Showing posts with label Penetration Grade Bitumen. Show all posts
Showing posts with label Penetration Grade Bitumen. Show all posts

January 2, 2019

Infrastructure Boom

Controversial tender system allows Turkish companies to dominate World Bank public investment list



Five of the world’s top 10 private sponsors of public infrastructure projects are Turkish companies, figures in the World Bank’s 2018 Private Participation in Infrastructure Database show.
Limak Holding, Cengiz Holding, Kolin, Kalyon and MNG Holding are the Turkish companies crowding the top 10, where they are joined by companies from Brazil, Germany, the United States and France.
The heavy Turkish presence on the list reflects Turkey’s status as one of the world’s highest investors in infrastructure projects. The World Bank’s data places Turkey as the fourth highest with $143 billion worth of investment, after Brazil, India and China.
The increased investment that brought Turkey back to the top five in 2018 was largely thanks to four highway megaprojects, the World Bank’s report said.
However, the number of Turkish companies on the list is likely down to Turkey’s private-public partnership system, which has been used to fund a diverse array of megaprojects that includes bridges, ports, roads, airports and even the planned construction of a massive canal that will join the Black Sea and Marmara Sea, turning Istanbul into an island.
High-profile projects still under construction include a new airport in Istanbul, where a soft opening was held in October. The airport, which is planned to be the world’s largest when construction is finally complete, is being built by a consortium of five companies, four of which - Limak, Kolin, Cengiz and Kalyon – feature in the World Bank’s list. The fifth, Mapa Construction, is a Saudi-based company.
Turkey’s Justice and Development Party (AKP) government has gained great political capital from the projects completed in Turkey using this system, and the long list of successful infrastructure projects serves as an inexhaustible source to draw from when AKP politicians are challenged to defend their party’s achievements over 16 years in power.
However, critics say the system has been used as a way of giving out handouts to the government’s clients. It allows private companies granted tender on the projects to make an initial investment and construct the infrastructure, after which they are granted the license to operate it for periods often reaching decades.
One of the main sources of criticism stems from the guaranteed income the government often grants these companies during their tender period. Agreements may stipulate that, in the event that a tender-operating company’s revenues from the infrastructure projects do not reach a certain level, the government will pay the difference.
This has led at times to massive pay-outs from the public coffers to contractors. That the income is often guaranteed in dollars or euros has exaggerated public losses even further this year, as the lira lost value heavily against international currencies.
With the revelation that five Turkish companies had done enough business in this fashion to enter the World Bank’s top ten list, Turks on social media quickly pointed out that none of these five companies were among the list of Turkey’s top taxpayers.
A glaring example demonstrating the shortcomings of the AKP’s public-private partnership system came with the construction of an airport designed to service the three western Turkish provinces of Kütahya, Uşak and Afyonkarahisar.
The income guaranteed to the contractor, IC İçtaş, is based on passenger quotas of hundreds of thousands of passengers per year. However, over the first five years in operation, the passenger numbers have fallen 95 percent short of these quotas, a figure that has cost the Turkish public over 20 million euros to date.
With the company granted tender until 2044, that figure if it maintains its current rate will rise to over 200 million euros in total – a figure that dwarfs its initial 50 million-euro investment.
Source - AHVAL

March 21, 2018

Fixing the Road ( Tenders)

A local company was allowed to fix tender prices for the road connecting Mombasa to Miritini, exposing taxpayers to an extra cost of Sh200 million, it has emerged. According to the National Assembly Public Investment Committee (PIC), SS Mehta was given a blank bill of quantities to fill in the price upon which the tender was priced. 

Narok- Mai Mahiu road cut off again This saw the cost of building the road that was initially to cost taxpayers Sh300 million go up to Sh500 million. “A representative of the company met Kenya National Highways Authority (KeNHA) officials at the third-floor boardroom on June 26, 2013, where he had been given the bill of quantities prior to the meeting,” said PIC Chairman Abdul Swamad Nassir (Mvita). 

Repackaged bid He said KeNHA’s decision to award the tender was mired by irregularities after it opted to directly procure the services of Mehta on the pretext of following a presidential directive. Avoid fake news! Subscribe to the Standard SMS service and receive factual, verified breaking news as it happens. Text the word 'NEWS' to 22840 Talewa Road Contractors had been awarded the tender for the road on the stretch where the Standard Gauge Railway terminates, but only managed to complete just over 40 per cent of the works. KeNHA then cancelled the tender and repackaged the bid documents to include Bomu Hospital Road and Changamwe Refinery road to divert traffic and cut congestion.

