… Says It Is Buying Back Rights From Tinubu, Other Investors For N15B
SAN
FRANCISCO, August 28, (THEWILL) – The Lagos State Government Wednesday
disputed news reports suggesting that it has cancelled the concession
agreement it entered with the Lekki Concession Company Ltd, a special
purpose vehicle representing investors, to design, build, operate and
transfer the Eti Osa-Lekki highway for a 30-year period.
The
controversial N50 billion naira agreement, which many stakeholders have
described as fraudulently engineered to particularly line the pockets of
the leader of the defunct Action Congress of Nigeria (ACN) and former
governor of the state, Asiwaju Bola Tinubu, was signed in 2006 but
became effective in 2008.
Stakeholders and the opposition in the
state had particularly complained about the N50 billion naira price tag
for the 50 kilometer road. The deal had priced 1 kilometer of the road
for N1 billion naira.
Lagos State Commissioner for Budget and
Economic Planning, Mr. Ben Akabueze, who led a team of the State
Executive Council to the House of Assembly Tuesday to present a request
for approval of supplementary budget told assemblymen that “the
principal basis for the supplementation of 2013 budget was due to the
decision to acquire the 100 per cent concession of the Eti-Osa-Lekki-Epe
expressway and have it entirely under the control of the state
government.”
Also commenting on the development, the Commissioner
for Finance, Mr. Ayo Gbeleyi, explained that the state government will
hand the concessionaire N15 billion naira to take the highway back from
Tinubu and other investors.
He added that N6.8 billion will be
expended on servicing existing debt obligations of LCC while N3.5
billion will be used to sort third party liabilities.
The
commissioner also stated that N32 billion naira has so far been expended
on the highway, with Lagos contributing N5 billion in 2008 when the
deal took effect.
A statement emailed to THEWILL by the Lagos State Government on Wednesday explained the government’s decision to buy out LCC.
See statement below:
“LAGOS STATE GOVERNMENT BUYS BACK LCC’S CONCESSION RIGHTS IN ETI-OSA LEKKI-EPE EXPRESSWAY
The
Lagos State Government wishes to state clearly that it has neither
terminated nor cancelled the Concession Agreement it entered into with
the Lekki Concession Company Limited (LCC) to reconstruct and expand the
49.36 km Eti-Osa Lekki-Epe Expressway.
To set the records
straight, Lagos State Government is engaged in buying back the rights
pertaining to the concession ahead of the 30-year period stipulated in
the Design, Build, Operate and Transfer (DBOT) Concession Agreement.
This is to be achieved by purchasing all the shares in LCC.
The
State Government came to this decision to buy back the rights in the
light of several developments clearly not envisaged in the 2006
Concession Agreement (which became effective in 2008) a few of which are
highlighted below.
• The project, given its pioneering nature,
had some underlying assumptions and market indicators under which the
transaction was concluded which have since drastically changed in a
manner that it can no longer be sustained in its current form. Such
include the devaluation of the Naira and costs of construction.
•
The LCC, which is the special purpose vehicle representing the
investors, formally brought it to the attention of the State Government
that given the rapid rise in interest rates on local loans, and other
cost parameters, it is compelled to raise tolls currently being charged
at Toll Plaza One from N120.00 to N144.00 per Car.
• The
Concessionaire also brought it to the attention of the State Government,
that as provided for under the agreement, tolling would have to
commence at Toll Plaza Two.
• In addition, the Concessionaire
indicated that unless it realised more income from increased rates at
Toll Plaza One and commence tolling at the same rate per Car at Toll
Plaza Two, it would not be able to meet its commitments to investors in
the project and continue to fund completion of the remaining sections of
the road.
• Furthermore, the LCC stated that Toll Plaza Three,
as contained in the Agreement, must be built and tolls collected for the
continued viability of the project.
Under such circumstances,
the Lagos State Government felt obliged to buy out the interests of the
Concessionaire in advance of the hand-over date of 2038 under a mutual
settlement option also expressly provided for in the Concession
Agreement. This is after due consultation with all major stakeholders
including the Lagos State House of Assembly based on various feedback
and agitation made to the Government.
Contrary to the misleading
reports by some sections of the media on Wednesday, August 27, 2013 from
the State House of Assembly’s consideration and approval of the 2013
Supplementary Budget, the buy-back is not and does not amount to a
“termination” or “cancellation” of the concession of Eti-Osa, Lekki-Epe
Expressway.
The significance of the buy-back, for which the State
Government deserves commendation, is that it allows the Government to
take full control over the determination of the toll rates in order to
continue to make it affordable for road users. The LCC shall therefore
continue to operate as a fully commercial entity for the benefit of
taxpayers and the larger society.
More importantly, it would also
preserve the ability of the Government to complete and deliver the
infrastructure by direct budget funding, which was also one of the
reasons for the presentation of the Year 2013 Budget Re-Ordering to the
State House of Assembly.
In addition LASG wishes to reaffirm its
unflinching commitment to the adoption of PPP Model as a complementary
policy thrust for the acceleration of infrastructure delivery towards
improving the living standards of the populace. Lagos remains an
investor friendly State that shall continue to ensure the sanctity of
contracts, as in this case, in sustaining investors’ confidence in its
investment climate as a preferred destination.
The general public
is therefore enjoined to continue to cooperate with LCC’s officials and
operatives as it continues the expansion and construction works on the
49.36km Eti-Osa Lekki-Epe Expressway and the operations of the toll
collection systems. LASG wishes you a safe and happy motoring experience
on the modernised expressway with its associated free value added
services such as 24/7 security patrol, vehicle break down recovery,
ambulance services, amongst others.
Eko oni baje O!
Ayo Gbeleyi Ade Ipaye
Honourable Commissioner for Finance Honourable Attorney-General & Commissioner for Justice
