Business Hilights
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Why FG may not reverse downgrade of Asaba Int’l airport

Strong indications have emerged showing that chances of reversing the downgrading of Asaba International Airport in Delta State may not come soon.

The Federal Government had on May 6, 2015 downgraded the airport built by former administration of Dr. Emmanuel Uduaghan on grounds of “safety concerns.”

On stepping in as government, the leadership of Governor Ifeanyi Okowa hurriedly awarded the contract for the rehabilitation of the runway and taxiways of the airport to drive reversal of the downgrade order of the federal government as soon as possible.

ULO Consultants, one of the indigenous engineering and construction firms servicing the state for years was drafted in to shore up the inadequacies of the young airport developed at a proximity to Onitsha with the target of capturing the commercial city flyers.

However, ULO Consultants, having failed to deliver a three months job in more than two years after pocketing 50 per cent mobilization in the N5bn contract, recently pulled out of site.

In a letter of disengagement, ULO Consultants purportedly claimed that it was withdrawing due to “unfavourable working condition imposed on them indirectly by officials of the State Government Ministry of Works”, alleging that it could not continue with the work because “the estimates prepared by the Ministry of Works in 2014” were no longer realistic given the prevailing economic situation in the country.

However, trouble began for ULO when the State Government, in a letter to Zenith Bank on August 28, 2017, two days before the expiration of the Advance Payment Guarantee, demanded for the immediate payment of the outstanding sum of N1, 959,264,958.57, “being un-recouped balance of the moneys advanced as per your APG.”

But Zenith Bank in a letter dated September 08, 2017, pleaded with the State Government to extend the tenure of the Performance Bond till December 31, 2017. According to the bank, “we have intimated the customer of this development and they have requested that we extend the tenor of the Performance Bond to enable them return to site as soon as the rain abates.”

However, the State Government refused to bulge insisting that the request for extension of the APG “amounts to a fundamental breach of the clear and unambiguous provisions of Clause C, Paragraph iv of the Advance Payment Guarantee issued by your bank.

“There is no provision in the Advanced Payment Guarantee which entitles the Guarantor (Zenith Bank Plc), upon receipt of the first demand for payment by the Delta State Government, to ‘extend the tenor of the APG,” the government said.

Consequently, the State Government wrote that it “shall be constrained to deploy appropriate legal means to enforce the payment of the outstanding sum advanced.”

Prior to the contractor’s pullout, House of Delta State Assembly Committee on Works had paid an inspection visit to the airport, and was dissatisfied with what they saw on ground.

Chairman of the Committee, Hon. Chief Evance Ochuko Ivwurie, berated the contractor for its failure to deliver the project on schedule. The lawmakers were livid at the slow pace of work by Ulo Consultants led by its Managing Director, Uche Okpunor which has dragged a three-month contract timeline to over two years.

According to the chairman, “I am extremely disappointed that this contractor is obstinately recalcitrant and the conduct has put Deltans and the State Government in difficulty. His non-performance has caused the State Government untold embarrassment, setbacks and public opprobrium.”

Besides, absence of the ULO Consultants Chairman and Managing Director of the Company, Chief Okpunor, during the lawmaker’s visit fueled the lawmakers’ anger.

Barely 24 hours after the Committee’s visit, ULO announced its withdrawal from the airport project with effect from November 20, 2017.

Observers were of the conviction that Okpunor’s absence during the oversight function visit was a step to the company’s pullout a day after the visit.

Business Hilights gathered that the contract for the rehabilitation of Runway and Taxiway was awarded by the Delta State Tenders Board ((STB.10/T/791), on May 21, 2015 at a total contract sum of N5Bn with 50% of contract sum as advance payment and a completion period of three months.

In its acceptance letter dated May 21, 2015, ULO affirmed that “completion period is within three (3) months from commencement of the project.”

The contractor subsequently submitted a Performance Bond from Zenith Bank to the State Government in August 2015 and on the basis of this, 50% of the contract sum amounting to N2.5 billion was released as advance payment. But two years after, ULO had achieved only 24.5% completion.

The pullout of the contractor with less than 30 per cent job done, after collecting 50 per cent of the contract sum in more than two years for a job agreed to be done in three months, currently compounds the efforts of the Delta State government to return the airport to profitability.

Investigations show that the state government may drag the contractor to court for contravening terms of agreement.