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Lagos Denies Terminating Lekki-epe Highway Concession Deal - Politics - Nairaland

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Lagos Denies Terminating Lekki-epe Highway Concession Deal by docjuli(m): 9:13am On Aug 29, 2013
… Says It Is Buying Back Rights From Tinubu, Other Investors For N15B

SAN FRANCISCO, August 28, (THEWILL) – The Lagos State Government Wednesday disputed news reports suggesting that it has cancelled the concession agreement it entered with the Lekki Concession Company Ltd, a special purpose vehicle representing investors, to design, build, operate and transfer the Eti Osa-Lekki highway for a 30-year period.

The controversial N50 billion naira agreement, which many stakeholders have described as fraudulently engineered to particularly line the pockets of the leader of the defunct Action Congress of Nigeria (ACN) and former governor of the state, Asiwaju Bola Tinubu, was signed in 2006 but became effective in 2008.

Stakeholders and the opposition in the state had particularly complained about the N50 billion naira price tag for the 50 kilometer road. The deal had priced 1 kilometer of the road for N1 billion naira.

Lagos State Commissioner for Budget and Economic Planning, Mr. Ben Akabueze, who led a team of the State Executive Council to the House of Assembly Tuesday to present a request for approval of supplementary budget told assemblymen that “the principal basis for the supplementation of 2013 budget was due to the decision to acquire the 100 per cent concession of the Eti-Osa-Lekki-Epe expressway and have it entirely under the control of the state government.”

Also commenting on the development, the Commissioner for Finance, Mr. Ayo Gbeleyi, explained that the state government will hand the concessionaire N15 billion naira to take the highway back from Tinubu and other investors.

He added that N6.8 billion will be expended on servicing existing debt obligations of LCC while N3.5 billion will be used to sort third party liabilities.

The commissioner also stated that N32 billion naira has so far been expended on the highway, with Lagos contributing N5 billion in 2008 when the deal took effect.

A statement emailed to THEWILL by the Lagos State Government on Wednesday explained the government’s decision to buy out LCC.

See statement below:

“LAGOS STATE GOVERNMENT BUYS BACK LCC’S CONCESSION RIGHTS IN ETI-OSA LEKKI-EPE EXPRESSWAY

The Lagos State Government wishes to state clearly that it has neither terminated nor cancelled the Concession Agreement it entered into with the Lekki Concession Company Limited (LCC) to reconstruct and expand the 49.36 km Eti-Osa Lekki-Epe Expressway.

To set the records straight, Lagos State 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 is to be achieved by purchasing all the shares in LCC.

The State Government came to this decision to buy back the rights in the light of several developments clearly not envisaged in the 2006 Concession Agreement (which became effective in 2008) a few of which are highlighted below.

• 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.

• 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.

Under such circumstances, the Lagos State Government felt obliged to buy out the interests of the Concessionaire in advance of the hand-over 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.

Contrary to the misleading reports by some sections of the media on Wednesday, August 27, 2013 from the State House of Assembly’s consideration and approval of the 2013 Supplementary Budget, the buy-back is not and does not amount to a “termination” or “cancellation” of the concession of Eti-Osa, Lekki-Epe Expressway.

The significance of the buy-back, for which the State Government deserves commendation, is that it 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. 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.

In addition LASG wishes to reaffirm 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. Lagos remains an investor friendly State that shall continue to ensure the sanctity of contracts, as in this case, in sustaining investors’ confidence in its investment climate as a preferred destination.

The general public is therefore enjoined to continue to cooperate with LCC’s officials and operatives as it continues the expansion and construction works on the 49.36km Eti-Osa Lekki-Epe Expressway and the operations of the toll collection systems. LASG wishes you a safe and happy motoring experience on the modernised expressway with its associated free value added services such as 24/7 security patrol, vehicle break down recovery, ambulance services, amongst others.

Eko oni baje O!

Ayo Gbeleyi Ade Ipaye
Honourable Commissioner for Finance Honourable Attorney-General & Commissioner for Justice

http://thewillnigeria.com/news/lagos-denies-terminating-controversial-concession-deal-on-lekki-epe-highway/
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by docjuli(m): 9:22am On Aug 29, 2013
"Contrary to the misleading reports by some sections of the media on Wednesday, August 27, 2013 from the State House of Assembly’s consideration and approval of the 2013 Supplementary Budget, the buy-back is not and does not amount to a “termination” or “cancellation” of the concession of Eti-Osa, Lekki-Epe Expressway."
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by docjuli(m): 9:23am On Aug 29, 2013
"The significance of the buy-back, for which the State Government deserves commendation, is that it 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. The LCC shall therefore continue to operate as a fully commercial entity for the benefit of taxpayers and the larger society."
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by docjuli(m): 9:23am On Aug 29, 2013
"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."