 The agency boss Peter Mundinia told the committee the authority took the decision as it was hard-pressed to comply with the 100 days rapid result initiative meant to cut the time taken to move cargo from the Mombasa port from 15 days to four days.

By Otiato Guguyu 

Read more at: https://www.standardmedia.co.ke/business/article/2001273908/agency-on-the-spot-for-inflated-road-tender-award-to-firm


March 13, 2018

Saudi Rail Event

Add caption
 Speaking at the 12th edition of the Middle East Rail 2018, Khalid Al Sultan, vice president - infrastructure, Saudi Railway Company (SAR), covered the company’s railway development plans in context of the country’s Vision 2030. He explained that railway will play a major role in three aspects of development: a cost efficient means of moving goods & freight, a means of moving people as well as aligning with major ports and entry points to ensure seamless infrastructural connectivity.

He also explained in great detail the length and depth of coverage of the country’s three major railway lines including the Riyadh Dammam Line, North-South Project (connecting major heavy industry hubs for freight projects) and the 453-km long Haramain High Speed Railway (HHR) project linking the holy cities of Makkah and Madinah.

Al Sultan also expressed SAR’s keen interest in working with the private sector to collaborate and partner in achieving success in multiple new projects. Of note were Public-Private Partnership (PPP) opportunities for the 340-kilometer dDouble-track Yanbu to Jeddah connection (via King Abdullah Port) and the 40-kilometer double-track Riyadh to Riyadh connection and new Dry-Port (connecting SAR and SRO networks in Riyadh and New Dry Port to be situated outside of Riyadh).

He also mentioned that SAR will soon be floating tenders for the Riyadh-Dammam and the Land Bridge Project. The project consists of a 449-kilometer passenger Line connecting Dammam and Riyadh passing through Al Ahsa and Abqaiq, a 546-kilometer Freight Line connecting King Abdulaziz Port in Dammam with Riyadh passing through Al Ahsa, Abqaiq, Al Kharj, Haradh and Al Tawdhiyah and a 400-kilometer Sub Line connecting industrial, agricultural and military sites with export ports and residential areas.

The Land Bridge extends from Jeddah to Riyadh with a total length of approximately 1000 km of double-track. It also connects with the GCC Railway Network.

Alstom showcases its complete mobility solutions

Alstom is showcasing its complete mobility solutions for urban signaling and services. 

“Alstom has been a reliable partner for the Middle East region since decades,” said Mrs. Thi Mai Tran, managing director of Alstom Gulf. “Alstom’s dedication to the UAE and the Middle East market and to the development of its transport & mobility network which includes Tramways, metro, high speed as well as signaling is confirmed by the number of projects currently in the region. Alstom is looking forward to further re-enforce its commitment to the development of the Middle East mobility sector and economy through participation in the upcoming railway & mobility projects,” added Tran.



The provider of the Dubai Tram and the leader of the ExpoLink consortium for Route 2020 project of the Red Line extension of Dubai Metro have highlighted eight new technologies with the power to transform mobility in the Middle East now – or in the very near future.

Ranging from connected tech to help passengers plan easier, more comfortable journeys, to autonomous last-mile shuttles, next-generation electric buses, and behind-the-scenes management systems to keep the whole transport system running smoothly, each of the innovations is available now to be deployed. When put together, they offer a revolution in smarter, more sustainable mobility for both passengers and operators, and will help rapidly growing cities move and breathe more easily for a better tomorrow.

Among the solutions Alstom will present on its booth, are Alstom’s Urban Integrated solutions; Citadis Range: More than 2,500 Citadis tramway sold in 53 cities; Mastria, the orchestration of all public transport modes from rail to road; Ecodesign: Sustainability in mobility from manufacturing to recycling; Aptis: the premium passenger experience inspired from the tram.


Indian Railways to talk about expansion

Indian Railways, India's national railway system operated by the Ministry of Railways, will talk about $140 billion worth of current and future rail projects that the government is building to upgrade country’s urban transportation network.

