Nigeria News

NIGERIA: Papering Over the Cracks on Lagos-Ibadan Expressway Project

Lagos-Ibadan Expressway When President Goodluck Jonathan announced a new beginning on the Lagos-Ibadan Expressway project last year, Nigerians thought that would end the endless controversy on the 105 Kilometre Highway that has been claiming lives on a daily basis.
 
But the road project is still raising dust. And it appears there have been more questions than answers, since the presidential pronouncement on July 5, 2013.
 
When he was flagging off the project on July 5, Jonathan said: “We have made adequate funding arrangements to see the project all the way through to completion and by the special grace of God, we are certain to deliver on our promise and pledge, on schedule.”
 
Events since that statement appear to have drawn more criticisms than praises, as the contractors, Messrs Julius Berger and Reynolds Construction Company (RCC), failed to meet public expectations several months after, thereby raising fears that what appeared so real might turn out to be a mirage.
 
And the true picture of the project, as initially conceived, appears to have been lost in the shifting sands of politics.
Bi-Courtney Highway Services Limited (BHSL) was to reconstruct, expand and modernize the highway before its concession agreement was terminated by the Federal Government (FG). There were plans to build a flyover at the Redemption Camp to ease the occasional congestion in that axis, provide dawn lightening powered by a gas fired plant, improved and new interchanges, new drainage system, recessed service areas, lay-by emergency parking areas, trailer parks, footbridges in heavy pedestrian areas, weighbridges, electronic traffic control and informative signs.
 
But the new arrangement, shrouded in secrecy, appears to have dumped all these amenities, indicating that the contractors would only repair the existing road rather than build a completely new world class interstate highway with series of bridge overpass and underpass at a cost of N89.5 billion, as earlier promised by the FG in the terminated concession agreement.
 
Government officials have, however, made several efforts to skirt around the issue or present it in cute packages.
On September 12, 2013, the Managing Director of the Infrastructure Bank Plc, Mr. Adekunle Oyinloye, reportedly announced that the Federal Government had mandated the bank to raise the N167 billion required for the reconstruction of the dual carriageway. And this was followed by several dangerous manoeuvres on the highway project.
 
The first manoeuvre was on January 8, 2014, when Mr. Bisi Agbonhin, the Director of Information, Federal Ministry of Works, said: “Investors will provide N117 billion for the road, through a private sector-led project finance; infrastructure finance facility with the Federal Government of Nigeria providing 30 per cent of the project cost (i.e. N50 billion) while the balance of 70 per cent would be provided by the investors and financiers to the project. This arrangement will enable completion of the project on time and on budget.”
On January 21, 2014, Onolememen, while addressing the Board and Management of Infrastructure Concession Regulatory Commission (ICRC), said: “For these three roads (Lagos-Ibadan Expressway, the Second Niger Bridge, and the approach route of the Murtala Muhammed International Airport), we are bringing vast resources from the private sector to the tune of about N300 billion. The reality in our nation today clearly shows that without the mechanism of Public Private Partnership (PPP), Nigerians will not be able to enjoy real dividends of democracy.”
 
Tony Ikpasaja, Special Assistant (Media) to the Minister of Works, in a newspaper article on January 29, 2014, said: “There are three major funding options that have the potential to provide adequate, reliable and timely financing for key road infrastructure.
 
“The first is On-Budget Public Funding; the second funding option is Off-Budget Public Funding, which includes special intervention funds, FGN Road bonds (to be issued in conjunction with the Debt Management Office), Concessionary Loans (e.g. from Nexim Banks). The third funding option, which is Private Sector Resources, comprises Pension Fund, PPP, Long-term Commercial Bonds, Export-Credit Finance, Private Equity and Infrastructure Bonds… Already, the Federal Government has N50 billion from the regular budgetary allocation of 2014 and 2015, as well as from Special Intervention Funds (SURE-P). In addition, the Minister, in conjunction with the Ministry of Finance is working with key Government Institutions to raise the balance of the construction cost through FGN Road Bonds and Infrastructure Bonds where private sector funds can be accessed for the speedy completion of Lagos-Ibadan Expressway. This makes it a variant of the PPP model, where private sector funds can be leveraged without concessioning the road to a private firm.”
 
