I.The contract for the Construction of Internal Roads E, N, M, DC, D & 8 with associated drainage work (Lot 3) at Kano Free Trade Zone was awarded to a contractor at the sum of N1,042,149,950.10 The status report shows that the contract is 100% completed and fully paid for. The examination of the payment vouchers and contract file shows that this contract suffered variation in its course
II.The contractor wrote for variation of the contract to the tune of N59,185,794.15 on 12 November 2018 as additional excavation and earthworks cost. To this effect, the sum of N52,777,806.94 was included in Interim Payment Certificate No.7 dated 13 December 2018 as variation/additional works to date. This was without recourse to Federal Executive Council which approved the contract. No Ministerial Tenders Board’s approval was attached to the voucher at the time of raising this Interim Payment Certificate No. 7. The Authority did not justify what the variations were meant for.
III.Paragraph 5 of the letter of award dated 20 April, 2018 stated inter alia “please note that this is a fixed sum contract and the Authority will not entertain any request for review of contract rates”.
IV.On the 26 June 2019, NEPZA prepared Interim Certificate No. 8 as Final payment for the construction work. Payment made on this certificate was N51,520,691.04 This payment meant that the sum of N1,092,429,298.51 was paid on the whole contract. This shows that the sum of N50,279,348.41 was paid in excess of the original contract sum of N1,042,149,950.10
V.The Federal Executive Council (FEC) at the meeting held on 18 March, 2020 approved the contract variation sum of N50,279,348.41 This was communicated to the Authority on the 18 May, 2020 via Federal Ministry of Industry, Trade and Investment letter with reference number FMITI/PROC/FEC/NEPZA/472/2020.
VI.The implication of the above analysis is that although the approval of FEC was obtained for the variation of the contract eventually, it was done nine months after the contract sum and the variation sum have been fully paid to the contractor.
The Managing Director is requested to:
I.Justify the payment of N50,279,348.41 without approval from the Federal Executive Council
II.Provide the revised Bill of Engineering Measurement and Evaluation (BEME) on the variation and evidence of work done to the Public Accounts Committees of the National Assembly
III.Otherwise, sanctions relating to inflation and unauthorized variation of contract in paragraphs 3102 and 3103 of the Financial Regulations will apply.
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