Mahesh Kumar Gupta, member engineering - Indian Railway Board, will lead a high-profile delegation of railway officials and experts to share more details about the region’s largest railway network’s expansion plans and future growth prospects, besides outlining a buddle of opportunities that the industry offers in the segments of metro, tram, monorail, long-distance freight and passenger train, and high speed rail.

Gupta, said: “We will highlight some of our achievements, growth prospects and future projections during this two-day event. This kind of events helps in creating awareness about gigantic organizations like Indian Railways, which deals in mega projects such as high speed trains, dedicated freight corridors, electrification, capacity expansion and tech development.”

Indian Railways will also be represented by two of its overseas arms – RITES and IRCON International Limited. While RITES deals in consultancy of transport and infrastructure and export packages of rolling stock, the IRCON is mainly into construction of railway projects.

“These are exciting times for railway industry. There are serious challenges in the road and air transportation sector, hence, the upgradation of the railway infrastructure is the need of the hour. Indian Railways has realized that accumulated backlog investment is the root cause of its inability to improve the market share or quality of services,” said Gupta.

Indian railways aims to concentrate on major investment projects in the areas of dedicated freight corridor, high speed rail, modernization of signaling system, track and rolling stock maintenance with major emphasis on safety. “Our future plan is to focus on electrification, 100% use of LED lights, ETCS level II of signaling and high speed technologies.”

Source- Saudi Gazzette

February 21, 2018

Security Clearance Sought for Road Project

Coastal road project...




With five international consortia among the 17 bidders, which qualified for the 29.2km coastal road project in the city, including China and Italy, the Brihanmumbai Mumbai Corporation (BMC) has written to the Centre for security clearance.

The proposals of 17 bidders will be analysed by a consultant appointed by the civic body.

After the analysis, the financial bids will be opened and the contract will be given to the lowest bidder.

However, if the Union Home Ministry disqualifies any firm, their financial bids will not be opened and will be automatically rejected.

“We have written to the Centre informing about the international firms’ participation and their security clearances,” said Sanjay Mukherjee, additional municipal commissioner, projects.

Talking about the commencement of work, BMC chief Ajoy Mehta said, “The actual construction of the Coastal Road between Marine Drive to Kandivli will begin in May this year, once the tendering process is completed in the next two months.”

The Hajo Ali section of the road. (HT Photo)

“The first phase of Marine Drive to Bandra Worli Sea Link has to be constructed by the BMC, while the construction of the remaining part will be taken care of by MSRDC,” he added.

Meanwhile, the international firms participating in the bid are from China, Italy, Korea, Dutch and Gulf countries.

Amid Sikkim stand off last year, Union Home Ministry had denied security clearance to Chinese consortium China Railway Major Bridge Engineering Group Limited in joint venture (JV) with Gayatri Projects Limited for the construction of Mumbai Trans Harbour Link.

The BMC is currently awaiting reply from the home ministry for its coastal road project.

In the past, Chinese companies have been disqualified by the Union Cabinet Committee on security grounds because of the growing cross border tensions between the two countries.

Chinese companies were also denied security clearance for the construction of Bandra-Worli Sea Link (BWSL).

Ajoy Mehta had ordered the civic officials to finalise the request for proposal (RFP) tender by March 15, 2018.

The coastal road aims to provide connectivity between western suburb and the island city.

The civic body proposed that the work be divided into two parts.

The south phase of the bridge will run from Princess Street flyover till the south end of the Bandra-Worli sea link and the north phase will cover the stretch from the north-end of the sea link to Kandivli.

The coastal road will have eight lanes with two dedicated bus lanes.

The project will require 186 hectares of land to be reclaimed, of which 91 hectares will be developed as green spaces. Stay updated with all the Mumbai Latest News headlines here. For more exclusive & live news updates from all around India, stay connected with NYOOOZ.

October 5, 2017

Road Topping Tender

Brace yourself for more chaos on the roads

Biggest white topping project to date set to begin in second week of October

In tune with the State government's move towards white topping roads, the Bruhat Bengaluru Mahanagara Palike (BBMP) has approved tenders for white topping 29 roads and six major junctions totalling to a length of 93.47 km at a cost of ₹723.71 crore. For motorists, this will be mean smooth roads, but citizens remain sceptical given the deteriorating condition of roads every monsoon.
Work is expected to begin in the second week of October simultaneously on multiple roads, and add to the traffic chaos across the city.
 
