companies and physical development at the sites began thereafter.
It was learnt: “The funds disbursement is done after the Approval in Principle (AIP) has been granted and due process requirements have satisfactorily taken place. For construction-related projects, disbursements are in three tranches of 50 per cent, 35 per cent and 15 per cent while for procurement-related projects, disbursements are in two tranches of 85 per cent and 15 per cent. The due process leads to accessing the first tranche of funds and must be carried out in line with the provisions of the Public Procurement Act 2007.
The components of the agreements include the contract sum, scope of service, time for completion, terms of payment, performance bond, equipment and workmanship, contractors’ warranty, supervision, assignment, termination, damages for non-completion, force majeure and arbitration. The agreements expressly stated that the contracts are “fixed and firm. There shall be no variation of any type, the contractor shall commence and complete the work within schedule.”
The schedule, according to the agreements, is that “the contractor shall complete and hand over the building to the university within 40 days reckoning from the date of signing of this agreement and mobilization of funds to the contractor.”
Terms of payment: “Subject to the contractor obtaining in favour of the university an Advanced Payment Guarantee Form from a first class bank or insurance company and in a form acceptable to the university in the sum of 15 per cent of the contract sum and depositing same with the university, the university shall so soon after the signing of this agreement pay to the contractor 15 per cent of the contract sum. Further payments shall be paid to the contractor on the basis of earned certificates and final completion and handing over of the building to the university.”
Petition
Against the backdrop of the alleged “flagrant violation of TETFund’s due process payment template,” the affected contractors sent to the school authorities a “fact-sheet and status report on on-going TETFund construction projects at Imo State University by building contractors working on those projects. In the petition addressed to the acting Vice Chancellor, IMSU, Prof. (Mrs.) Victoria Adaobi Obasi dated August 24, 2015, the contractors noted, “the contracts for these projects were awarded in observance of due process; and the agreements specifying the terms governing the contracts were duly signed between us and the university about January this year.”
The petition said: “We hereby outline three critical terms in the agreement we signed with the university and highlight one or two fall-outs from those terms of contract. First, there was a clause on ‘completion and hand over date’ with subsequent sanctions imposed for breach on the building contractors. There was also a clause stipulating that the contract will not be subject to variation. It is of the greatest importance for us to underscore that the university’s breach of TETFund’s funding provisions for payment, within seven days, of earned certificates has already invalidated those provisions in the contract agreement. It is an indubitable fact that almost every ‘privilege’ is virtually driven by prior ‘obligation.’ The two foregoing terms were underpinned by the provision that earned certificates will be paid within seven days. The university, by its conduct, over two months, has deliberately shifted the completion and hand-over dates of these projects and annulled the ‘no variation’ clause.”
The petition added that during the period, “the university had jettisoned the terms of agreement, the dollar has spiraled. Thus, the university, by a tactical orientation, also annulled the ‘no variation’ clause and inevitably induced the first need for a variation in the contract sum. This legitimacy of this fact will also continue to subsist and apply each time the university withholds payment for earned certificates and we, hereby, solicit your understanding and cooperation in this regard.
“Thirdly, some of us borrowed funds from banks in our bid to bridge the non-payment of earned certificates. We did this to keep the project implementation in pursuit of the completion deadline. While we will not want to press for compensation for loss of time, cost and expenses of staff downtime etc, we will, however, individually, present and expect the university to fund bank interest charges (other than the first term charge), over funds borrowed in lieu of payments for earned certificates. Most of these interest charges have attained double, triple or multiple maturity dates. We bided for TETFund projects with the understanding that they are devoid of the difficulties typically encountered with building and physical development projects in environments that are riddled with uncertainty. TETFund projects do not fall within environments of uncertainty as TETFund provides at least 50% initial funding for its projects from the very beginning.
“In conclusion, we thank you in advance for an early resolution of the specific issues we have raised and trust that this flagrant violation of the TETFunds due process payment template, very obvious and contrary to TETFund standards, will never recur either in this project or any other project we may have cause to undertake for the university.”
The expectations of the contractors for an early resolution of the issues remain dashed, as nothing was done about their complaints. The second quarter of 2016 has rolled by yet the projects remain stagnant.
Recently, the reporter visited the projects sites at IMSU and saw a ‘ghost town’ without any activity going on there. In fact, bushes are growing around some of the sites.
It was gathered that the deans and lecturers in the faculties under construction are operating in shanties following the destruction of their old lecture rooms. Now, the rain is falling, they are not finding things easy.
“I’m not authorised to speak with the press, but the fact is that we are suffering now. You see, when they started this project, my dean was reluctant to move out. He said that he preferred to stay where he was sure than gambling with the uncertainty of an edifice. He has been proved right,” a lecturer who didn’t want his name in print told the reporter.
The question is, why is the university not shouting about the delay in the construction of the faculties?
When the reporter met the IMSU PRO, Mr. Ralph Njoku Obi, in his office, he said that it is a pay-as-you-go arrangement. He directed the reporter to Arc. M.E. Nwachukwu, head of physical planning, office of the VC.
The reporter went to Nwachukwu’s office but he was not around. However, at about 12.49pm on June 22, 2016, the reporter called Nwachukwu on phone and he said he was in the hospital and could not talk. He added that unless the reporter got a clearance from the VC, he would not speak on the issue.
Intervention fund
In every material particular, the Tertiary Education Trust Fund is a great idea, considering the parlous state of the education sector over the years. TETFund was established as an intervention agency under the TETFund ACT – Tertiary Education Trust Fund (Establishment, etc.) Act, 2011; charged with the responsibility for managing, disbursing and monitoring the education tax to public tertiary institutions in Nigeria.
To enable the TETFund achieve the above objectives, TETFUND Act 2011 imposes a two percent (2%) Education Tax on the assessable profit of all registered companies in Nigeria. The Federal Inland Revenue Service (FIRS) is empowered by the Act to assess and collect Education Tax. The Fund administers the tax imposed by the Act and disburses the amount to tertiary educational institutions at Federal and State levels. It also monitors the projects executed with the funds allocated to the beneficiaries.
The mandate of the Fund as provided in Section 7(1)(a) to (e) of the TETFUND ACT, 2011 is to administer and disburse the amount in the Fund to Federal and State tertiary educational institutions, specifically for the provision and maintenance of the following: Essential physical infrastructure for teaching and learning; instructional material and equipment; research and publication; academic staff training and development; any other need which, in the opinion of the Board of Trustees, is critical and essential for the improvement of quality and maintenance of standards in the higher educational institutions.
TETFund ensures that funds generated from education tax are utilised to improve the quality of education in Nigeria without direct contract awarding by providing funding for educational facilities and infrastructural development, among other critical interventions.
But it appears that TETFund is not strictly monitoring projects it is funding.
It was further learnt that the former VC of IMSU, Prof. Ukachukwu Awuzie, was suspended because of his zero tolerance for shady transactions. A report quoted him as saying: “When I was suspended, I left about N2.4billion in the TETFund account and N219million in the Needs Assessment account and I know that the contractors are being owed N500millio. My consistent cry that they should be paid despite the refusal of the ‘powers-that-be’ that their monies be withheld got me into trouble.’’