2020 Budget: Nigeria may lose ₦1.2 billion next year to overpricing by MDAs

Nigeria may lose over ₦1.2 billion next year to overpricing in the proposed 2020 budget currently before the National Assembly.

This is because federal ministries, departments and agencies (MDAs) are trying to avoid the Bureau of Public Procurement (BPP) to fix bogus prices for items they propose to procure.

Section 4 (b) of the Public Procurement Act saddles the BPP with the function of the “establishment of pricing standards and benchmarks”.

However, the Bureau’s price checking portal is not functioning at the moment. Worse still, the agency said it does not involve itself in determining the prices of items listed for procurement.

The 2020 budget proposal is before the National Assembly but past experiences gave no assurance that the lawmakers will check the infractions.

This N1.2 billion figure is an estimate of a series of overpriced items and what is proposed for an unnamed project in the 2020 appropriation bill presented by President Muhammadu Buhari to the National Assembly in October.

A recurring feature of the bill is the existence of sketchy details about the proposed projects.

Culpable in this anomaly are virtually all MDAs, including the Office of the Presidency and the anti-corruption agencies like the EFCC and ICPC.

Certain MDAs that gave the details of their intended projects have been caught to have overpriced some of them, perhaps as a result of deliberate fraud or failure to carry out a market survey before fixing the prices.

Earlier, at the budget defence session by MDAs, Senate President Ahmed Lawan specifically named overpricing as an underbelly in the budget proposals.

Then, PREMIUM TIMES reported how the Federal Road Safety Corps (FRSC) priced “one 500KVA soundproof generators for Lagos office” at ₦26,930,992. The product sells for ₦19 million in an online sales shop, Jumia.

Further scrutiny by this newspaper of the budget proposal has revealed that not less than 23 of such price disparities exist in the budget.

Some projects are newly proposed while others are ongoing, indicating that the latter were uncompleted and brought forward from previous years.

These 23 items have a cumulative proposed amount of ₦1,645,839,108. However, price estimates obtained from Jumia, Konga — both online stores — and BudgIT show that with ₦403,772,497, all 23 projects would be implemented.

This could save the country from piping ₦1,242,066,611 down the drain.

Breakdown

Of the 23 projects randomly selected from the budget, an unnamed project with code “ERGP28145325” stands out. Tagged as an ongoing project, and named as “ERGP28145263″, the project is priced at ₦30 million.

Also, the Nigerian Football Federation (NFF) proposes to purchase seven colour laserjet PRO M252DW” printer for ₦2.75 million. The same product sells for ₦190,500 each, meaning that the Nigerian football house is proposing to spend ₦1.42 million of taxpayers money than necessary.

The presidency is not left out either in the wastage. The Presidential Air Fleet proposes to purchase three units of “2 horsepower panasonic air conditioner” at ₦1.05 million. But with ₦489,000 all three can be bought. This is another ₦561,000 to be wasted from the nation’s purse. No further details was given of the required air conditioner to enable a check if there would be a need for a price increase.

In the same vein, Michael Okpara University of Agriculture plans to procure a hilux jeep for ₦40 million, but with ₦25 million, the vehicle can be theirs.

The construction of blocks of classrooms provides the largest chunk of projects whose prices are inflated. Costs of completed 2015 constituency projects as published by BudgIT show that instead of the proposed sum of ₦870 million, constructing these classrooms should cost ₦229 million, leaving an excess of ₦641 million.

With only three projects sampled in this category, the Lower Benue River Basin Development Area (RBDA) with one of the projects and the Universal Basic Education (UBE) Commission with the remaining two are parties involved in the above infraction.

Trailing construction of classrooms is the drilling of both solar and motorised boreholes. The same report by BudgIT was used to estimate the cost of drilling boreholes. Going by the prices quoted in the report, rather than the proposed ₦495 million, ₦75 million can do the same job, leaving a saving of ₦420 million.

The four projects under this category were proposed by the headquarters of the quartet of Border Communities Development Agency (BCDA), Federal Ministry of Environment, Federal Ministry of Water Resources and Benin/Owena River Basin Development Area (RBDA).

There is also a high proposition for generators and solar panel of various capacity. Specifically, the taste for 5KVA of solar inverter, and 30KVA, 50KVA, 60KVA, 100KVA, 200KVA, 250KVA generators rank top.

These appliances are to cost the country a little above ₦207 million. But with prices sourced from Jumia and Konga, about ₦73 million is all that is needed to purchase them — yet again another saving of ₦134 million.

MDAs caught in this web are Regional Centre for Technology Management (NACETEM—Lagos), Technology Business Incubator Centre, Yola, National Youth Service Corps (NYSC), Kamuku National Park, Federal Road Management Agency (FERMA), National Park, Federal Teaching Hospital, Ido-Ekiti, FGC in each of Azare, Sagamu, Kwali, Gboko, and the Mass Literacy Council.

Blame the procurement process

Samuel Atiku, a policy and development economist, explained that budgeting in Nigeria is done at the MDAs, using the bottom-to-top approach. By this, he means that agencies prepare their budgets and submit to their head ministries who consolidate the proposals before they get to the National Assembly.

“Most of the MDAs that prepare the budget have a copy of the price list of items, as provided by the Bureau of Public Procurement,” Mr Atiku says.

“If you are discovering there is a disparity between what is in the budget and the market price, it means that the buck stops at the table of the Bureau of Public Procurement. Maybe the price list they are using is not in tandem with what is happening within the market place in Nigeria.

“It could also be as a result of wrong description. But there is no excuse for anybody. The key issue is that, if you pick up the budget, it should reflect the economic reality we have around us, and if it is not, then there is a problem, and that problem needs to be addressed.”

Mr Atiku also blamed the issue of overpricing on MDAs which do not carry the public along while preparing their budgets, or, in the least, get feedback from the people.

He called on the budget office to make the budget open by making the budget available in machine-readable format, for easy analysis and cross-check.

The Bureau’s position

Spokesperson of the Bureau of Public Procurement, Segun Simmons, said he was bereaved and thus was not in the state of mind to make a comment.

The phone of the Bureau’s review officer, Mr Zibiri, which Mr Simmons provided, was switched off all the times our reporter called.

But the Director-General of the Bureau, Mamman Ahmadu, said the bureau is not in charge of regulating prices proposed by MDAs in the budget. He requested an official letter for the issue raised to be looked into.

“We don’t monitor their budgets. If they make any request, we ask them to provide evidence that it is in the budget before we approve it. I’m not in a position to give you an answer. You can write formally to the Bureau or you call back. I’m chairing a meeting.”

Section 4 (b) of the Public Procurement Act saddles the Bureau with the function of the “establishment of pricing standards and benchmarks”. However, its price checking portal was not functioning as at the time of this report.

Dodgy Senate

Efforts to reach Jibrin Barau, Senate Committee chairman on Appropriation, to know what measures the committee has in place to check overpricing in their vetting of budget proposals were abortive. Calls placed to his known phone numbers were not answered or replied. Also, a mail sent to him was not replied.

In like manner, calls and text messages sent to the deputy chairman of the committee, Adaeze Oduah, were greeted with silence. After WhatsApp calls and messages sent to her with two different numbers showed that they have been read, she blocked the numbers on both occasions.