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At Last, Julius Berger, 7 Others Submit Bids for Lagos-Ibadan Road Contract

19 May 2013

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Lagos-Ibadan Expressway

*As FG’s indebtedness to local contractors Hit N200 billion
  Festus  Akanbi

Indications were rife at the weekend that the Federal Government is now set to begin the much-waited reconstruction of the Lagos-Ibadan expressway as eight construction firms including Julius Berger Nigeria Plc and RCC Nigeria Limited submitted bids for the tender opened for the project two weeks ago.

Also last week, figures emanating from construction industry showed that the Federal Government’s indebtedness to local contractors has hit N200 billion.

The Federal Government, through the Federal Ministry of Works, had drafted two construction firms-Julius Berger and RCC to the road for repair works after the three-year-old concessionary agreement on the reconstruction of the road awarded to Bi-Courtney Highway Services was revoked last year.

While Julius Berger was put in charge of section 1 of the road, covering Lagos to the Shagamu interchange, RCC was to handle repair work on the section 2 stretching from Shagamu to Ibadan.

However, following heightened public outcry against the worsening condition of the road, the federal ministry of works was said to have opened a tender two weeks ago and no less than eight construction firms are jostling for the project.

Managing Director Julius Berger, Mr. Wolfgang Goetsch, who confirmed the development in Lagos last week disclosed that the company, along with seven other construction companies, had submitted bids for the Lagos-Ibadan expressway project and that the federal ministry of transport may announce the name of the successful bidder next week.

He said: “The Federal Ministry of Works has opened a tender for the Lagos-Ibadan road project 10 days ago. Eight construction firms were involved and presently, the ministry is working on the tender and an announcement may be made in two weeks’ time. The announcement will be made by the federal ministry of works after it must have been approved by the Federal Executive Council.”

Goetsch explained that contrary to some reports, the company was not given the mandate to reconstruct the road in December last year as its mandate was limited to repair in preparation for the yuletide.

“Last year, we were called in by the Federal Government to move to the Lagos Ibadan expressway to do emergency repair for the Christmas season.

“Initially we were reluctant to accept the job of repairs because we believed people will think we were mobilised to do a thorough job. We felt the assignment might spoil our reputation, but our job then had nothing to do with the contract,” Goetsch explained.

The 125-kilometre expressway – Nigeria’s busiest and, arguably, its most dangerous on account of accident – was concessioned to Bi-Courtney in May, 2009 for 25 years under a Design, Build, Operate and Transfer (DBOT) scheme. . The company was expected to spend N89.53 billion.

The Federal Government, in terminating the contract, argued that the company lacked the capacity to execute the project.
Minister of Works Mike Onolememen, who announced the revocation of the contract with Bi-Courtney, said the cancellation followed alleged breach of the terms of the 25-year concession agreement.

Meanwhile, statistics emanating from the construction industry have shown that the Federal Government may be owing local construction companies up to N200 billion for unpaid contracts.
Consequently, the Federal Government is said to have decided to raise some bonds in respect of construction contracts executed by its various ministries, departments and agencies.

Explaining the new scenario, a source disclosed that the government has entered into an agreement to repay debt owed construction companies through the issuance of bond.

The bond issue is said to be managed under the Local Contractors Receivables Management Limited (bond issuance programme).
According to the source, the bond has a N100 per value split coupon with fixed interest rate at 16.5% per annun payable on its offer a the end of three year zero coupon period and on the said principal sum semi-annually in arrears each year during the tenor subject to and in accordance with the conditions and provisions of the tranche trust deed.

Some construction companies had lamented that 2012 had been challenging as there were delayed payments by government at all levels, a development that compounded that of late signing of the appropriation act.

An official of Julius Berger Nigeria Plc told THISDAY that the company had financial assets of bonds issued by the federal government against the debts owed.

Tags: Business, Nigeria, Featured, Lagos-Ibadan Expressway

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