Drama as Reps, Amaechi disagree over alleged $33 billion contract award on rail projects transportation
There was a mild drama yesterday as the Minister of Transportation, Mr Rotimi Amaechi vehemently disagreed with the Chairman of the House of Representatives committee on Loans, Treaties and Protocols, Mr Ossai Nicholas Ossai allegedly on the award of contracts for the construction of railways to the tune of $33 billion.
The issue which generated a heated argument forced the Committee to suspend proceedings for about 30 minutes after Speaker Femi Gbajabiamila waded in to restore orderliness.
Ossai at the start of the hearing expressed displeasure with the Ministry of Transport for allegedly obtaining over $33 billion loan from China for the construction rail project without any clear cut financing arrangements.
Ossai (PDP: Delta) claimed that most of the commercial contracts agreements lacked local content clauses adding it was unfortunate that the deals were sealed by non designated and authorized officials.
Ossai’s claim irked Amaechi who insisted that there was no iota truth that his ministry obtained $33 billion for the construction of railway projects in the country.
The Minister who had a hot exchange of words with Ossai disclosed that his ministry has so far obtained a loan of $1.6 billion for the construction of Lagos -Ibadan railway project.
The Minister also faulted the notions held in certain quarters that the local content laws were breached by his ministry.
The minister warned that the activities of the lawmakers will hinder the acquisition of the loans to finance the south-south rail projects adding that the only loan secured by the present government was the NI.6 billion Lagos -Ibadan rail.
Said he: “Mr Chairman I have the right to speak, you invited me, I was once a member of the house. if you say the ministry of transport has a contract $33 billion we want to see it because as the Minister of transport the only contract awarded so far is 1.6 billion dollars contract for Lagos Ibadan which is under threat.
“Mr Chairman the implication of having a contract of $33 billion is that I will have a large number of workers. There’s no $33 billion contracts in the ministry of transport. What we have is $1.6 billion contracts awarded under President Buhari and $800 million contracts awarded by Goodluck Jonathan.
” By the time we came the contract awarded by Jonathan signed by Aganga has been completed 80% so we didn’t have to do the meeting of local content or no local content. The only one that has to deal with the issue of local content is the 1.6 billion dollars contract that was awarded for Lagos to Ibadan. For which the Chinese government is providing $1.2 billion and we’re providing the remaining 400 million dollars. There are over 20 thousand workers and only 560 of them are Chinese, we need to begin to say the truth. It’s good to tell Nigerians the truth, this very political and we will show all the contracts awarded by the PDP government.
“The contracts awarded by this government is 1.2 billion dollars contribution by the Chinese and the 400 million dollars we are including.
“You asked about training, there are over 150 Nigerians in China being trained as engineers. We will provide the document to you by Tuesday. They have built two training institutions in Idu and Daura. We provided you with the list of a total number of Chinese workers on that project.”
“You asked about training, there are over 150 Nigerians in China being trained as engineers. We will provide the document to you by Tuesday. They have built two training institutions in Idu and Daura. We provided you with the list of the total number of Chinese workers on the Lagos Ibadan project.
On the $11.1 billion railway project allegedly signed on July 1 2016, Amaechi said: ” I’m aware, you see sometimes I allow you to make a lot of statements initially and you restricted yourself, it is important I tell you sir that contract was signed as a prelude to a loan and there’s no loan and we may not get the loan because of you Chairman, because of the Committee you set up against the China Loan. That contract is from Lagos to Ibadan which is the whole of the south-south, we may not get that loan so there’s no contract. Just say you want to meet the south south contract.”
Undeterred, Ossai went on to remind Amaechi that they were not quarrelling but rather addressing issues of national importance.
When Ossai said he was not talking about South-South rail but Nigeria at large, Ameachi retorted “You have approached me on south-south rail. Have you not? You have. Until you get the loan, there will be no contract. And there will be no loan.”
The tone of the conversation prompted the a member of the Committee, Hon. Wole Oke to call the attention of the Chair for “guidance”, but the call was not heeded.
The following exchange thereby ensured between the duo this:
Amaechi: Because of the Committee you’ve set up we will lose that contract from Lagos to calabar
Ossai: This issue is not about south-south but Nigeria and I’m serving Nigeria as a legislator, if we continue to serve our geopolitical zone this country will not be nice.
Amaechi: Have you not approached me on south-south train, Mr Chairman you’ve approached me.
