Abandoned Projects In Nigeria

1. Abandoned N12trn projects

Date 12th November 2017
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.

Source : http://sunnewsonline.com/abandoned-n12trn-projects/
2. Reviving abandoned LNG projects needs pragmatic ideas
Date: August 8, 2018

Ibe Kachikwu, minister of state for petroleum resources over the weekend said the government
might ask the NLNG to help get two delayed LNG projects in the country – the 10mtpa
BrassLNG and 20mtpa Olokola LNG – off the ground through either minimal investment or
expert advice. Kachikwu said this when he visited the Bonny Island base of the NLNG, which
currently produces 22 metric tonnes per annum (mtpa) of LNG, with plans to invest about $7
billion on the Train-7 project to expand its production capacity to 30mtpa. Since the
development of the NLNG, new projects have been too few and far between. Three LNG
projects in Nigeria: Olokola LNG, Brass LNG and the NLNG’s Train 7 have been unable to
reach final decision by the stakeholders as investors have pulled out. The OK LNG project was
stalled because all the international oil companies (BG, Shell and Chevron) withdrew from the
project, with only the Nigerian National Petroleum Corporation (NNPC) left.

The Brass LNG project, which was designed to produce 10 million metric tonnes per
annum, was to be built by the NNPC, Total, ConocoPhillips and Eni Group. But ConocoPhillips
withdrew from the project in 2013. The minister said, “We have opportunities that are stranded
everywhere – BrassLNG in terms of shareholding and financing; OKLNG in terms of even
taking off the ground – I am saying, as the grandfather of this business, they built six trains,
looking at seven, hopefully potentially more, let’s begin to look at where through minimal
investments, through structures and designs and reconfiguration and expert advice, you can
actually hand-hold some of those trains that are beginning to lag behind so that the whole
founding father concept of ‘take this all over the place’ can happen. “We are going to be
reaching out to them, not from an imposition point of view, but from a collaborative point of
view, to see what we can do and learn from what they have done well.” According to NLNG’s
shareholding structure, the Nigerian government through the Nigerian National Petroleum
Corporation (NNPC) owns 49 per cent of its shares; Shell Gas B.V. has 25.6 per cent; Total Gaz
Electricite Holdings France, 15 per cent; and Eni International, 10.4 per cent.

It is not clear how the government will get the NLNG to invest in these projects
considering its shareholding structure. Nigeria’s own dividend from the project is used to finance
the budget and other critical sectors of the economy so it is difficult to use only its share. With
moves to amend the NLNG Act, Nigeria will have a difficult time convincing other investors of
its seriousness to respect contracts. Rather than urging NLNG who is facing a threat to its market
share in Asia from prolific production from Australia, the United States to invest in new projects,
whose investors pulled out because there is no clear path to profit, Nigeria should be thinking of
making generous concessions, similar to ones granted to NLNG to attract investments. Locally
the need for domestic gas is huge, perhaps it makes more economic sense to liberalise gas
pricing, enact competitive gas terms in production sharing contracts to ramp up production that
will give the plants feedstocks and develop these projects for local consumption through public
private partnerships.
 Source: https://www.businessdayonline.com/companies/oilandgas/article/reviving-
abandoned-lng-projects-needs-pragmatic-ideas/

3. Abandoned NDDC contracts

March 9 2016

Nigerians eager to know exactly how much contractors of the Niger Delta Development
Commission (NDDC) absconded with after collecting mobilisation fees might have to tarry
awhile to enable the Office of the Auditor-General of the Federation and officials of the
commission complete the reconciliation of the accounts on abandoned contracts. What is certain
for now is that some of the commission’s contractors collected mobilisation fees and disappeared.
While the auditor-general’s office insists that about N70.4billion was involved in the contract
scam between 2008 and 2012, the commission claims it is not more than N11billion. The
development arose from the report presented to the Senate Committee on Public Accounts last
week by the assistant director, public accounts division in the auditor-general’s office, Mr
Emmanuel Akpan, which claimed that about 1,733 NDDC contractors disappeared after
collecting N70.4billion.

According to Akpan, “The real value of contracts upon which monies have been collected
by NDDC contractors during the period under review, as of the time of auditing, was N70.4
billion and not N11 billion the NDDC office is claiming now. “There is the need for NDDC
officials to practically prove that contractors involved in close to N60 billion gap they are trying
to create have actually gone to site and executed their projects not on paper, but physically on
ground”. But the commission, in response to a query from the auditor-general’s office, insisted
that the amount involved was N11billion. NDDC’s Director of Finance, Jimoh Egbejule, said the
commission had, on its own, audited the various projects awarded during the period under review,
and discovered that the said scam affected N11 billion worth of projects and not N70.4 billion as
reported by the Office of the Auditor-General of the Federation.

