- It’s between N400m to N1bn per kilometre
The combined effect of poor planning, sloppy budgeting process, corruption and lack of absorptive capacity in the Ministry of Works has pushed up the cost of road construction and maintenance in Nigeria, making it the most expensive in Africa.
A report on Road Infrastructure Development in Nigeria (2009-2013) which benchmarked the cost of road construction in Nigeria against what obtained in some African countries showed a remarkable difference that suggests an abnormality in Nigeria.
The report, published by the Centre for Social Justice (CSJ), Abuja, was based on an earlier study Mark insists on state creation and benchmarking conducted by the World Bank in 2000. In Nigeria, the CSJ report said a kilometre of road costs between N400 million and over N1 billion, an amount the report described as outrageous.
According to the report, a 9.52 kilometre Ibadan Township road in Oyo State was awarded at the cost of N5.8 billion, which is approximately N609.24 million per kilometre. Similarly, the contract sum for the Abuja/Abaji/ Lokoja road, a 196 kilometre project being handled by the Federal Government was awarded at an estimated cost of N42 billion in 2006.
It was however reviewed upward to N116 billion in 2011, an increase of 176.2 per cent. This was in spite of the declining rate of inflation at an average of 2.52 per cent within the five-year period.
With the total cost of the Abuja/Abaji/Lokoja road project, the cost of the project per kilometre is approximately N591 million, which exceeds the upper bound benchmark cost of $1,374,429.60 per kilometre recommended by the World Bank as cost of constructing a kilometre of paved road.
In the earlier study by the World Bank, a set of indicators were constructed to perform comparative assessments of the contract procurement and implementation processes in the road sector across 13 countries in Sub- Saharan Africa. The countries used in the study were Congo, Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Malawi, Mauritania, Mozambique, Madagascar, Nigeria, Tanzania, Uganda and Zambia.
The research generated a specialised data set for 109 road and bridge works contracts and 76 supervision consultancy contracts in projects financed by the World Bank and “the highest cost overruns” were observed in Nigeria, where the contracts increased their original value by an average of 39.7 per cent during implementation.
On the other hand, the average cost overrun in Ghana was 34 per cent; about 18 per cent in Mozambique and Tanzania while there were no cost overruns in Ethiopia, Uganda and Kenya. In the Limpopo Province of South Africa, the average cost of constructing a kilometre of road falls within the World Bank road construction benchmark.
The CSJ report attributed the abnormal cost of road construction in Nigeria to insufficient budgetary allocation and other associated problems. “There are too many road projects and resources are so thinly spread. There is a great differential between insufficient budgetary allocations to road infrastructure and the releases and cash -backing necessary for MDAs to utilise the funds. This is not good for road infrastructure development in Nigeria.
The continuing and further differentials between the amounts cashbacked and their eventual utilisation show lack of absorptive capacity in the MDAs.
“It can be seen that the level of funding does not match the timeline within which the road projects should be executed. Roads that should have been completed within two years or less are still undergoing construction after five years.
The delays lead to variations at sometimes about twice the value of the original award. This creates enormous challenges to the fiscal system, especially with the huge amounts posted for augmentation of road contracts,” the report stated.
It recommended the need for enhanced investments and a fresh thinking to get new funds for the road sector while existing laws and policies such as those governing the Public Private Partnership (PPP) arrangement and the Infrastructure Action Plan needed to be implemented immediately.
Besides, it recommended that budgetary funding for the road sector should be progressively improved. Beyond appropriations, the Ministry of Finance should ensure full and timely release and cashbacking of budgeted funds to the Ministry of Works and other MDAs involved in the road sector.
It also called for the reduction in the cost of road project implementation through benchmarking with African and international prices.
According to the report, the cost of building roads in other countries such as Ghana, which has nearly the same soil environment as Nigeria, will put extant cost in its proper context.
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