Exclusive: Multimillion naira contract inflation scandal rocks Kwara tractorization exercise (part 1)~NEWSEXTRA - NEWS EXTRA ONLINE

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Tuesday, 21 July 2020

Exclusive: Multimillion naira contract inflation scandal rocks Kwara tractorization exercise (part 1)~NEWSEXTRA



....Cost of renting 24 tractors higher than 26 tractors 

.....Contractor refused to pay all relevant taxes and dues

.....#10,125,000 paid as operators allowance – investigation


By Abdulrasheed Akogun (Ilorin) and Godwin Irue (Abuja)


The last might not have been heard of the tractorisation exercise of the Kwara State government, aimed at alleviating the sufferings of farmers through subsidised provision of machinery for harrowing, ploughing and ridging of the farm land, with strong allegations of multimillion naira contract inflation trailing the whole exercise, Fresh Insight investigation has revealed.

It would be recalled the Kwara State government through the Chief Press Secretary to the governor, Rafiu Ajakaye had, via a press release dated June 9, 2020 said “The government is deploying no less than 50 tractors for distribution to farmers at N10,000 per hectare of land, about N6,000 less than the market cost of hiring the machinery from private firms.
“This is the first phase of our interventions to the farmers and we will move from tractorization to supplying input to the farmers, seeds and fertilisers to boost yields,”

However, according to Fresh Insight’s investigation, the Commissioner for Agriculture – Mrs. Adenike Harriet Afolabi-Oshatimehin had, via a letter dated May 12th, 2020, which partly reads “Your excellency may wish to refer to the virtual meeting held on 1st May, 2020 on the options of the tractor leasing companies and the subsequent committee meetings and reports there from.

“Your excellency is humbly requested to consider and approve the release of the sum of Ninety-five million, two hundred and fifty thousand naira only (#95,250,000) for the above, the relevant vote of charge is code 0215001 (Min. of Agric), sub-code 230502 (Acquisition of non-tangible and tangible assets, sub sub-code 23050270 (Agric mechanisation) with the sum of Seven hundred and forty seven million, five hundred and forty-four thousand, eight hundred and twenty naira only in the 2020 approved budget estimates” he added.

The Governor via his minute on the aforesaid letter on May 15th, 2020, approved all requests with the exception (item 4iii), cost of operational allowance, which he minuted thus “Farmer’s agents to bear the cost of operational allowances and thus approved #85,125,000 as against the proposed #95,250,000.

According to the letter of provisional award of contract to the two tractor leasing firm; Traxi Continental Limited and Machine and Equipment Corporation Africa (MECA) signed by one Hajia Maryam Nurudeen Mohammed and dated May 18th, which was separately issued to the two firms.

The letter written to MECA partly reads ” Sequel to the outcome of the deliberations of the tenders board committee of the Ministry of Agriculture and Rural Development, I am directed to convey the approval of His Excellency the executive Governor of Kwara State for your company to undertake the execution of tractor leasing at a total contract sum of forty-eight million, six hundred thousand naira only (#48,600,000.00) being cost of leasing and transportation of 24 units tractors.

“To ensure your speedy mobilisation to site, you shall be immediately paid 75% of the total contract sum; thirty-six million, four hundred and fifty thousand naira only (#36,450,000.00) inclusive of 16.5% taxes and deductions.


“Payment of the sum of #180,000 to the State tenders board at the ministry of works as contractor registration fee (#150,000), application form fee (#20,000), and registration card fee (#10,000), payment of the sum of #120,000 comprising of a non refundable tenders fee (#80,000), administrative fee (#40,000)” it concluded.

In the same vein, the letter to Traxi partly reads “Sequel to the outcome of the deliberations of the tenders board committee of the Ministry of Agriculture and Rural Development, I am directed to convey the approval of His Excellency the executive Governor of Kwara State for your company to undertake the execution of tractor leasing at a total contract sum of forty-four million, three hundred and twenty-five thousand naira only (#44,325,000.00) being cost of leasing and transportation of 26 units tractors.
“To ensure your speedy mobilisation to site, you shall be immediately paid 75% of the total contract sum; thirty-three million, two hundred and forty-three thousand, seven hundred and fifty naira only (#33,243,750.00) inclusive of 16.5% taxes and deductions.


“Payment of the sum of #180,000 to the State tenders board at the ministry of works as contractor registration fee (#150,000), application form fee (#20,000), and registration card fee (#10,000), payment of the sum of #120,000 comprising of a non refundable tenders fee (#80,000), administrative fee (#40,000)” it concluded.

It is glaring from this two letters that the proposed cost by the Kwara State ministry of Agriculture of leasing 24 tractors to KWSG by MECA was higher than the cost of leasing 26 tractors from Traxi at the rate of (#48,600,000) and (#44,325,000) respectively.


Further investigation by Fresh Insight showed that according to a letter dated 27th May, 2020 and signed by the Chief Executive Officer of Traxi, Mr. T. Chiyoka which was addressed to the Permanent Secretary Ministry of Agriculture and Rural Development, they accepted all the terms as contained in the letter of provisional award of contract.

MECA on the other hand rejected and sort a further concession through its acceptance letter dated 27th May, 2020 which was signed by Prince Chinedu Obi the company’s Chief Operating Officer and addressed the Commissioner of Agriculture and Rural Development, it partly reads “We are happy to provide mechanisation services to Kwara State, however we are concerned about the conditions attached to the transaction, which we considered initially as off-shelf purchase with all the waivers and considerations already made in the course of negotiations with your very diligent team.

“Accordingly, we request waiver and considerations on the following items (a) waiver in advance payment guarantee, since it was not disclosed during our negotiations (b) VAT charges of 7.5% on the entire cost of Agricultural inputs are VAT exempt (c) Waiver of all taxes and charges on the operator’s fees, 
conveyance logistics cost, since it was not disclosed during negotiations (d) waiver of State tender fee of #180,000 to the State tenders board, since it was not disclosed during negotiations (e) Waiver of tender fee and admin fee of #120,000 to Ministry of Agriculture and Rural development, since it was not disclosed during negotiations.

In the same vein, the operator’s allowance to the tune of #10,125,000 not approved by the Governor via his minute on May 15th, 2020 to the letter written of approval dated May 12th, 2020, was however included as approved in the letter of provisional award of contract to the two companies and thus MECA got the sum of #5,400,000 while Traxi got #4,725,000 respectively.


Further investigation by Fresh Insight confirmed through a letter dated May 28th, 2020 and addressed to the Governor, where the ministry conveyed the acceptance and reservations expressed by the two preferred companies respectively, it partly reads “Traxi continental limited, on his part, accepted all the terms and conditions detailed in the letter of offer and the draft memorandum of understanding.

“MECA, a contractor unknown to have rendered any service to the State, requested for 100% upfront payment without advance payment guarantee as well as waiver of the 7.5% VAT from its contract sum, 9% tax deduction from daily charter cost only and while they also requested for other services to be tax free.
To be continued

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