Sufuyan Ojeifo and Chinedu Eze
25 June 2008
Abuja — The Senate Committee on Aviation investigating the disbursement and application of the N19.5 billion Aviation Intervention Fund was yesterday told how the Federal Airports Authority of Nigeria (FAAN) awarded the Safe Tower Projects in four international airports at an inflated cost of N5.5 billion.
About N10 billion was also said to have been diverted from the intervention fund given as loan to the aviation industry by the Federal Government for infrastructural and facility upgrade in 2006.
Senate President David Mark also accused unnamed aides of former aviation ministers of trying to bribe committee members in order to kill the probe.
A Technical Consultant to the Senate Committee, Captain Daniel Omale, who presented a pictorial and detailed analysis of the expenditure of the N19.5 billion, said that the quotation he got from the manufacturer of the equipment for the Safe Tower Project at a 100 per cent "marked up profit" was N2 billion.
He said that the best price was about N2 billion, indicating that the contract, which was awarded by FAAN to M/S AVSATEL, Vienna, Austria, at the cost of N6.5 billion, was inflated by N5.5 billion.
Omale told the Committee that about N6.4 billion had been paid to the company with 80 per cent of the project completed.
He said nothing had so far been done on the Tower at the Kano Airport.
He told the Committee that the best estimate for the Safe Tower Projects at the Lagos, Abuja, Port-Harcourt and Kano Airports, was N2 billion.
But a member of the Senate Committee, Senator Ikechukwu Obiorah, pointed out that the contracts were actually worth N1 billion, excluding the 100 per cent marked-up profit added to it by the manufacturer at the behest of the Technical Consultant for "worst case" argument purposes.
According to Obiorah, "The contract was grossly inflated."
Omale had, during his presentation, which was witnessed by stakeholders in the Aviation sector, told the Senate Committee that the Kano Airport Tower would not be ready because a new tower must be built in another location.
He also said there was a Safe Tower Committee set up by former Aviation Minister, Dr. Babalola Borishade, which faulted the contract award.
According to him, the office of the National Security Adviser (NSA), Ambassador Seriki Mukhtar, also faulted the contract award.
THISDAY yesterday obtained a copy of the report to President Umaru Musa Yar'Adua by the NSA which recommended that Borishade should be summoned to explain why the N6.5 billion loan from a bank "was used to fund the Safe Tower project contrary to the directive of the Federal Executive Council and as contained in the Due Process Certification".
The NSA, which reviewed the report of the Technical Sub-Committee on the Safe Tower project headed by Captain Shehu Iyal (Senior Special Assistant to the President on Aviation Matters), said in his report, "Notwithstanding the shortfalls and lapses associated with the conception and implementation of the Safe Tower Project, the project should continue."
The report said that the Budget Monitoring and Project implementation Unit (BMPIU) should explain why a contract of this magnitude should be awarded a certificate of Due Process without the unit sighting the Bill of Quantity with price listing of various components of the contract equipment.
"All the benefiting agencies of the Aviation industry should bear the burden of repaying the N6.5 billion loan in proportion to their allocation from the Aviation Intervention Fund," the report stated.
It added: "The former Managing Director of National Airspace Management Agency (NAMA) should be sanctioned for signing a repayment agreement for the loan without considering its financial implication on the Agency."
Meanwhile, many of the contracts are yet to be completed while more than 70 per cent of the contract sums had been paid to the contractors, Omale said yesterday.
The intervention fund was approved by the Federal Government in response to the three major crashes between 2005 and 2006.
Also, the contract for the resurfacing of the runway 18L, which is the domestic runway at the Murtala Mohammed Airport, Lagos, was inflated by about N2 billion, he alleged.
According to Omale, the contract which was awarded for about N3.56 billion included the extension of the runway at both ends by 150 meters, but due to the nature of the runway it could not be extended, "therefore the cost of the contract was purposely inflated with the intent to divert the excess," he said.
He said when the engineers at FAAN were queried why part of the contract was for the extension of the runway, they admitted that the runway could not be extended but it was in their plan to extend the taxi-way but this was not reflected in the contract.
Omale also said that the contract for the extension of cargo apron was awarded for about N856 million, although only 25 per cent of this job was done, whereas 50 per cent of the contract cost has been paid, with its completion behind schedule.
He said that the contract for the upgrade of Kano airport was not only left uncompleted but out of 15 contractors handling the project, only two were identified. All the contractors had their office addresses in Kano.
On the asphalt resurfacing of the Port Harcourt International Airport by Julius Berger at the cost of N3.5 billion, Omale said airfield lighting was not included and from his projection, the airfield lighting of the runway was not likely to be completed.
He said N3.5 billion for runway resurfacing only "was highly inflated without airfield lighting".
He also noted that in the contract for the resurfacing of Runway 18L of MMA, airfield lighting was not included and that would cost an extra N920 million.
Mr. Ochei Tony, a financial consultant to the committee, also said the N2 billion designated for severance pay of some workers that were sacked from FAAN was pilfered, with N300 million missing.
Also about N653 million and N501 million were at different times taken away from the intervention fund by FAAN and the monies were not accounted for, he said, adding that there was inflated interest and other charges by the bank from which N6.5 billion for the Safe Tower Project was borrowed from.
The committee revealed that it recovered N229.5 million from the banks for FAAN.
Also, the committee said the FAAN management duplicated 23 contractors' names and about N1.7 billion was paid to these ghost names as contractors.
Mohammed Nuruudin, legal consultant to the committee, also said in all the contract transactions in FAAN, due process was not followed, accusing the agency of awarding itself certificate of due process to justify the contracts it was awarding to itself.
He said that 80 per cent of the contracts, some worth N1 billion each, were awarded to companies that had low share capital.
Nuruudin said that there was no in-built penalty clause for defaulting on date of completion of contracts, which means that contractors could arbitrarily delay.
Testifying, the Managing Director of NAMA, Capt Ado Sanusi, said the Safe Tower project was inflated "and there was no bill of quantity, no letter of credit".
Declaring the public hearing open Senate President Mark had said the aides of some former ministers had been trying to bribe the committee members and urged them to desist from that.
A Senator, whose company was said to have won one of the contracts, was also accused of making moves to kill the probe.
Mark declared yesterday that Senators would rather lay down their lives than take bribes.
Mark's declaration came on the heels of the claim by the Chairman of the Committee, Senator Anyim Ude, that overtures were made to him and members of the Committee in an attempt to compromise the integrity of the exercise.
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