2 Likes

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by docjuli(m): 9:25am On Aug 29, 2013
"The general public is therefore enjoined to continue to cooperate with LCC’s officials and operatives as it continues the expansion and construction works on the 49.36km Eti-Osa Lekki-Epe Expressway and the operations of the toll collection systems. LASG wishes you a safe and happy motoring experience on the modernised expressway with its associated free value added services such as 24/7 security patrol, vehicle break down recovery, ambulance services, amongst others.

Eko oni baje O!

Ayo Gbeleyi Ade Ipaye
Honourable Commissioner for Finance Honourable Attorney-General & Commissioner for Justice"

Over to you now.
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Q3(m): 1:15pm On Aug 29, 2013
[b]Return of d NINJA.................Fashola NONI! grin grin grin
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by realone2012: 1:16pm On Aug 29, 2013
Don't even know anything about Lekki! I stay in Badagry, Badagry-Express way can't be more worse than it is now, so I don't care about what's going on in Lekki.

2 Likes

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Emchio: 1:19pm On Aug 29, 2013
We are shocked!
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Nobody: 1:20pm On Aug 29, 2013
Please Lagos state should ensure accountability...
for properties/lands and accommodations in Lekki/Ikoyi/Victoria Island and the entire Lekki expressway axis-check out our listings at http://www.distributenaija..com/2013/08/updated-properties-for-september-2013.html

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by rozayx5(m): 1:27pm On Aug 29, 2013
L
A
G
O
S

another name for Tinubus purse undecided

1 Like

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by israel007: 1:30pm On Aug 29, 2013
Oh no!!
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by debosky(m): 1:35pm On Aug 29, 2013
Quite confusing I think - how can LCC continue to operate 'commercially' if it can't increase the tolls to meet its needs? Does that mean LASG will meet the shortfall between the toll-generated funds and the expenditure requirements from other budgetary funds?

If so, what areas of government expenditure will suffer in order for the road to be built?
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by mascot87(m): 1:41pm On Aug 29, 2013
rozayx5: L
A
G
O
S

another name for Tinubus purse undecided
Bro abeg stop hating,I dey take God beg u.

2 Likes 1 Share

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Boss13: 1:46pm On Aug 29, 2013
I do not know what to say about this because I don't want to insinuate. I just feel that this deal was bound to happen right from inception. When you pay someone money he ought to earn for 30 years today, it means the inflation that is expect to eat into those future income would have been eroded and he is better off with the money today than earning it in 30 years (the present value (PV) of future income).

Honestly, the deal isn't looking good. The winners are the owners of LCC. I do not want to analyse this because it will be deficient due to the fact that adequate financial information were not made available but from the little here, I can confidently say that LCC investors are smiling to the bank in a joyous mood. While Lagos state will have to raise extra funds to finish the road. Though the tolling will not stop. Hence, the public statement that the concession was not terminated or cancelled. Another wasted project again.

Fashola is truly working.
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by everyday: 1:47pm On Aug 29, 2013
Any further comments from other parties on this matter
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Delafruita(m): 1:52pm On Aug 29, 2013
Boss13: I do not know what to say about this because I don't want to insinuate. I just feel that this deal was bound to happen right from inception. When you pay someone money he ought to earn for 30 years today, it means the inflation that is expect to eat into those future income would have been eroded and he is better off with the money today than earning it in 30 years (the present value (PV) of future income).

Honestly, the deal isn't looking good. The winners are the owners of LCC. I do not want to analyse this because it will be deficient due to the fact that adequate financial information were not made available but from the little here, I can confidently say that LCC investors are smiling to the bank in a joyous mood. While Lagos state will have to raise extra funds to finish the road. Though the tolling will not stop. Hence, the public statement that the concession was not terminated or cancelled. Another wasted project again.

Fashola is truly working.
am sure the buy-back option in the agreement will have its own terms which would have been mutually agreed by both parties before the agreement was signed.
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Boss13: 1:52pm On Aug 29, 2013
debosky: Quite confusing I think - how can LCC continue to operate 'commercially' if it can't increase the tolls to meet its needs? Does that mean LASG will meet the shortfall between the toll-generated funds and the expenditure requirements from other budgetary funds?

If so, what areas of government expenditure will suffer in order for the road to be built?

Exactly, LASG will have to go source the money either by Federal monthly allowance, Internal Revenue Generations or by issuance of Bonds (I heard LASG will issue bond soon). The Lekki-Epe expressway will now form part of the budgetary plan for the state, another reason why the bill was sent to the State House of Assembly for approval. The tolling was not stop, the State will generate income from the toll, LCC (which is now owned by the State Govt through the buy-back via shares) will collect the toll on behalf of the Govt. But the Govt will not rely on the toll income to finish the road.

I hope you understand now. I wanted to do the financial analysis of this and to explain financially why the Investors of LCC are better off. Honestly, this was a wasted project another waste of tax payers money and to make matter worse, tax payers have made someone richer.

