FG shifts gear on road infrastructure devt, unveils innovative measures to end delays
…Rejig contract price variation clause
The Federal Government has announced a significant overhaul of its road infrastructure development strategy, set to eliminate delays and tackle the long-standing issue of contract price variation.
Minister of Works, Sen Engr. Nweze David Umahi, unveiled the new measures during a meeting with contractors on Tuesday, at the Ministry’s Headquarters in Abuja.
The move is part of the Renewed Hope administration’s infrastructure development masterplan, spearheaded by President Asiwaju Bola Ahmed Tinubu.
The Minister emphasised the need for realistic, creative, and innovative thinking to overcome funding challenges in road infrastructure development.
In his words, “When the Renewed Hope administration came on board on 29th May 2023, Mr. President inherited over 2,600 ongoing projects from the past administration amounting to over N15 trillion, out of which only about N2 trillion was certified and paid.
“And so we now have ongoing projects of N13 trillion, including budgetary projects, NNPCL, SUKUK, Presidential Initiative Development Projects, other Tax Credit Scheme Projects of NLNG, MTN,Dangote, BUA, Mainstream and projects under EPC +F, PPP. “
He also addressed the significant impact that the aftermath of the fuel subsidy removal and forex fluctuations have had on contract cost elements and pricing.
He noted that Variation on Price (VOP) has been insufficient to remedy the situation, particularly for long-standing contracts where VOP adjustments sometimes reached 500 percent.
In seeking a solution, the Ministry obtained President Tinubu’s approval for an allocation in the 2024 budget to sustain all inherited projects.
However, the budgetary allocations for new projects under the 2024 budget, including those from the National Assembly, remain inadequate.
Meanwhile, the Minister introduced several responsive measures, now adopted as the Ministry’s strategy for improving road infrastructure development in Nigeria.
“These measures include revising the VOP clause to align with current economic conditions.
“Other measures adopted were that contractors must have a timeline for project delivery, and every contractor shall have a duty to maintain the road under construction until the entire project is completed and delivered.
“A deadline shall be given for all ongoing projects, and with time, all projects that have no funding shall be stood down, but projects will be selected zone by zone or State by State for funding,” he added.