“BBMP has set a one-year deadline for completion of works on the 29 roads. We have split the work and given tenders to two firms so that the project starts simultaneously and is finished on time,” said K.T. Nagaraj, Chief Engineer, Projects, BBMP.
All roads will be provided with service ducts on either side for optic fibre cables and power cables. However, sewage and water lines will not be shifted, sources said.
White-topping is an overlay of Portland cement concrete layer over the existing asphalt layer on the road. Chief Minister Siddaramaiah and City Development Minister K.J. George are passionate votaries of the technology. Recently, Mr. Siddaramaiah had said that he would like to see roads in the city to be white-topped.
For now, however, sections on major roads like Outer Ring Road, Mysuru Road, Brigade Road, Hosur Road, Bannerghatta Road, Sarjapur Road and Tumakuru Road will be revamped.
This will be the biggest white-topping project in the city to date.
Bengaluru City Traffic Police, who have given their go-ahead for the works, said that though the project will disrupt traffic in the short run, white topping of roads is better since it provides a pothole-free ride, once completed. “We cannot block the roads. Work will be taken up on one lane while traffic will be allowed on the opposite lane,” said R. Hitendra, Additional Commissioner of Police (Traffic). He added that they would like the BBMP to press more paver machines into action to speed up the process.

September 27, 2017

Mombasa to Nairobi- The Political Road

In another three years, a Kenyan travelling from Mombasa to Nairobi will have at least four major options Kenya has chosen to build a brand new road between Mombasa and Nairobi instead of expanding the existing highway in what will leave consumers spoilt for choice Transport CS James Macharia said the deal had not been signed and that several other companies could be allowed to bid Kenya has chosen to build a brand new road between Mombasa and Nairobi instead of expanding the existing highway in what will leave consumers spoilt for choice.

The Sunday Standard has established that instead of turning the current road into an expressway, the government decided to construct a completely new road to run side by side with the existing one. ALSO READ: Kenya Railways threatens top managers of RVR This means that in another three years, a Kenyan travelling from Mombasa to Nairobi will have at least four major options. One may choose the Standard Gauge Railway (SGR) passenger train that takes about five hours or take a flight and land in the coastal town in an hour. If he wants to travel by road, he will have two roads to pick from. If in a hurry, and would like to drive at speeds of 120 kilometers per hour, he will take the expressway whose contract was handed to an American firm, Bechtel, three days to the General Election in a deal described as a ‘thank you gift’ to the Americans.

This will not just be the most comfortable drive given how smooth the road would be, it will just take him three and-a-half hours. But this will not be without a cost. He will have to part with some unspecified amount of money in toll fees to enjoy the road. If he does not want to pay or is not in a hurry, he will still have the current road at his disposal, which will be available but only for smaller vehicles. The current road will also have been downgraded to stop trucks and big buses from using it. Shelved proposal It will also mean that the government will buy land afresh, in a similar fashion as it did before it build the SGR, in what could provide land cartels with another round of minting millions from government projects. The initial proposal, which was shelved in favour of the current deal, involved expansion of the existing highway to four lanes between the Machakos Turnoff to Mariakani.  ALSO READ: Kenya Railways threatens top managers of RVR It has also emerged that the contractor building the controversial expressway will be allowed to ‘sell’ it to another private contractor, who will charge users toll fees to recoup the billions sunk in the project.

“Under the Exim Bank financing model, the government has the opportunity to privatise or securitise the individual sections of the expressway that could reduce the total borrowing requirements,” Engineer Peter Mundinia, the director general of the Kenya National Highways Authority (Kenha) said in a statement. The authority, however, refused to comment on the cost of the project. A source familiar with the project says the government will pass the road to private investors, who have the experience to monetise the road. “Private investors will buy the road and charge toll fees in line with the initial Public Private Partnership (PPP) model after it is constructed.

