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The
Federal Government yesterday terminated the concession of the Lagos-Ibadan
Expressway granted to Bi-Courtney Consortium on May 8, 2009 by the late
President Umaru Musa Yar’Adua for poor performance.
Addressing State House
correspondents in Abuja, the Minister of Works, Mr. Mike Onolememen, said that
the termination of the concession agreement was due to the failure of the
company to close financial agreement among other reasons.
The concession was for N89.53bn
for a period of 25 years under a Design, Build, Operate and Transfer, DBOT,
scheme. The minster announced that the Federal Government has engaged the
services of Julius Berger Plc and RCC Nigeria Limited to commence work
immediately on the reconstruction of the expressway.
According to him, due to the
senseless carnage on this important expressway, which is part of Arterial Route
A1, the Federal Government has also decided to embark on the emergency
reconstruction of the expressway.
Onolememen, who addressed
journalists alongside Minister of State for Works, Bashir Yuguda and Special
Adviser to the President on Media and Publicity, Dr. Reuben Abati, further
said: “While Julius Berger would handle Section 1: from Lagos to Shagamu
interchange, RCC Nigeria Limited will be responsible for Section II: from
Shagamu to Ibadan.”
“The Federal Government wishes to
assure that while it will continue to uphold the sanctity of contracts entered into
by the Federal Government, it will not shy away from implementing provisions of
the contract agreement dealing with non-performance on the part of the
contracting party,” Onolememen said. President Goodluck Jonathan had on Sunday
during the Presidential Media Chat aired live on the network of the Nigerian
Television Authority, NTA, and radio gave the hint that government would take
decisive action on the concession agreement.
Jonathan said, “On the
Lagos-Ibadan expressway, Bi-Courtney lacks the capacity to carry out the job.
The country is held to ransom. We cannot continue that way. We’ll intervene on
that road,” adding that the government would also fix the Benin-Ore road. “That
road has been with Bi-Courtney since we came on board in 2007 and I think we
are going to take the final decision on the matter because it is like the
company is not in position to do it and I don’t think as a responsible
government, we can allow Nigerians to continue to suffer.” “It is the busiest
road in this country and it is beyond the South-West.
Because that is the busiest road
in this country and all of us in government, we feel pained that the country is
held to ransom because of a transaction that probably was not handled properly
because of some kind of issues.
But we cannot continue like this,
we will intervene on that road,” Jonathan had said. While speaking on the legal
implication of terminating the concession agreement yesterday, Onolememen said:
“The legal implications of this termination have been carefully considered by
both the Federal Ministry of Works and indeed the Federal Government. If you
recall we have been on this issue for quite sometime now and we have
meticulously followed the concession agreement, the provision of relevant
clauses of the agreement.
“We have complied fully with the
provisions of this agreement. We have had cause even in the past to write the
concessioner to detail the breaches which it had committed in this agreement in
this particular transaction and we have also followed the minimum and maximum
number of days the contractor was expected to remedy the situation but failing
which the Federal Government had no alternative but to take this course of
action. “In terms of percentage payment so far, this is a concessioned project.
In other words, it is different
from the normal EPC contracts, so the Federal Government in a sense did not
make any direct payment to Bi- Courtney in this particular transaction.
Bi-Courtney was supposed to raise fund, he would have been able to raise the
fund from the private sector and apply it to the construction of this
expressway and toll it for as many as 25 years, to recoup his investment and
this has not happened, and that is why today the concession has been
terminated.
“For your information, under this
concession the construction period is supposed to last for four years and the
four years will come to a close in about six months time and right now there is
nothing on ground to suggest that the company is capable.”
On whether it was a mistake
giving the concession to Bi-Courtney, the Minister said: “I would not want to
say that it was a mistake, because though I was not in the office as at that
time, perhaps at that time they had the most responsible bids, the details are
best known to the then Minister of Works and his team that handled the project.
But again it is not out of place to give Nigerian companies opportunities to
handle projects of this nature.
This is our country, whoever has
the ability and the capacity to do projects of this nature we believe should be
encouraged.” On the percentage of work done on the road, Onolememen said: “I
will leave that for those who use the road.
As
far as we are concerned, the terms of work have not been complied with”. The
poor condition of the road has been a major concern to the Federal Government
and governors of the South West states considering the frequent rate of
accidents on the road resulting in the loss of many lives.
The governors had met with the
President in May over transport infrastructure and Lagos-Ibadan expressway
expressing disappointment with the state of the road and had called for a
review of the concession agreement.
The road, which is a vital link
between the nation’s commercial capital, Lagos and other parts of the country,
was handed over to Bi- Courtney on May 26, 2009 to expand, modernise and
maintain for a period of 25 years.
Its scope of work involves the
full reconstruction of the existing carriageway from Lagos to Ibadan; the
provision of two additional lanes in each direction between Lagos and Sagamu
Interchange, making it four lanes. The reconstruction was in four phases and
planned to last four years.
Representatives of the sacked
concessionaire had blamed the slow progress on the construction work on delays
in getting final approval for the project design from government, which was
finally approved on May 10, 2011; difficulties in securing the Right of Way;
the long period required for the mobilisation of materials and equipment;
involvement of banks and technical partners to make the project a success.
The concessionaire had mobilised
four gangs for the immediate rehabilitation of the highway last December
following bickering between it and the Ogun State Government over the ownership
of the site of its Asphalt Plant Site located in Shagamu; and two weeks after
the Minister of Works, issued an ultimatum to the firm to complete the repairs
of the expressway within 60 days.
The company had patched some bad
spots of the road at that time.
The Federal Government had been
considering the cancellation of the concession since the beginning of the year
but was slow in acting for fear of incurring huge legal penalties enshrined in
the concession contract. The Infrastructure Concession Regulatory Commission,
ICRC, had in a March 7 presentation to the Federal Executive Council, FEC,
concluded that virtually all public infrastructure concession granted in recent
times were performing poorly and should be reviewed.
Other concession projects noted
for poor performance in the presentation made by the Director-General of ICRC,
Alhaji Mansur Ahmed, include the TBS National Facilities, Lagos International
Trade Fair Complex and Apapa Ports among others.
The
DG had told the FEC that three years after the signing of Bi-Courtney agreement
the project was yet to achieve financial close. He had identified inadequate
project development, non-competitiveness of the procurement process, lack of
design or evidence of financing during the signing of agreement as part of the
problems for which lessons must be learnt and taken into account in granting
similar concessions in the future.
He had also pointed out that
there was not enough due diligence (technical and financial) by grantor and
that roles of other stakeholders were not taken into account at project
development.
On the way forward for poor
performance of PPP projects in Nigeria, Ahmed had advocated that adherence to
guidelines for PPP (development, procurement, and implementation) must be made
mandatory, while project selection and prioritisation should be consistent with
the National Planning Framework.
He had also urged that project
procurement must remain transparent and competitive to sustain confidence in
the Nigeria PPP market and that risk analyses must be undertaken for every
project and properly allocated.