Bodo-Bonny Road: FG Pays JB N20bn Augmentation Fee

Bennett Oghifo

The squabble between the federal government and Julius Berger Plc over the stoppage of work on the N200 billion Bodo-Bonny Road in Rivers State may have been resolved with the government’s provision of a N20 billion additional augmentation fee to the company.

Minister of Works, Engr. Dave Umahi, last Thursday, threatened to terminate the federal government’s contract with Julius Berger if the company did not return to site within 14 days.

However, the company said in a statement that they have been provided an additional N20 billion augmentation fee after a meeting between Umahi and their Managing Director, Dr. Lars Richter and that they “have both committed to ensuring the completion of the critical Bodo-Bonny Road project by year end.”

The statement said, “This is coming just as the minister suggested an additional N20 billion augmentation fee to the contractor to cushion the effects of current economic realities in the country.

“Umahi who was of the view that there was no need for any augmentation, hoped that the additional amount of N20 billion which he announced there and then would assuage the contractor’s burden on the project.”

The Minister, according to the statement, reminded the stakeholders of the importance of the project to both the surrounding communities and the country, adding that when completed it will enhance development even as he gave the assurance to Bonny kingdom that the project will be completed by the end of 2024.

Richter drew the attention of the minister to the time lag when the contract was awarded in 2014 when the exchange rate was N305 to a dollar, adding that the cost of relevant construction materials have since risen by over 1000%.  

He called for the variation of the contract which he said has become necessary in view of the declining value of the Naira and rising cost of construction materials in the country.

He said, I thank you all for coming and for giving me this opportunity to share more light on the project. Allow me to give you some insight from us on this project. This project was initiated in 2013 and today we are talking of 2024, which means the project is more than 11 years old. In 2014, we received the letter of award and the project couldn’t commerce. Then in 2017/2018, the NLNG stepped in with the infrastructure tax credit scheme for modalities in funding the project.”

He said the company asked for the augmentation because as at the time the contract was drafted it was based on the exchange rate of N305. “And last year there were some developments in the economy which resulted in a huge change in prices of construction materials, diesel, among others. When we signed this project, we were talking of N142 per Liter for diesel. But today we are buying diesel for N1500/N1600 per Liter. In 2013 the price of bitumen was far cheaper than today when we bought bitumen for N1.2 million.”

The company said the augmentation fee they actually requested was N80bn and not N28bn as in the quote from the ministry.