How Julius Berger exploit govts, inflate costs, and drain public funds

Markson Abibo

Port Harcourt – In Nigeria’s construction industry, a troubling pattern has emerged: contract variation fraud. What appears as a routine adjustment in project costs is often a well-oiled scheme to siphon billions from government coffers. The latest showdown between the Rivers State Government and Julius Berger Nigeria PLC over a N171 billion variation request is not an isolated case—it’s part of a systemic ploy used by contractors to manipulate contracts, delay projects, and extort public funds.

The Rivers State Exposé: A Case Study in Contract Manipulation

The ongoing Ring Road project in Rivers State was initially awarded to Julius Berger for N195.6 billion, with the state paying N150 billion upfront (77%) to avoid cost fluctuations. Yet, months later, the company demanded an additional N171.7 billion—an 87.77% increase.

• If approved, the project cost would balloon to N367.4 billion—nearly double the original price.
• The state government refused, calling it “economic sabotage.”
• Days later, a misleading report surfaced claiming Julius Berger was withdrawing from sites due to unpaid bills—a claim the government has debunked.

This raises a critical question: Is contract variation a legitimate necessity or a deliberate scam?

Julius Berger’s History of Controversial Variations

Rivers State is not alone. Sources within the Federal Ministry of Works reveal that Julius Berger attempted similar “variation exploits” on major federal road projects under former Minister Babatunde Fashola. However, the current Minister, Dave Umahi, has taken a hardline stance against such practices.

• Lagos-Calabar Coastal Highway: Julius Berger reportedly sought a 40% cost increase, but Umahi rejected it, insisting on fixed-price contracts.
• Second Niger Bridge: Variations pushed costs up by over 60% before completion.
• Abuja-Kano Road: Delays and repeated variation requests have stalled progress for years.

A senior ministry official, speaking anonymously, said:
“Once these big contractors get a job, they deliberately slow down work, cite ‘unforeseen challenges,’ then demand outrageous variations. If you resist, they either abandon the project or use media blackmail.”

Other Notable Cases of Contract Variation Abuse include:

• Lagos-Ibadan Expressway: Multiple variations extended completion by years.
• East-West Road: Original budget tripled due to repeated adjustments.
• Ajaokuta Steel Plant: Decades of variations with little to show.

How the Variation Scam Works

1. Low-Bid Wins, Then Inflate Later: Contractors bid low to secure contracts, knowing they’ll exploit variations later.
2. Delays as Leverage: Slow-paced work forces governments to either pay more or face indefinite delays.
3. Media Manipulation: Plant stories (like The Guardian’s report) to pressure the government into paying.
4. Abandonment Threats: If variations are denied, contractors may withdraw, leaving projects unfinished.

The Consequences: Bloated Budgets, Half-Completed Projects

• Taxpayer Burden: Every inflated variation drains funds meant for healthcare, education, and other infrastructure.
• Project Failures: Many projects are abandoned after variations make them unsustainable.
• Corruption Enabler: Some variations are prearranged kickback schemes between contractors and compromised officials.

What Can Be Done?

1. Fixed-Price Contracts: As Minister Umahi advocates, contracts should have strict cost ceilings.
2. Penalties for Unjustified Variations: Contractors who make frivolous demands should be blacklisted.
3. Transparency in Procurement: Full disclosure of contract terms and variations to the public.
4. Stronger Media Oversight: Fact-checking reports that may be planted to manipulate negotiations.

Conclusion: Time to Break the Cycle

The Rivers State case is a wake-up call. If governments continue yielding to predatory variation tactics, Nigeria’s infrastructure budget will remain a feeding ground for exploitative contractors.

The real test is not just exposing the scam—it’s ending it. Will more states and federal agencies follow Umahi’s lead and resist the variation racket? Or will contractors keep dictating terms while Nigerians pay the price?

This investigation continues. Share your thoughts: #StopContractScams