Contract variation: FG pays Julius Berger N20bln for Bodo-Bonny Road

The Federal Government says it has paid Julius Berger a N20 billion augmentation fee for the construction of the Bodo-Bonny Road.

The row between the federal government and Julius Berger Plc regarding the halting of construction on the N200 billion Bodo-Bonny Road in Rivers State appears to have been settled, with the government offering an extra N20 billion payment to the company.

Persecondnews recalls that Mr. Dave Umahi, the Minister of Works, issued a warning last Thursday that the federal government might reconsider its contract with Julius Berger if the company failed to resume work on the project within 14 days.

Julius Berger announced in a statement on Sunday that they have received an extra augmentation fee of N20 billion following a meeting between the minister and their Managing Director, Dr. Lars Richter.

The statement reads: “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.

He added that when completed, the road would enhance development, even as he gave the assurance to Bonny Kingdom that the project would 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 had 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 the rising cost of construction materials in the country.

“I thank you all for coming and for giving me this opportunity to shed 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 about 2024, which means the project is more than 11 years old. In 2014, we received the letter of award, but 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.