In a dramatic turn of event, the Lagos State government is buying back the concession rights it granted Lekki Concession Company (LCC) to reconstruct the popular Lekki-Epe Expressway.

The concession right which would have seen LCC reconstructing the road towards Epe, with three different tolling points, had been a subject of controversy from the beginning – trailed by agitations and mass protests by the residents of the Lekki corridor, backed by civil rights groups.

The concession agreement, which underpins the “Lagos Infrastructure Project”, was to involve upgrading and creating new road infrastructure along the first 49.4km of the Lekki-Epe Expressway (Phase I). Additional private sector finance was also to be deployed towards developing the first 20km of the coastal road with an option to do the Southern Bypass as well (Phase II).

In keeping with the globally established BOT model of infrastructure delivery, the concessionaire was to operate and maintain the road for the full 30-year term of the concession, and then hand over the assets to Lagos State in good condition at the end of the concession term.

In this way, Lagos State was to enjoy new world class infrastructure as a direct consequence of the agreement and users of the road would positively experience the service-based approach that was to be adopted by the concessionaire to deliver certain benefits to the people.

The benefits were to include convenience – traffic decongestion, easier access to and from the Lekki-Epe corridor, breakdown and recovery assistance, ambulance service, and customer call centre.

Other were shorter journey times, reduced wear and tear on motor vehicles, reduced fuel consumption by road users, security – law enforcement, better street lighting, reduced risk of “go slow robbery among others.

Although there was official explanation on why the state government is buying back the concession rights, BusinessDay, however gathered that it may not be unconnected with the difficulty of sourcing funds to prosecute by LCC.

There have been complaints in several quarters over the decision of concessionaire to start collecting tolls on the road when the construction is still ongoing. Many watchers of events in the state had argued that tolling amounted to collecting monies from the citizens to build road as against sourcing funding elsewhere and completing the road before commencement of tolling.

Governor Babatunde Fashola in a letter dated August 19, 2013 sent to Adeyemi Ikuforiji, the Speaker of the state House of Assembly, seeking to amend the 2013 budget size of N499.105 billion to accommodate additional N7.5 billion. This will increase the budget to N507.105 billion, in what is intended to fund the buying back of the concession rights.

Fashola said in the letter, that “the proposal for further amendment is largely predicated on the need to fund the acquisition of existing concession rights and toll revenue benefits held by the Lekki Concession Company, the concessionaire for the Eti-Osa-Lekki-Epe expressway. This will effectively accelerate the transfer of ownership of the road to the state, leaving the state with wider policy options with regards to that important road infrastructure.”

In order to address these issues, we have proposed a two-prong approach; namely, re-ordering some expenditure provisions and also direct supplementation of the year 2013 budget. These will entail an increase in the overall budget size by N7.5 billion. This is against the a background of a projected shortfall of N22.5 billion in budgeted internally generated revenues (IGR) which now needs to be covered by additional borrowings,” the governor said.

Fashola stating further in the letter which was read on the floor of the House on Tuesday, said “we also need to restructure our borrowing plan as the N30 billion World Bank DPO II will no longer materialize in 2013. In effect, we will need to issue bonds totaling N87.5 billion this year, instead of the N35 billion originally envisaged, in order to cover the shortfall in the IGR and the delay in disbursement of DPO II, so as to be able to finance the acquisition of the concession rights and take control of the toll regime for the benefit of our citizens.

The re-ordering and direct supplementation being proposed have brought the budget size to N507.105 billion from N499.605 billion and the capital/recurrent ratio to 58/42 as against 54/46 in the approved budget,” Fashola said. BusinessDay recalls that the 2013 budget earlier passed by the House was assented to by Governor Fashola on January 2, 203.

Meeanwhile, in a swift action, the House of Assembly has approved the governor’s proposal to acquire the existing 5v 6 concession rights and toll revenue benefits held by the LCC and the supplementary budget proposal read on the floor by the Clerk of the House, Ganiyu Abiru.

Source: http://www.magazine.believersboard.com/lagos-buys-back-concensioned-lekki-epe-expressway/

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