The recent lamentation by the governor of Rivers state over the World Bank/ADB loan ‘non-approval’ or delay by the Federal Government smacks of bluff, subterfuge, and depicts the extreme political chicanery that has invaded governance, at the expense of citizens. It has become a direct blackmail, as if a Guarantor is simply an insignificant signatory to the ADB loan agreement.
Banks will always advice that is dangerous to recommend anyone who you do not trust. Being a Guarantor to a World Bank/ADB loan is even more dangerous. The penalties of failure in performance or payments is stiff not just for the Borrower, but also the Guarantor, especially, if the Guarantor is a member state, and it is all clearly stated in Section 10 of the General Conditions Applicable to the African Development Bank, Loan Agreements and Guarantee Agreements (Non Sovereign Entities) document.
Every responsible government will first of all profile the Borrower’s performance in major collaborative projects like PPPs, and the Borrower’s project management capacity. The will to commence a project is never enough, what counts to a Guarantor is the ‘capacity’ to comply with the terms of the loan agreement, and to perform and deliver as agreed. The Federal Government is right to have hesitated, because an analysis of major projects undertaken by the Rivers state government calls for gradualism in the Guarantor’s approval process.
The $150m Mega Specialist Hospital project turned out to be a scam. The government doesn’t even talk about it these days. On September 29, 2009, the governor said “the Justice Karibi Whyte Mega Specialist Hospital has been designed to make Rivers State the number one Medical Tourism destination in Africa. It would have a leisure arm that would make it a major tourist attraction.” He promised it would be completed by December, 2011. This project is in collaboration with Clinotech Canada. The project is nowhere, as I write.
The $318m Mega Monorail project is another. This perhaps will go down in the history of the Southern Nigeria as the biggest white elephant project ever. As early as September, 2010, the governor had doled out N11b for the project. The governor assured that the monorail, not the entire project, not the phase 1, but the phase 1A will be completed by December 2013. After four years of award, less than 25% of the project has been achieved. The governor promised his people that “that the monorail would be the first of its kind in West Africa, and will be developed for mass transportation within the Port Harcourt metropolis, decongest roads in the city, and create job opportunities.” The project failed!
The Rivers state government has not been completely honest with the FG and the World Bank/ADB.
The state government has barely met the conditions set by the World Bank.
The State Ministry of Water Resources developed a Water Master Plan for Port Harcourt and Obio/Akpo. The design was concluded since 2011. Thereafter, the governor promised to release N5billion available for the first phase of the project, nothing happened. Much later, the governor reneged, and decided to adopt the Cross River state model.
They began the chase for $200m World Bank/ADB loan.
The State Water Board has been without form. The World Bank/ADB listed conditions for the loan. Amongst which is that a reform must be undertaken to create an autonomous agency that will have its own board of directors and a finance management framework that is independent.
The governor directed the speaker to pass a bill for the creation of the Port Harcourt Water Corporation, Rivers State Small Towns Water Agency, and the Rivers Water Regulatory Agency. The bill was signed on the 30th day of May , 2012. Since then, like every other bill passed by the rubber stamp Assembly of the state, it has remained just a documentation. Only a bill board exists at the Rumuola Water station in Port Harcourt.
The Rivers State Ministry of Water Resources has since advertised vacancies in these ‘demo’ agencies in national dailies. Of course, these advertisements were also included in the documentation to the World Bank. But if you were one of those who applied, Sorry! Nothing is happening. It is all deceit. No such agencies exist in the state. Therefore, the most fundamental condition given by the World Bank/ADB has not been met. No Board, no management, no organization, no structure. Rivers state has not met any of these conditions.
The Amaechi administration is desperate for the World Bank loan because it provided zero allocation for Water in the state 2013 budget. Consequently, all water stations in Rivers state are grounded as I write. Would any responsible government allow things to get this bad because they are waiting for a loan?
Now, for any loan to a state/state agency to get the final nod of the World Bank/ADB, a key condition is that the national government – in this case the FG – must act as a guarantor. Considering the record of the Rivers state government in collaborative ventures like the few projects listed above, would you recommend that the FG guarantee a $200m loan to a government that has been unable to deliver on any major project? The Guarantor is as liable as the borrower.
The problem is not Mrs. Okonjo-Iweala, the problem is Gov. Amaechi’s government. They could not deliver on the $150m Mega Specialist Hospital; they could not deliver on the $315m Mega Monorail Project. How can he deliver on this?
Written By Ross Alabo-George
Twitter @imaginasion1