1 Like

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Boss13: 1:55pm On Aug 29, 2013
Delafruita:
am sure the buy-back option in the agreement will have its own terms which would have been mutually agreed by both parties before the agreement was signed.

Yes the buy-back right was there from inception. That was why the right was invoked. it is a scheme to make some people richer.
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Boss13: 1:59pm On Aug 29, 2013
When I tell people that Fashola is not truly working, they begin to copy and paste pictures of intended projects on Nairaland. This scheme is a dubious one and right to our very face. I have always insisted that LASG been transparent and publish a journal of its revenues and all projects it is handling. Then we can start a thorough appraisal system for Fashola.

Now where are the song praisers and chanters? Are they running away from this thread. I am not a PDP fan but a concerned Lagos tax paying resident who is feeling cheated right now.

1 Like

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Nobody: 2:12pm On Aug 29, 2013
Somebody please explain to me how this remains a PPP if the LASG is buying out the private investors? Do they intend to sell the shares off LCC to a new investor. Does LASG really think people on this axis are crazy? LASG's justification for the toll was the private sector funding needed to expand the road. Now that LASG is buying out LCC with TAX PAYERS money, why on earth should people on this axis continue to pay TOLLS ON THAT ROAD. This is no longer double taxation but quadrupule. Since they have bought out LCC, there needs to be an audit. We need to know how much LCC made from TOLLING at plaza one.

The sham involved in this scheme is intense.

6 Likes

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Delafruita(m): 2:17pm On Aug 29, 2013
Boss13: When I tell people that Fashola is not truly working, they begin to copy and paste pictures of intended projects on Nairaland. This scheme is a dubious one and right to our very face. I have always insisted that LASG been transparent and publish a journal of its revenues and all projects it is handling. Then we can start a thorough appraisal system for Fashola.

Now where are the song praisers and chanters? Are they running away from this thread. I am not a PDP fan but a concerned Lagos tax paying resident who is feeling cheated right now.
how and why is a tax payer cheated by this buy back option?the lagos state government has clearly stated that LCC wanted to raise toll.to avoid that and for other reasons,its buying out the contract and it has gone ahead to say it will issue bonds to financa the buy-back.pray tell how that becomes a tax-payers burden.nothing changes except that the road will now be finished by LASG and not LCC.and the funds will still not come from the coffers of LASG but rather from investors who invest in the issued bonds.how is that too difficult to understand?
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by MostIncredibleDFirst: 2:19pm On Aug 29, 2013
Fashola is buildin each KM of road for N1 billion, n tolling all common amenities which d citizens are supposed to enjoy. Yet some idiots wil come here 2 claim he's d best governor in nigeria n building excellent infrastructures! NONSENSE!

2 Likes

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by teskyg: 2:20pm On Aug 29, 2013
cheesy cheesy cheesy cheesy cheesy.Where is Eko -Ile alias Eko-Atlantic?This charade is becoming glaring.Fund is require for APC 2015 bogus ambition.Fashola for President.
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Delafruita(m): 2:20pm On Aug 29, 2013
A-town:
Somebody please explain to me how this remains a PPP if the LASG is buying out the private investors? Do they intend to sell the shares off LCC to a new investor. Does LASG really think people on this axis are crazy? LASG's justification for the toll was the private sector funding needed to expand the road. Now that LASG is buying out LCC with TAX PAYERS money, why on earth should people on this axis continue to pay TOLLS ON THAT ROAD. This is no longer double taxation but quadrupule. Since they have bought out LCC, there needs to be an audit. We need to know how much LCC made from TOLLING at plaza one.

The sham involved in this scheme is intense.
first,why would you even ask such a question as the one in bold?

secondly,LASG will still not fund the project with taxpayers money.it will fund it by issuing bonds to investors
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by nduchucks: 2:22pm On Aug 29, 2013
I knew it! The usual suspects are getting paid upfront. Duk Barawo banza.
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Boss13: 2:22pm On Aug 29, 2013
A-town:
Somebody please explain to me how this remains a PPP if the LASG is buying out the private investors? Do they intend to sell the shares off LCC to a new investor. Does LASG really think people on this axis are crazy? LASG's justification for the toll was the private sector funding needed to expand the road. Now that LASG is buying out LCC with TAX PAYERS money, why on earth should people on this axis continue to pay TOLLS ON THAT ROAD. This is no longer double taxation but quadrupule. Since they have bought out LCC, there needs to be an audit. We need to know how much LCC made from TOLLING at plaza one.

The sham involved in this scheme is intense.

Now that is left for Lagos State Resident to start SCREAMING NOW!!!!!!! The publication was devised to confuse people. However, you have to read in between the lines. LASG has bought off the private investors from their company. The company now belongs to LASG. The term buy-back of concession via purchase of shares was intended to confused people. This is a project the LASG contributed N5 billion and now part off N15 billion (total government expenditure N20 billion).

