Following the legal twists and turns trailing the privatization of the Lagos-Ibadan Expressway project, the Federal Government may have opened talks with the former concessionaire towards finding a lasting solution to the imbroglio that is hampering the smooth execution of the contract.
It was learnt that the Minister of Power, Works and Housing Development, Mr. Babatunde Fashola has begun talks with Dr. Wale Babalakin, the owner of Bi-Courtney Nigeria Limited, the former concessionaire in order to reach an amicable settlement that would allow the completion of the on-going construction.
The Lagos-Ibadan Expressway has been caught up in two court cases in which an order has been made cancelling a financing agreement to fund contracts for Engineering, Procurement and Construction (EPC) of the road awarded to Julius Berger Plc and Reynolds Construction Company (RCC) in 2013 at the cost of N167billion with a completion date of 2017.
Early this year, Bi-Courtney Highway Services Limited secured a court injunction, setting aside a new concession agreement granted to Motorway Assets Limited to finance the reconstruction of the Lagos-Ibadan Expressway and manage the road, which may have stalled the redevelopment.
The firm attributed the delay in executing its concession contract to the inability to get the project design approved on time by the Federal Ministry of Works.
It said itwould have completed the road project in record time if it had received the kind of support being given to the new contractors now, as it spent $300million to maintain the road, while it was under its care for three years.
“Out of the N167billion to be raised for the implementation of the project, the Jonathan administration provided the sum of N50bn for the concessionaire. This money was supported by a standing payment order of about N2.5bn payable every month from the coffers of the Federal Government,” Bi-Courtney officials alleged.
The Federal Government in 2009 signed a 25-year concessionary agreement with Bi-Courtney under a Public Private Partnership scheme, to reconstruct and expand the Lagos-Ibadan expressway and recoup the money invested on the road through tolling.
But in November 2012, government terminated the concessionary agreement due to alleged non-performance on the part of Bi-Courtney while in December 2012, government engaged contractors to carry out some palliative work on the road to ease traffic.
It was also gathered that the Ministry of Power, Works and Housing Development has commenced an internal review of the Federal Highways Act, with a view to making recommendations to the Ministry of Justice to consider and effect some changes that will ensure successful privatization process.
In the Act, it was discovered that current review shows that: “The Infrastructure Concession Regulatory Commission Act (ICRC) does not contain a “saving provision” with regard to other existing legislation. This means that the law is subject to other legislations that relate to concessions.
“The law makes no clear provision for the commission with regard to the approval process for PPP projects and the authority to grant a concession. This is obvious from the provisions of section 20 (a) – (d) of the Act which seems to vest the Commission with ‘monitoring’ and ‘advisory’ responsibilities rather than regulatory.
“The Act also does not make provision for alternative dispute resolution, which is a more efficient platform for resolving commercial disputes in contra-distinction from regular courts.”
The expressway traverse three South- Western states of Lagos, Ogun and Oyo states, which commences at Ojota interchange through shagamu junction, Ogere and terminates at Ojoo in the city of Ibadan; a distance of 127.6km. It is also a major artery that connects Lagos, the host of major Nigerian sea ports, to other states of the federation, and forms not only a part of the Trans-Saharan Highway that links Lagos on the Atlantic Ocean to Algiers on the Mediterranean Sea, but also part of the Trans-African Highway linking the Atlantic City of Lagos to the Indian Ocean city of Mombassa in east Africa through Cameroon and Central Africa, as the Shagamu Interchange separates the two continental highways.
Fashola hinted recently of the impending discussion when he said: “The past government did not act in good faith, or even compromised or was even negligent. The answer is not cancellation, if the contract is performing. The answer is renegotiation. I am not saying that government must not terminate non-performing contracts. Indeed these are rights that are standardly provided in all well drawn contracts.
“What I am saying is that contracts cannot be terminated or frustrated on trumped up reasons simply because a new government does not like the affiliation of the holder of the contract.
“It weakens the economy, it frustrates enterprise and leads to poverty and unemployment through job losses, loans taken from banks are endangered and the knock on effect is more than we often can see on the horizon, because the bad word spreads around the global investment community very quickly like wildfire.”