This must not wait until it is fully built but it can start with the sections as they get completed,” a source said in an interview. This will make the multi-billion road the first ‘private road’ in the region. Kenha has contradicted the Ministry of Transport which had denied claims that the contract had been signed. In a press release this week, Kenha said the commercial contract for the project was signed on August 5. Reacting to an earlier story by the Standard, Transport CS James Macharia said the deal had not been signed and that several other companies could be allowed to bid. ALSO READ: Kenya’s Sh300b ‘thank you gift’ road project to US sparks tender wars But Kenha, which handed the project to the American firm without a competitive process, says the development is under its mandate. Available estimates show that the project will cost about Sh300 billion, before the cost of buying the land is factored in.

Kenha says its economic projections show that there is an infrastructural symbiotic relationship between the SGR and the new road as it offers connectivity for people, business and communities along the road. “Once completed, the expressway will play a critical role in improving Kenya’s transportation logistics and trade competitiveness while supporting the spatial and industrial development along the corridor,” Mundinia said. Kenha has defended the decision to opt for the construction of a new road on grounds that it is distinct from the PPP alternative given that it offers a new alignment designed as a high speed six-lane expressway of higher capacity and safety standards.

“The expressway project will include highway capacity through construction of the greater Nairobi-Southern Bypass which has been planned for several years, thereby contributing to decongestion of the fast-growing Nairobi Metropolitan Area,” Mundinia said. But as details of the deal become available, it is emerging that the mega project has stark similarities to the SGR contract handed to a Chinese company in the run-up to the 2013 General Election. Both the contracts of the SGR and the expressway project were signed shortly before the elections. The firms constructing them are the ones tasked with determining the costs of the projects. Worse, both have been single-sourced and were entered in the cover of government-to-government contracts, in deals that reduce the level of public disclosure and scrutiny that open tenders go through. The biggest concern for sources familiar with government financing is that both of these projects are now going to be financed largely from borrowing at a time when the government is exhausting its headroom to stock up any additional debt.

Kenya Railways set to operate old line It has emerged that top officials of the PPP directorate were caught unawares after the government made an about turn on the project and decided to build a new road instead. A working paper from insiders at the Treasury and the Ministry of Transport seen by this paper raised sharp questions on why the project had to be announced in a rush, three days before the elections, and why it was not competitively done. The deal has also brought back the American government on the front row seat of firms that have bagged big infrastructure projects after being elbowed out by Chinese companies.

A brief by the State Department of Infrastructure as it sought concurrence to proceed with the project says Kenya will borrow funds from American lenders (US Exim Bank and OPIC) and then sign an Engineering, Procurement and Construction (EPC) contract to build the road on a single source basis. The brief queries why a previous model financed by the World Bank was abandoned and how it was determined that the single sourcing approach would offer taxpayers better value for money and would be faster than a PPP.  “Although the proposal is being referred to as ‘alternative project concept’ or ‘highway development concept,’ it is simply a non-competitive, single source procurement of an EPC contractor who is able to bring financing with it,” the brief notes. Engineer George Kiiru, the head of PPP at Kenha, told the Sunday Standard that the government changed its focus from a PPP to EPC because it will be delivered faster as compared to PPP. Shorter period


 “Achieving commercial and financial close for PPP contracts can take two to three years thereby delaying the start of construction and completion of the project,” Kiiru said. “A comparative analysis between a PPP model for a 20-30 year concession shows cumulative repayments under the PPP approach would be higher compared to the alternative approach with ECA (US Exim/OPIC) support,” Kiiru said. The brief from the State Department of Infrastructure, however, intimates that there is no reason to suggest that the construction will take longer under the PPP arrangement. “Indeed, there are strong arguments that overall construction period may be shorter under the PPP project as it splits construction between three different EPC contractors. In any event, the constraining factor is always likely to be land acquisition, so it would be a mistake to assume that the Betchel proposal can deliver construction completion more quickly,” the brief notes.   Kenha says the government is yet to determine the exact cost of the project and is waiting for a complete detailed design, which is yet to be undertaken, before it can determine the actual cost. Kenha also refused to give a cost range that the project is expected to fall in on grounds that it did not want to speculate despite the fact that costs are the first considerations in deciding if a project is viable or not. Costs per kilometre “This project is a government to government initiative. The US Government nominated Betchel International to work with the implementing Agencies in Kenya to develop the project,” Kiiru said. In 2015, Kenha says, the governments of Kenya and the US signed a memorandum of understanding for development of priority infrastructure projects supporting Kenya’s Vision 2030. Kenya later held discussions with the US government for development of the highway. The US, through the US Exim Bank, has provided a letter of support to Betchel for the Nairobi–Mombasa Expressway under a proposed government to government agreement.

