Senators want mobilisation fees for contractors doubled

Nigerian senate chambers where senators attend plenary
Nigerian senate chambers

The Nigerian Senate is considering a bill to amend the Public Procurement Act 2007 to review contractors’ mobilisation fees from 15 to 30 per cent.

This bill passed second reading after a lengthy debate on Thursday.

The Senate discussed two separate bills to amend different sections of the law, which was first passed in 2007.

The first was from Isa Shuaibu(Taraba North) and the other from Uche Ekwenife (Anambra Central).

The version from Mr Shuaibu was concerned about the need to constitute the National Council on Public Procurement.

It also called for an upward review of mobilisation fees to contractors from 15 to 30 per cent with the argument that the current figure is grossly inadequate to mobilise contractors to sites.

This provision is contained in section 35 of the newly-proposed bill.

The amendments

In his debate, Mr Shuaibu said the increase will ensure the early completion of projects.

He also said the bill will combat the rate of uncompleted projects in the country.

Similarly, the bill proposed that contractors should submit to procuring entities, an insurance performance bond from a reputable insurance company for (all local contracts), and Irrevocable Bank Guarantee for (international contracts) before such fees are released.

“The instruments shall be for the life span of the project or programme which were not provided for in the 2007 Procurement Act. The bill canvassed for the creation of a National Council on Public Procurement to address the administrative issues,” he said.

The lawmaker explained that Section 5 of the Act is also being amended to harmonise price benchmarks of all item(s) to be procured by government procuring entities that were hitherto not provided for in the Act.

Under this section, mediation or arbitration mechanism is introduced towards addressing complaints and grievances between procuring entities, contractors and service providers before legal actions can be taken.

Section 15 of the Act was expanded to include all public entities including Security Agencies, Government-owned Enterprises, Commissions, Institutions, Councils and Authorities etc, to comply with the provisions of the Public Procurement Act.

Section 16 of the Act provides for the issuance of the “Certificates of No Objection” by the Bureau of Public Procurement BPP for all contracts to be considered by the Federal Executive Council, FEC but no provision was made in the Act for the FEC to approve such contracts.

“This Bill has taken care of this omission by spelling out the approving authorities of all contracts within the prescribed thresholds at various levels. Also, new sub-sections 20 and 22 in section 16 have been introduced to hold accounting officers of procuring entities responsible for omissions, contraventions, inflation of prices and irregularities in the discharge of their official responsibilities,” Mr Shuaibu said.

The bill also made provisions for the issuance of a Letter of Credit from the Central Bank of Nigeria (CBN).

Exempting ecological procurements

Ms Ekwenife’s bill, however, sought an amendment that will ensure that all procurements are placed on “open competitive bidding except for those for ecological procurements.

The Procurement Act of 2007 was enacted to entrench transparency and accountability in the country’s purchases.

The bill amends the extant provisions to section 16 (1) (c) the PPA Act to provide procurement of goods and works from the ecological fund office to be conducted through a direct procurement process rather than the open competitive bidding process user know all other cases.

Another amendment in Section 37 (2) (4) seeks to increase the number of days within which payment shall be deemed “delayed payment” to replace 60 days to 180 days

In their contributions, Deputy Minority Leader, Emmanuel Bwacha, and Abbah Moro welcomed the bills which they said will curb corruption as well as delays experienced in the procurement processes.

Bassey Akpan (Akwa Ibom Northeast) supported the bills which he said were timely for effective implementation of the 2020 budget as Nigeria plans to adjust its fiscal calendar to run from January to December.

The lawmakers, however, expressed concerns about the need to curb excesses of the use of “Certificate of No Objection” by the Bureau of Public Procurement with Solomon Olamilekan (Lagos West) calling for the ‘unbundling’ of the agency.

Other concerns were the need for price harmonisation and project cost which is very high in Nigeria compared to other countries.

On his part, the Senate President, Ahmad Lawan, welcomed the amendment. He noted that it gave necessary amendments to the loopholes in the existing law.

He also said the amendment will reduce the time spent on procurement because of “unnecessary cumbersome lengthy processes of bidding.”

Both bills were referred to the Senate Committee on Procurement for further legislative work. The committee is expected to revert to the chamber in two weeks.

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