Like a winding way, the Lagos-Ibadan Expressway presents twists and turns. Another development has further complicated the ongoing reconstruction of the Lagos-Ibadan Expressway and reinforced earlier complications. In the news is a new concession claim that is surprising and thought-provoking.
An October 22 report said: “The Ministry of Works has said that the contractor handling Section II of the Lagos-Ibadan Expressway reconstruction and expansion project, Reynolds Construction Company, RCC, was facing challenges of finance, adverse weather and impatience of motorists. Mr. Nelson Olubakinde, the representative of the Ministry, told newsmen in Ibadan: “The construction company (RCC) is facing challenges of finance, weather, especially rain, and impatience on the part of road users often resulting in accidents within work location.”
The report also said: “Olubakinde, however, said that the construction effort was under Public Private Partnership, PPP, arrangement with Motorway Assets Limited as leasee, while the ministry was the guarantor.”
The confusion was compounded by a November 11 report which said: “Oyinloye was quoted in a newspaper report on November 4 as saying: “Motorways Assets Limited has been given consideration for the project. The Infrastructure Concession Regulatory Commission has to give the concession certificate, while the lenders and investors have to ensure that all the details are properly worked out. We have now got all the relevant approvals.” Mr. Adekunle Oyinloye is Managing Director of the Infrastructure Bank Plc.
The question is: How did MAL get into the picture? It is noteworthy that the Lagos-Ibadan Expressway has moved from controversy to controversy, especially following the Goodluck Jonathan administration’s 2012 termination of a concession agreement with Bi-Courtney Highways Services Limited (BCHSL), which was supposed to reconstruct and manage the toll road. The past government alleged that the company failed to make progress on actualising the objective of the concession four years after the agreement signed with a preceding administration.
The 127.6-km-long Lagos-Ibadan Expressway dates back to 1978. Apart from connecting Ibadan, the capital of Oyo State, and Lagos State, Nigeria’s economic capital, the road is the busiest inter-state road, and it is a main link to the northern, southern and eastern regions of the country.
According to Bi-Courtney, “We are in court because the alleged cancellation of the concession did not follow due process. Apart from that, the so-called contract involving the two new companies handling the project was awarded arbitrarily without a bidding process.” The company said: “BCHSL won the concession to reconstruct and manage the toll road for 25 years. It’s a Design, Build, Operate and Transfer (DBOT) arrangement. According to the concession agreement, the road will be expanded to 10 lanes from Lagos to Sagamu and six lanes from Sagamu to Ibadan. Because of this expansion, structures that fall within 60.35 metres from the median on both sides of the road will be demolished, and government will compensate owners of the affected properties.”
The company proudly argued that it rebuilt the Murtala Muhammed Airport (MMA2) in Lagos “against all odds”. “It is the first airport in Africa to be owned by a private company on a Build, Operate and Transfer (BOT) basis, the first of its kind in Nigeria, and it was delivered far ahead of schedule,” Bi-Courtney said.
The company’s response to the allegation of non-performance blamed work delay on the Jonathan administration. In the period of three years and six months that the company had the concession, it was slowed down for two years and 10 months. According to the company, the design process which was expected to be completed within four months took 18 months as a result of bureaucratic bottlenecks at the Ministry of Works. The Infrastructure Concession Regulatory Commission (ICRC) corroborated Bi-Courtney’s position.
From the look of things, the announced cancellation of the concession by the Ministry of Works on November 19, 2012, was the culmination of a chain of unprogressive manoeuvres resulting from behind-the-scenes influence. While the delay lasted, Bi-Courtney said, “We were advised by the ministry not to do any serious works on the road other than palliatives”. Before the concession was terminated, the company claimed it “had completed the patching and overlaying of bad portions of the highway, preparatory to full-scale reconstruction”.
It is interesting to note the new language describing MAL as “leasee” and the reference to Public Private Partnership (PPP). The old understanding was that the contract involving Julius Berger Nigeria Plc and Reynolds Construction Company Limited is not a concession unlike Bi-Courtney’s, with the implication that the federal government is expected to fund the road rehabilitation and operate the toll road. With MAL in the picture now, has the picture changed?
Of course, it is open to debate whether adopting the concession model for the rehabilitation of the expressway promises greater socio-economic benefits than the old way of doing things. However, the attraction of the Public-Private-Partnership (PPP) approach, which the concession concept represents, cannot be reasonably discounted in a modern economy, considering reported examples in Western Europe and the U.S. where private investors are involved in infrastructure development based on concession agreements.
The PPP appeal is highlighted by a recent report: “Contractors handling over 184 federal road projects have abandoned the various sites due to lack of funding from the Federal Government and the huge debt owed them by the Federal Ministry of Works.” The Lagos-Ibadan dual carriageway was listed among the roads affected by the funding problem. According to the report, “The contractors said they were owed over N600bn, adding that although part of the sum was owed by state and local governments, over 80 per cent of the amount was owed by the Federal Government.”
This kind of abandonment seems less likely under a concession arrangement that requires the concessionaire to raise funds for the concerned project, rather than wait for government funding that may make a mess of the project, particularly in the context of dwindling government revenue.
Against this background, the appointment of ex-Lagos State governor Babatunde Fashola as Minister of Power, Works and Housing, may prove to be a clarifying factor concerning the Lagos-Ibadan Expressway. He has a track record of progressive performance. Fashola was quoted as saying: “Let us design and build roads that last and houses that will stand the test of time. We want to know if some of those problems are man-made or systemic…We want information on what has been done, what remained to be done, and what are the future plans, we want to continue from there.”
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