“The US Exim Bank has shown interest to finance the project together with other US Export Credit Agencies such as the Overseas Private Investment Corporation (OPIC),” Kenha said in its response. The brief says Betchel’s construction costs per kilometer are higher than estimates presented to the ministry by PricewaterhouseCoopers (PwC) on construction costs for the PPP approach of Sh600 million per kilometre versus Sh500 million per kilometre ($6 million Vs $5 million). “The per kilometre costs under the PPP proposal includes all taxes and duties while Betchel’s proposal assumes complete tax exemption for the project (corporate tax, income tax and import duties) which could reasonably be assumed to cost the government an additional Sh100 million per kilometre,” the brief notes. It goes on to argue that as part of the American firm’s proposal, an advance payment of Sh30 billion and also a payment of Sh10 billion as ‘establishment fee’ will be required. “So Betchel will be Sh40 billion in funds and highly cash positive before the start of the project whereby the government will be paying interest on this sum from day one as this will be drawn immediately by Betchel at contract signing,” the brief notes. There is also a further Sh6 billion of design management fees. The proposal from the American firm excluded all relevant taxes.

Read more at: https://www.standardmedia.co.ke/article/2001255435/billion-shilling-u-turn-that-will-cruise-you-to-coast-in-three-hours

October 10, 2016

TOT or Advance Selling of Human Traffic Loads ?

The National Highways Authority of India (NHAI) is preparing to start the process of monetizing toll-based operational road assets under the toll, operate and transfer (TOT) model, aimed to bring new investments to the highways sector.

“We have not as yet floated tenders to monetize road assets, but are preparing to do so. We expect to begin doing this in 2-3 months’ time under the TOT model,” NHAI chairman Raghav Chandra said in an email response to queries from Mint.

This will be India’s first exercise in auctioning NHAI’s operational projects after a cabinet clearance in August. The proceeds will fund new highway projects under various models.

NHAI is currently working on the guidelines for TOT, under which the investor will collect tolls and be responsible for operation and maintenance of the project. The TOT model will be essential to attract long-term foreign investment, financial investors and investment bankers told Mint.

NHAI can lease up to 75 national highway projects which are fetching tolls for at least two years to various entities on the TOT model. The overall annual toll collected from these projects is about Rs2,700 crore, against which NHAI can expect to raise Rs25,000-30,000 crore by granting 30-year concessions, said Ashish Agarwal, director (infrastructure) at investment bank Equirus Capital.

The TOT model is long overdue, said Gautam Bhandari, partner at I Squared Capital, a US-based investor in road projects. “We are hopeful that NHAI finally does launch its TOT programme so that it can serve as a model for other sectors as well. As a global investor, we believe that NHAI’s TOT model, if executed properly, could be a win-win for everyone. Proceeds from TOT auctions will free up valuable taxpayer capital that can then be recycled for much-needed new infrastructure projects,” he said.

I Squared is looking to invest as much as $1 billion in Indian infrastructure. It has invested more than Rs1,000 crore through its investment platform Cube Highways and Infrastructure Pte. Ltd in three road projects so far.

IDFC Alternatives, which has bought controlling stakes in operational road projects, is waiting to see the fine print. “The good part is that in the TOT model, there are far less variables and concerns to be addressed as compared to projects with embedded construction risks. The differences in the bids here would be more a function of how differently each investor views the traffic growth rates, maintenance costs, synergies with other projects in one’s portfolio, if any,” said Aditya Aggarwal, partner (infrastructure), IDFC Alternatives.

There is significant interest from international infrastructure funds in the Indian road sector, said Rahul Mody, managing director, Ambit Corporate Finance Pvt. Ltd. “The TOT model is an excellent idea. The model takes away two key risks in the road sector—delays or cost overruns and initial traffic discovery—as the assets that will be offered under this (model) will be operational with some tolling history; hence it should attract considerable interest from Indian companies as well as foreign investors,” Mody said.

“The model can be an avenue for NHAI to raise upfront capital to fund the EPC and HAM projects; opportunity to feed the increasing number of pension funds and infrastructure investors having access to low cost capital and further deepen the infrastructure market; and allowing players to choose better the nature of risk-reward play they want to play in the road sector,” Agarwal said.

