Lagos State Govt buys back LCC's concession rights in Lekki-Epe Expressway

The Lgos State Government has announced the termination of its

concession agreement with the Lekki Concession Company. Find a press

statement from the State Govt below..

The Lagos State Government wishes to state clearly that it has

neitherterminated nor cancelled the Concession Agreement it entered

into withthe 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

devaluationof 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 fromN120.00 toN144.00 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

atthe 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, insustaining investors' confidence in its investment climate as

a preferreddestination.

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

itsassociated free value added services such as 24/7 security patrol,

vehicle break down recovery, ambulance services, amongst others.

Kudos! Ekoo oni baje O!