The Oyo State Government has announced that it has successfully negotiated a reduction in the proposed additional contracts sum of N159.6 billion put forward by contractors handling some of its projects to N86.1 billion.
This adjustment, according to the state government, resulted in a savings of N70 billion for the state, while addressing the financial pressures caused by rising project costs and in a strategic move to address the soaring foreign exchange rates.
This was made known on Wednesday during the State Executive Council meeting held at the Governor’s Office Executive Chamber, Agodi, Ibadan.
While briefing the Governor’s Office correspondents on the development, the Commissioner for Works, Public Infrastructure, and his counterpart from the Budget and Economic Planning Ministry, Professors Dawud Sangodoyin and Musibaudeen Babatunde, respectively, shared details of the decision.
According to Oodua News, they indicated that the original estimated cost for the affected projects was slightly over 200 billion naira. Following negotiations with contractors, the proposed increase was successfully reduced to 86.1 billion naira, resulting in a savings of over 70 billion naira for the state.
The government had previously established a committee to investigate the contractors’ claims regarding the necessary price adjustments.
This initiative, they said, was aimed aimed to alleviate financial pressures on both the state and the contractors involved in various infrastructure projects.
Professor Sangodoyin explained, “The price review of the contract sum involves asphaltic improvement of 12 selected road construction and rehabilitation projects within the Ibadan metropolis.”
He further elaborated on the specific projects impacted, stating, “Projects affected by the price review include the construction of Rashidi Ladoja Circular Road Lot 1 and Lot 2, the rehabilitation of Saki-Ogboro-Igboho Road, the construction of Iseyin-Apomu Road, and the construction from Apomu Junction to Ogbomoso.”
“Additionally, we are looking at the construction of Ajia-New Ife Road with a spur to Amuloko, as well as asphaltic reconstruction, expansion, and total overlay of the Iwo Road Interchange to the Osun-Oyo boundary.”
“Other projects include the reconstruction, rehabilitation, and expansion of the road network inside Aerodrome, Samonda, Ibadan, along with junction improvement on Agodi Gate Road.”
Emphasising the importance of the decision, Professor Sangodoyin noted that the rising foreign exchange rates have significantly increased the cost of materials and services.
He stated, “The price adjustment became imperative for the timely completion of projects without compromising quality. The Executive Council has considered the cost submitted by the committee and approved that the reviewed contract sum for the 12 ongoing projects stands at a total of N86.1 billion.”
“Let me throw more light on this: the contractor submitted a Variation of Prices (VoP) of N159.6 billion, but the committee and experts consulted reviewed it and negotiated it down to N86.1 billion, which saved the government up to N73.4 billion.”
“The payment of this is subject to milestone achievements that will be consistent with the original contract.”
“We believe that once this is done, all our projects will be distributed as we have agreed with the contractors, and we shall not have any abandoned projects,” Professor Sangodoyin concluded.