From the publication N32 billion has been expended on the road, what is the percentage rate of completion at as now and what is the total cost of constructing that road. Remember, LCC has incurred debt and other liabilities which the government is still going to pay.

Please pardon my analysis of LASG owning LCC (even though we know). I got emotional about the dirty deal. It has only bought the concessionary right through shares. So LASG is also a shareholder of LCC and LCC will not longer keep the tolls as part of its income, but collect it and give it to LASG. I also wonder if LCC will be constructing roads or if it was actually set up to be a construction company. But I give kudos to the master mind of this project, the guy truly thinks and a smart financial business analyst.

1 Like

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Nobody: 2:23pm On Aug 29, 2013
Delafruita:
first,why would you even ask such a question as the one in bold?

secondly,LASG will still not fund the project with taxpayers money.it will fund it by issuing bonds to investors

I asked because i need an answer! So how is issuing bonds any better? Selling Lagos to the highest bidders abi.
I repeat my question, if LASG is involved in running this project, how does it still remain PPP? Answer my question.
Where is the private participation?
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Boss13: 2:24pm On Aug 29, 2013
Delafruita:
first,why would you even ask such a question as the one in bold?

secondly,LASG will still not fund the project with taxpayers money.it will fund it by issuing bonds to investors

And how will it pay the interest on the Bonds that it has issued to investors. Oga be careful oh. Do you think investors will buy your Bond papers if they don't know how they will get their principal plus interest from.
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Fazhy: 2:26pm On Aug 29, 2013
Says It Is Buying Back Rights From Tinubu, Other Investors For N15B

I thought somebody on this forum explained it yesterday.

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Nobody: 2:31pm On Aug 29, 2013
Delafruita:
how and why is a tax payer cheated by this buy back option?the lagos state government has clearly stated that LCC wanted to raise toll.to avoid that and for other reasons,its buying out the contract and it has gone ahead to say it will issue bonds to financa the buy-back.pray tell how that becomes a tax-payers burden.nothing changes except that the road will now be finished by LASG and not LCC.and the funds will still not come from the coffers of LASG but rather from investors who invest in the issued bonds.how is that too difficult to understand?

Who are they trying to fool. If LCC, a private organization states that it needs to increase toll to remain in business, is LASG FATHER CHRISTMAS? How will LASG expect to finish the project and remain profitable? By running the state further in debt? Are you aware that in the buy-out, LASG will still have to figure out how to pay the debts owed by LCC. Currently LASG has directly committed 5+15billion. The 32billion plus interest and debt that LCC owes still needs to be sorted out. Their OPEX needs to be sorted out. We also need to know how much they have made so far on the tolls to justify how much LASG will have to pay back. All these will probably be shrewded in secrecy hence why this is an absolute sham and people should not remain quiet

1 Like

Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by seunmsg(m): 2:33pm On Aug 29, 2013
Lagos state govt has just 2 choices on this matter, they either put up a strong face and continue with the PPP arrangement not minding the political backlash that an increase in toll rate and the commencement of tolling in the two other toll gates with bring or, they exercise the buy back clause.

When u look at the noise that greeted the commencement of tolling at the admiralty toll gate, couple with the court case instituted by Adegoruwa, the noise that will herald the coming up of two other toll gates can best be imagined. So, LASG really had no choice than to buy back the concession. Doing otherwise is to expose themselves to serious political backlash.
Re: Lagos Denies Terminating Lekki-epe Highway Concession Deal by Boss13: 2:46pm On Aug 29, 2013
@ Delafruita if LCC is a going concern, it does not need tolls to complete the construction of the road. It can source its funds either through loan (and that it what it has done) or capital (Doesn't the company have capital). The tolling will be income to repay the loan and also make profit for constructing the road. I believe the management went to the drawing board after noticing that their financial projection was not summing up based on their budgetary analysis. Hence, they invoke the buy-back right.

Now the LASG has agreed to issue bond to buy the concessionary right. Remember interest will be paid on the bond. The bond was issued to by concessionary RIGHTS and not to for infrastructure development. Again, the government was now have to source for funds to finish up the road. Now if you are a good financial analyst, you should know that there have been a depletion, an opportunity cost (an alternative forgone). The government MUST pay for the bond it has issued to investors and because it will source fund from either Federal Monthly Allocation or Internal Revenue Generation, projects that these funds should have primarily be used for will suffer.

Now delafruita how will the LASG pay for interest and principal for the bond? By re-issuing another bond? (Excuse me) by using your tax payers' money to pay investors and if they want to be nice by using Federal monthly allocation (I doubt this one because, this monthly fund should have been budgeted for)

Fashola is truly working.....

1 Like

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