Lekki road concession: We’re only buying back the rights –LASG

[Mirror]

...'LCC rakes N30m daily from toll' The Lagos State government yesterday said it has not terminated the concession agreement with the Lekki Concession Company Limited, LCC, to reconstruct and expand the 49.36km Eti-Osa Lekki-Epe Expressway.

A statement jointly signed by the Commissioner for Finance, Mr. Ayo Gbeleyi and the Attorney- General and Commissioner for Justice, Mr. Ade Ipaye explained that the 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, according to the statement could be achieved by purchasing all the shares in LCC.

The statement said, "The Lagos State Government felt obliged to buy out the interests of the concessionaire in advance of the handover 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."

It stressed that the buyback 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, adding that 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," the statement said.

Explaining further reasons behind the fresh agreement, the statement said: "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."

It added that 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," the statement said.

It however reaffirmed 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.

In a related development, fresh facts emerged yesterday that the concessionaire allegedly rakes in about N30 million daily from toll collection on the road.

An impeccable source who did not want his name mentioned, told National Mirror that the state government was no longer comfortable with the existing concession right earlier given to the company, which gives it the right to collect the toll for a period of 30 years in order to recoup its N50bn expenditure on the project.

The source said the government had to consider the 'buy-over' of the infrastructure in order to meet other needs.

"We heard from a very reliable source that the company realise not less than N30m daily. Multiply that in a month and imagine how much it will be in 30 years. Buying over of the infrastructure is the wisest option for the state government. Although, it has its economic implications, but it is better for a state government and its residents than to remain servitude to a company," the source said.

Meanwhile, concerned built environment experts have expressed mixed reactions over the planned termination of the concession agreement.

Speaking to National Mirror, Lagos based estate surveyor and valuer, Chief Kola Akomolede, said the termination would be unfortunate, saying it would generate two reactions.

According to him, it would be good news for citizens of Lagos State if the action would mean the cancellation of toll on the route or reduction of toll fee from N120.00 to N60.00.

He said the toll fee at the moment is high. "The money is too high, two toll points on a short distance on Lekki Road is too high. It is not done anywhere in the world," he added.

On the other hand, Akomolede said the cancellation of the concession agreement would be regrettable, as it is bound to send wrong signal to other investors that might want to take up such a project in the future.

National Mirror