It was when the two parties could not agree on the actual amount involved that the
Senator Andy Uba-led committee adjourned sitting by one month to enable them reconcile their
books and come up with an acceptable figure. “There is the need to stop this public hearing
abruptly, so as to allow the three parties time to sit down and harmonise their findings and
reports on the subject matter. “Definitely, this committee is not satisfied with what has happened,
but we have to give them time to meet and harmonise whatever they can before coming back to
us to present their updated reports, upon which we can now do the proper probing without one
agency saying it doesn’t have the reports the other is presenting,” Senator Uba said. We agree
with the committee on the need for reconciliation of reports by the parties. But one thing is clear,
and that is the fact that some NDDC contractors collected money without executing their
contracts. This is bad enough; irrespective of the amount involved. Even if it is one million naira,
we must be worried.
The commission was established in 2000 to facilitate the rapid and sustainable development of
the Niger Delta and make it economically prosperous, socially stable, ecologically regenerative
and politically peaceful. For an oil-producing region, these are laudable objectives.
Government’s failure to address the challenges of oil pollution and also compensate the people
of the region for the despoliation of their land and other issues associated with oil exploitation
had in the past led to various crises between people in the region and the oil companies on the
one hand, and the people and government on the other. It therefore would amount to a great
disservice for any contactor to get money for the development of the region without executing
the contract. The relevant agencies should within the stipulated one month reconcile their
accounts and come up with the actual amount that the contractors absconded with. Thereafter,
the culprits should be apprehended and prosecuted alongside their accomplices in the
commission. It has always been the impression that contracts are not necessarily meant to be
executed if the players can grease the palms of certain public officials. This dispensation should
not condone such practices.

4. About 12,000 federal projects abandoned across Nigeria

Date November 24 2012

An estimated 11, 886 federal government projects were abandoned in the past 40 years across the
country, Founder of the Africa Diaspora Research in Charis Complex, Centurion, South Africa,
Professor Kole Omotoso, has said. The university don, who quoted this from the report of the
abandoned Projects Audit Commission set up by President Goodluck Jonathan in 2011, stated
this while delivering the Federal University of Technology, Akure’s 24th Convocation Lecture
titled, ‘Technology and Human Development’ He said lack of a functional steel complex
anywhere in the country would make it impossible for Nigeria to achieve any meaningful
technological growth before year 2020. Mr. Omotoso, an expert in Comparative Literature,
identified corruption as the major cause of Nigeria’s backwardness in technological development.
Mr. Omotosho lamented the abandonment of the multi-billion dollar Ajaokuta Steel Complex
and other federal government owned steel firms across the country as a result of sharp practices
by corrupt leaders.

His words, “In 1979, the federal Government of Nigeria under General Olusegun
Obasanjo, signed a global contract that was opened to bidders from the whole world. The leaders
believed then that without a functional steel industry, there can be no industrialization and no
material with which to build infrastructure. “The contract was signed with TyajzPromExport of
the then Union of Soviet Socialist Republics for the establishment of the Ajaokuta Steel project.
The date of completion was 1986 but it was never completed till date due to policy
inconsistencies and massive project corruption for which no one was ever punished.” Mr.
Omotoso explained that the project was abandoned “after it had become one of the bottomless
drain pipes of the national coffers.” He said former President Ibrahim Babangida reviewed the
project in 1986 and signed a new contract with the same Soviet firm, the TPE, which started it in
1979 with a new completion date of 1989. He explained further that the project was also later
abandoned when it was 99 percent completed and that no reason was given for its abandonment
till date. He said, “In all, Nigeria spent $5bn on the Ajaokuta Steel Complex project which was
supposed to cost $650m. “Nigeria was listed as the 41st steel producing nation in the world and
by 2010; the country was no longer listed at all as a steel producing nation. “During those years
of the Ajaokuta Steel Complex project saga, Nigeria spent N2.1 trillion on the importation of
steel products into the country. “During the same period, the TPE had successfully completed on
schedule, steel complex projects for various countries working towards industrialization and
infrastructure building around the world including China, South Korea and Brazil,” he added.

Mr. Omotoso described the abandonment of the Ajaokuta steel firm project as “the most
spectacular project abandonment among thousands of abandoned projects in Nigeria.” He cited
the case of a contract for the construction and equipping of a Federal Medical Centre in
Ohambele community allegedly awarded to former Senate President, Adolphus Wabara, in 2002.
He said the project, which was published by the Niger Delta Professionals for Development,
Effurun, in Delta State in its Citizen Score Card publication, revealed that the project was not
executed at all. “On paper, however, it seems the project has been completed because when it
reached the stage of supplying equipment and drugs, they were supplied and it was kept in the
former Senate President’s house up till today,” he added. Mr. Omotoso said the Nigerian Ports
Authority also revealed six months ago that there were 500 containers which contained materials
for various abandoned federal government projects across the country. Source
https://www.premiumtimesng.com/news/108450-about-12000-federal-projects-abandoned-
across-nigeria.html