Ossai: it’s ok, we will not degenerate this issue to south-south
Amaechi: But you’ve approached me
Ossai: it’s ok, the issue we are talking about today is the issue that concerns Nigeria our priority is to make sure that any area is viable and it will promote the economic activities of Nigeria and bring about a multiplier effect.
Earlier on, Ossai said besides the Chinese loans, there are over 500 bilateral loan commercial contracts agreements and investments treaties with different countries and institutions.
The lawmaker claimed that government officials charged with the responsibility of representing Nigeria in these issues were more “desperate to just take the loans at any condition, possibly using non negotiated loan agreements templates rather than go through the rigour of diligent technical review of negotiating specific clauses with clarity and for the national interest.”
He maintained that it was a common practice that most international loan agreements would adopt ‘Sovereign guarantee’ and a neutral international arbitration centre as opposed to waiving of the country’s national sovereignty in an omnibus manner; especially in dealing with countries like China, known to possess an absolute state status on their institutions and corporations.
The lawmaker stated that the MDAs sign these commercial agreements in billions of dollars, then go the President and Federal Executive Council for approval to execute, including securing loan facilities through Ministry of Finance and Debt Management Office (DMO) and then proceed to negotiate the terms of these loans before coming back to Mr President who then writes the National Assembly asking for approval for billions of dollars to do projects without attaching the negotiated loan and commercial contracts agreements details.
According to him: “We have noticed from documents available to us that commercial contracts prices signed by Federal Ministry of Transport alone within this is over $33 billion without any clear cut financing arrangements.
“Most of these commercial contracts agreements didn’t also have local content clauses and more witnessed by none properly designated and authorized officials.
“There are observable issues relating to the procurement process, evidences of 15% advanced payments, payment of management fees, drawdown process and remittances and a whole lot of other matters, which we are strongly poised to ask questions on and hopes to get honest answers that will fine-tune the current process, plan for the possible renegotiation of some these agreements in order serve Nigerians better.”
“We have heard some people ask why we are focusing on only Chinese related loans and commercial contracts. We will like Nigerians to know that we aren’t focusing on only Chinese loans. From what we know, Nigeria has over 500 bilateral loan commercial contracts agreements and investments treaties with different countries and institutions.
“There is no way the committee will do a thorough job without segmenting the issues based on countries, institutions, or MDAs. Thus, it must be clearly noted that this is not targeted at only China, neither was it designed to impede the development of the railway sector and other infrastructures. But rather to ensure full disclosure, transparency, accountability, utmost good faith, and value for money in both the bilateral loans and commercial contracts agreements entered into by the Nigerian government.”
“This approach is the reason we have government representatives signing empty pages of loan agreements repayment schedule and other key documents required for the loan agreements to become effective. We have commercial contracts signed in US Dollars, while the loan agreements for the execution of the same contracts were signed in Chinese YUAN currency in Ministry of Communications and Digital Economy/Galaxy Backbone Limited.”
The lawmaker said the committee has an important role in drawing the attention of the federal government to local content issues, due process/ compliance with extant laws, transparency accountability, local content provisions, procurement process, disbursement schedules, Management/commitments fees issues and repayment mechanisms of the loans and commercial contracts agreements in line with its constitutional mandate.
He assured that the Committee would work to ensure that proper due diligence is taken by various MDAs before, during and after negotiations and signing of all bilateral loan and contractual agreement.
He stressed that both the government and Nigerians appreciate the fact that loan agreements are not just about of Infrastructural development, but also a matter of national interest and national security.
Ossai said as such, the efforts of the committee to review the status of these agreements was to ensure that it was done with the best interest of the Nigerian people in focus, monitor the progress of its operation, management and administration by the relevant agencies of government in line with the terms of the agreements and recommend a more transparent and open process in accordance with enabling laws and international best practices.
The chairman said even in situations where countries out of desperation and weak economic position waive their national sovereignty in bilateral or contractual agreements; the immunity of sovereignty waiver clause would usually be clear and categorically state-specific assets associated with the loans for takeover in the event of default.
Ossai, however, said the immunity clauses in most of these agreements before the committee are not only ambiguous but very obscure and without recourse to the fact that Nigerian government had issued circular on the subject matter SG/OP/1/S.3/X/1737 dated 11th August 2014 that provided a guideline on issues of waiver of sovereign immunity clause during the loan and commercial agreements negotiations.
The committee said it expected government officials negotiating and signing these loans to fully comply with this guideline and ensure that the clauses are couched to clearly reflect same.
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