Government
on Wednesday denied the report that it has 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.
A statement signed by the Finance Commissioner, Ayo
Gbeleyi and his Justice counterpart, Ade Ipaye, reads:
“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
Beauty of the Lagos State Gov: Fashola doesn't give room for doubts or misunderstanding of his actions. Am glad this clarification was done. Now this is governance at its best.
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