Source- LiveMint

October 8, 2015

Nigeria Missed the Bus Again - This time Not Crude But Bitumen

Iriele is a small community situated in Ondo State and the indigenes have high demands for development. Over the years, they have dreamt of the day when bitumen would be exploited, creating job opportunities, infrastructure and economic prosperity. The people of this town consider bitumen as a God endowed heritage which should be harnessed immediately to create jobs, deliver infrastructure and reduce the hardship they face daily. 

Those dreams have not become reality up till now, denting their hopes and leaving them frustrated as the indigenes of these towns wait endlessly for the government to attract the needed investment.

In the light of the foregoing, is the wider debate about Nigeria’s rich mineral reserve and the failure of the government to properly utilise the wealth of the nation to the betterment of lives of the citizenry. This belief is voiced by majority of the ordinary people in this bitumen bearing community including border communities like Agbabu and Ilubirin.

Nigeria is the sixth largest bitumen deposit in the world with most of the reserve found in Ondo State. However, there’s a wider debate about Nigeria’s rich mineral reserves and the failure of the government to properly utilize the wealth of the nation to the betterment of lives of the citizenry.

This belief is voiced by majority of the ordinary people in this bitumen bearing community including border communities like Agbabu and lIubirin. They have argued that since 

Nigeria’s crude might no longer generate sufficient revenue to run the nation’s economy, there should be an alternative to fall back on. In the perspective of these pro-bitumen agitators, bitumen is a guaranteed option as Nigeria re-defines its roadmap to economic recovery.

A lawmaker representing the Irele-Agbabu State Constituency in Ondo State House of Assembly, and one of the key proponents of bitumen Honourable Afolabi Iwalewa, thinks that the wobbly situation of Nigeria’s oil is a wakeup call for the exploitation of bitumen:

“ Any moment from now, crude oil will fade off. Look at what is happening now with the talk of oil theft. Every state is crying now, even the Federal Government is crying that it is not getting what it used to get from oil. What is the Federal Government doing, and why can’t we find another alternative? If crude oil is not going to fetch us what we project (in terms of revenue), why can’t we switch over to bitumen?”

Another standpoint of Honourable Iwalewa’s pro-bitumen advocacy is that the non-exploitation of the resource is causing people in these communities a lot of trouble because they have to cope with the reality of spill ravaging precious farmlands where bitumen is found so close to the surface that a simple shovel can excavate the glossy black substance.

Bitumen is found in tar sands, which is also a combination of clay, sand and water. A heavy black viscous substance, oil-rich bitumen is extracted from tar sands, which is then refined into oil. The bitumen in tar sands cannot be pumped from the ground in its natural state; instead tar sand deposits are mined, usually using strip mining or open pit techniques, or the oil is extracted by underground heating with additional upgrading.

In essence, it involves a complex process that will certainly disrupt their lives and livelihoods beyond what they can imagine. This is what the people of the bitumen bearing communities in Ondo State are calling for when they appeal for the exploitation of the resource in their soil.

Taking a closer look at the experience of Canada, the biggest producer of tar sands globally, shows that exploitation has actually resulted in serious damage to the local communities and the environment. The clearing of vast area which is a component of the mining process is responsible for the Canadian moon-landscape we see in Alberta, Canada, where large forest with pristine trees that sprawled across its landscape now looks more like a waste land ravaged by the exploration of bitumen.

In spite of all of the warnings pointing at the dangers of venturing into tar sands exploitation, especially the apparent impacts of livelihoods of ordinary people due to the far reaching implications for the environment, including the lands and water bodies, the people in the bitumen bearing communities have inclined to brush these opinions aside.

Olofun of lrele, Oba Olarenwajulebi, the octogenarian traditional ruler of the Irele community, for instance, criticizes talk of possible environmental hazards if bitumen were to be extracted in the area. He brags about of what his realm would look like if development were to prevail, using bitumen as the tool.

