Govt to concession road
Motorists will continue to face hardship on the ever-busy Lagos-Ibadan Expressway – no thanks to a cash crunch that is threatening the Federal Government’s plan to rebuild the road.
The Federal Government is considering a fresh concession to investors to make the N167billion project a reality.
In the proposed Public-Private Partnership (PPP), the government will collaborate with investors, the Infrastructure Bank, Julius Berger Plc and Reynolds Construction Company Limited(RCC).
About N23million has been voted in the 2014 Budget for the hiring of consultants on the PPP scheme.
The government has also allocated N5billion to the rehabilitation of the Lagos-Sagamu-Ibadan dual carriageway (Section 1) to make for the challenge it is facing on the reconstruction of the expressway.
The recourse to concession is being kept under wraps by the government in what a source described as a back-door approach.
The Federal Government, in November 2012, terminated the 25-year concession given to Dr. Wale Babalakin’s Bi-Courtney Limited for the construction and maintenance of the 105-kilometre Expressway.
The expressway was concessioned to Bi-Courtney in 2009 at N89.53 billion for 25 years.
Minister of Works Mike Onolememen said the agreement was revoked due to Bi-Courtney’s failure to adhere to its terms.
In June last year, the Federal Government re-awarded the reconstruction of the expressway to Julius Berger Plc and RCC.
Last July, President Goodluck Jonathan launched the reconstruction at N167billion with a completion timeline of 48 months.
But barely six months after the launch, the project has run into a hitch.
Neither the Federal Government nor the construction firms can source funds to execute the project.
A source, who spoke with our correspondent, said: “The government has no money to implement the project.
“There are so many competing demands for the government. And the construction firms, who has been re-awarded the project, cannot finance it without necessary legal backing granting the concession to them.
“The firms are also unprepared to take the risk to bear the cost without partnership or understanding with the government on how to recoup their investment.
“When the government re-awarded the contract to the two construction giants, it gave the impression that it would finance it wholesale.
“Even if the government now concedes the project to Julius Berger Plc and RCC, it would amount to a violation of the PPP law because there are laid down procedures.
“For instance, the project ought to be advertised for competitive bidding by the Infrastructure Concession Regulatory Commission (ICRC).
“So, the PPP for Lagos-Ibadan Expressway would have become legally flawed from the beginning.
“You can see that what the government should do first is what it is now doing. I think politics crept into the project and the government could not do its homework properly.”
Section 2.1 of the Nigerian Public-Private Partnerships Manual reads: “The project is usually initiated by a Ministry, Department, and/or Agency (MDA) of the government. In select cases, the project could be initiated by the private sector as an Unsolicited Proposal under a transparent, competitive process which will also be managed by a MDA.
“The first step for the MDA is to develop a project concept to be approved by the National Planning Commission (for projects of the Federal Government) or other relevant state authorities.
“The project concept will usually be based on a Pre-Feasibility study or Outline Business Case, and if it is approved, will allow the project to be included in the 15-year Master Plan (or National Implementation Plan for the Federal Government) which sets out the Government’s infrastructure investment strategy covering all forms of procurement, including projects that will be financed in whole or in part from the federal budget.”
It was learnt that the Federal Government was contemplating reaching out to the ICRC Governing Board for a “bail out”.
The board, which is headed by former Senate President Ken Nnamani, may receive the concession proposal this month.
Other members of the board are the Secretary to the Government of the Federation, Senator Anyim Pius Anyim; the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala; the Minister of Justice, Mr. Mohammed Bello Adoke(SAN); the Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi; Yabawa Lawan Wabi; Abdullahi Musa Elayo; Comfort Saro-Wiwa; Chief A.U. Kanu; Mrs. Janet F. Adeyemi; and Mr. Aminu Diko.
A member of the ICRC board, who spoke in confidence, said: “The government is proposing to go back to the concession alternative to enable it get investors to execute the project.
“This is the case because of cash flow. The resources are not there due to competing needs.
“The concession will involve a sort of PPP with the participation of Julius Berger, RCC, investors, the Infrastructure Bank and the government.
“There is a challenge however , we may need to waive procedures to make the project a reality. Yet, many people have reservations about this back-door approach.
“Yet, no investor will buy into a back-door method. If care is not taken, we may return to the same spot on the project.”
Responding to a question, the source added: “The President meant well and as a Governing Board, we will assist him to achieve his goal.”
A top source at the Federal Ministry of Works drew our attention to the provision for the wxpressway in the 2014 Budget.
He was not willing to entertain any question on the project.
A part of the budget reads:
•Rehabilitation and Asphalt overlay of Benin-Shagamu Expressway (Benin-Ofosu) N500 million
•Rehabilitation of Lagos-Shagamu-Ibadan dual carriageway section 1 N5 billion
•Reconstruction of the outstanding section of Benin-Ofosu-Ore-Ajebandele-Shagamu Expressway phase III N750 million
•Rehabilitation of Shagamu-Ajebandele-Ore road section 1 Ajebandele-Ofosu road in Ondo state N78,153,148
•Lagos-Ibadan concession project management/consultancy services N23 million
