LAGOS — Lagos State Government, yesterday, said it terminated
its concession agreement with Lekki Concession Company, LCC, the concessionaire
handling the 49.63 kilometer Eti-Osa-Lekki-Epe Expressway, “to save motorists
from paying exorbitant toll tariff on the ever busy road.”
its concession agreement with Lekki Concession Company, LCC, the concessionaire
handling the 49.63 kilometer Eti-Osa-Lekki-Epe Expressway, “to save motorists
from paying exorbitant toll tariff on the ever busy road.”
This came as it announced that the last phase of N87.5 billion
out of the N275 billion fixed rate bond would be out for prospective investors
in the fourth quarter of the year, to finance the acquisition right and take
control of the toll regime on the road.
out of the N275 billion fixed rate bond would be out for prospective investors
in the fourth quarter of the year, to finance the acquisition right and take
control of the toll regime on the road.
The termination came seven years after the commencement of the
30-year agreement between the state government and LCC, for the upgrade,
expansion and maintenance of the road estimated to gulp N50 billion.
30-year agreement between the state government and LCC, for the upgrade,
expansion and maintenance of the road estimated to gulp N50 billion.
It will be recalled that the state House of Assembly had, on
Tuesday, at a special plenary session, approved N7.5 billion supplementary
budget to accelerate the transfer of ownership of the road to the state,
leaving the state with wider policy option with regards to that important road
infrastructure.
Tuesday, at a special plenary session, approved N7.5 billion supplementary
budget to accelerate the transfer of ownership of the road to the state,
leaving the state with wider policy option with regards to that important road
infrastructure.
Reason for govt’s action
Giving the reason for government’s action, Commissioner for
Finance, Mr. Ayo Gbeleyi, said: “As provided for in the concession agreement
between the parties, the concessionaire, (LCC) can increase the toll tariff
based on the inflation rate in the country, among other things every quarter.
The risk is that when an agreement was reached between two parties to negotiate
on a contract, whatever the year, one cannot envisage the entire challenge that
will arise later. The dynamics of the Lekki project did not envisage that there
would be devaluation of the country’s currency, between 2008 and 2013 from N118
to N160. This impacted on their cost which they will attempt to pass to the
common man on the street, because of the inflation adjustment.
Finance, Mr. Ayo Gbeleyi, said: “As provided for in the concession agreement
between the parties, the concessionaire, (LCC) can increase the toll tariff
based on the inflation rate in the country, among other things every quarter.
The risk is that when an agreement was reached between two parties to negotiate
on a contract, whatever the year, one cannot envisage the entire challenge that
will arise later. The dynamics of the Lekki project did not envisage that there
would be devaluation of the country’s currency, between 2008 and 2013 from N118
to N160. This impacted on their cost which they will attempt to pass to the
common man on the street, because of the inflation adjustment.
“For instance, if the state government had not come up with this
plan last July, the concessionaire would have increased the toll fee for cars
from N120 to N144 while drivers of SUVs will have to part with N180 as
against the N150 cost they are still enjoying. This is because the
concessionaire would have added 20 percent. The government felt that this would
be difficult to push to the residents at this time. And of course, at every
anniversary, it was meant to go up by the inflation rate plus five percent. And
we should not forget that this is the first Public Private Partnership, PPP,
agreement reached by the state government.”
plan last July, the concessionaire would have increased the toll fee for cars
from N120 to N144 while drivers of SUVs will have to part with N180 as
against the N150 cost they are still enjoying. This is because the
concessionaire would have added 20 percent. The government felt that this would
be difficult to push to the residents at this time. And of course, at every
anniversary, it was meant to go up by the inflation rate plus five percent. And
we should not forget that this is the first Public Private Partnership, PPP,
agreement reached by the state government.”
On N85.5bn bond
The commissioner said “Our application has been filed with
Security Exchange Commission, SEC, and other aspects have been handled. Our
best estimation is that by the early fourth quarter of this year, we will be
able to access the cash from the transaction. Out of the bond issuance of N275
billion, the state government has issued three series of the bond totaling
N187.5 billion.”
Security Exchange Commission, SEC, and other aspects have been handled. Our
best estimation is that by the early fourth quarter of this year, we will be
able to access the cash from the transaction. Out of the bond issuance of N275
billion, the state government has issued three series of the bond totaling
N187.5 billion.”
Source: Vanguard