“If development were to succeed the way the people of this area want it, this town would have looked like Lagos. I say so because bitumen will provide a lot of employment for all the youths in this area, not in Irele alone, but all over the Southern senatorial district and even in the whole of Ondo State. The bitumen deposit here is a very huge one. It is the second largest in the world, according to the survey conducted by some experts,” he enthused.
And on the Canadian experience he explained: 

“In Canada, they do it in Calgary, and I have been there. They don’t drive away communities, and they replenish the soil. Where they mine the bitumen, they mix the soil with some chemicals, and restore it for the farmers to go back there and farm. And when those people were working here, I talked to them and they told me that even if they have to relocate some communities, they will have to build some fine buildings for them, and that the exploitation won’t affect much of their lands. It is something that they will dig from the ground; and it won’t affect us adversely.”

There’s no doubt that the allure of jobs, development and the improvement they envisage that bitumen development would give to their communities has strengthened their resolve to continue campaigning for the exploration of their God-given wealth. Any attempt to make the pro-bitumen agitators to consider the consequences is usually met with cold shoulders.

However, a geologist at the Federal University of Technology, Akure, Ondo State, Professor Peter Odeyemi offered a much more balanced picture of the realities on the ground. Odeyemi, who was a member of the defunct Federal Government’s Bitumen Implementation Committee (BIC) made a poignant observation when he noted that the mere presence of a resource does not necessarily translate into commercially viable deposits.


“The first thing is that how much is there? We don’t know! We need to carry out further work in that area in the first instance. Secondly, exploration can be carried out by an oil company because bitumen is a hydro-carbon but also there are difficulties (technical difficulties). If an oil company is going to carry out an exploration there, there is an interest, financial one. This company will calculate how much it’s going to get. It will also look at certain technical issues and the ease of exploitation. This is so because although both of them are hydro-carbon, one is easier to exploit than the other.

Also,how will you exploit without exposing the soil to direct rain fall impact, denudation, erosion and degradation. So they have generation of enlightened professors and everything. The place is highly enlightened and the environmental issues are potent here like in Europe. If you look at the Niger Delta, the people just welcomed oil companies with open hands not knowing that oil companies are devils. They are only interested in profits. They are not in any way interested in environmental sustainability, in flora, in fauna and even in the development of the people,” he said.

He continued: “Our problem is not bitumen; our problem is corruption. What do we do with the money we have been getting from oil? The one we are exploiting, what are we doing with it? The people are getting poorer; there is no electricity, water, healthcare, and education. This is despite the fact that we are making trillions of dollars. So, if we now exploit bitumen and add another trillion, we are just going to multiply the corruption,” Odeyemi concluded.

There is no doubt that the exploration of bitumen will have a heavy toll on the environment of Iriele, and neighboring Agbabu and IIlubirin Communities in Ondo State. Water will be polluted, farmlands destroyed, large expanse of forest will be brought down and communities destroyed. Is this kind if cost these communities are willing to pay or are their alternative development paths that communities can take that will have more sustainable economic impact? As the federal government plans to diversify the economy, and explore mining of solid minerals as an alternative, there’s no gainsaying that the environment must be protected even as the nation seeks improved economic fortune.


Inwerogu wrote from Lagos

September 23, 2015

Process and Save OilSands

Plans For Bitumen Refinery Ramp Up

Keynote speaker Frank McKenna at Bitumen Conference in Sarnia May, 2013Keynote speaker Frank McKenna at Bitumen Conference in Sarnia May, 2013
The Chairman of the Sarnia-based Bowman Centre is convinced that in 2016, possibly sooner, a commercial partner will be announced for the ambitious $10-billion SABER project.
The Sarnia-Lambton Advanced Bitumen Energy Refinery would process heavy crude from the Alberta Oil Sands and has been described as a potential game-changer for the economy.
The Bowman Centre, located at the Western Research Park, says 30 local organizations have recently committed over $100,000 to take the project to a new level.
Clem Bowman says a commerical proponent is needed to update marketing, logistics and margin analysis reflecting current crude oil prices.
He says with Prime Minister Harper’s indication of support in principle, they can proceed with or without the support of the provincial government.
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A group of former Chemical Valley executives launched the project saying Canada is losing $2.5-billion a year by exporting, rather than processing oil sands bitumen at home.
They say there is an existing pipeline from Alberta to Sarnia, access to international markets and serviced industrial land available.
There is also a commitment to build a leading edge plant in terms of energy and greenhouse gas efficiency.
(With files from Josh Boyce)