While addressing a delegation of People’s Democratic Party (PDP) chieftains in Abuja on February 4, 2014, Onolememen introduced yet another variation, saying: “The government can decide how it funds its road projects, and government has made commitments up to N50 billion on that road. And we have decided as a government and ministry that in order to fast-track the completion of that road, we are going to be issuing road bonds and infrastructure bonds, where we will raise a balance of N100 billion. We already have government institutions that are also putting money down up to about N17 billion for that road.”
 
Going by the figures being pushed out by the Ministry of Works, the Lagos-Ibadan Expressway is now seen as the most expensive expressway project in the world.
 
One of the things that put the ministry in a quandary, according to Onolememen is that there are 180 projects struggling for the N100 billion-budgetary allocation to the ministry.
Shortly after he mulled the PPP option indicating that there could be a new concession arrangement, Onolememen turned around to say he didn’t mean it that way.
 
During an inspection of the road on February 10, Onolememen disclosed that the Federal Government had secured Private Finance Initiative (PFI) to fund the project.
“This is very common in the United States, and we are introducing it here under this project to make it faster,” he said, as he denied that the ministry was about to re-concession the road.
 
The Ministry had largely been blamed for the failure of the initial concession arrangement that was terminated by the FG. The ICRC and the Bureau of Public Procurement (BPP) stated this at various times, indicating that Bi-Courtney that was on the road earlier was a victim of the bureaucratic bottlenecks created by officials of the Ministry, who exploited certain clauses in the concession agreement to frustrate the concessionaire. It took two years for the final design to be approved.
 
Road concession is state policy in India, where 152 roads have been delivered under the arrangement. The state of Uttar Pradesh alone delivered over 13 of its major roads through that arrangement.
 
Of a total of 51, 242 km of motorways in Western Europe, 17,009 km (representing 33 per cent) were done under concession arrangement. Of this figure, while 16, 356 km are toll roads, 653 km have shadow toll.
For instance, in Germany, over 12, 200 km of roads have been given out as concession, UK, 580 km, France, 6, 705 km, Italy, 5, 600 km, Spain, 2, 255 km and Norway, 550 km, are currently under concession.
 
It remains a standard practice in Europe to concession infrastructure development to private investors, and in the United States (U.S.), concession covers all the sectors of the economy, including IT/Telecom, Energy, Financial Services, Leisure and Entertainment, Transportation and others.
 
Besides the calls on government to encourage PPP, the Nigerian public has been crying over the need for the FG to do what other nations are doing: develop the alternative means of transportation to roads.
Apart from the nuisance and danger articulated vehicles constitute on the roads, they are also the major reason properly constructed roads do not last. Ordinarily, the Lagos-Ibadan Expressway should not be in such a bad shape, but for the constant usage of the road for the movement of heavy goods by articulated vehicles, because the government is yet to resuscitate the railway as a veritable means of transporting goods across the country.
 
The PPP experiment was expedient in 2009, after the FG had tried several unsuccessful options.
In the face of global economic meltdown, the move was in line with modern approach to infrastructure development all over the world.
The cost of Nigeria’s infrastructure gap is calculated at over N30 trillion, and the Ministry of Works’ N100 billion budget devoted to construction is grossly inadequate.
 
It’s so plain to see that there is no alternative to PPPs, to bridge this gap. This level of funding cannot be sourced locally, as our financial institutions simply do not have the capacity. It must ultimately be raised in the international financial markets like Bi-Courtney was trying to do.
 
According to some analysts, the problems on the Lagos-Ibadan Expressway was compounded with the alleged gang up and eventual crucifixion of the infrastructure development company that single-handedly delivered the MMA2, the only project that has successfully been completed under a PPP arrangement in the country.
 
Presently, the FG is being accused of not showing enough seriousness to see the new arrangement through.
Before it made a curious u-turn on its position recently, there have been complaints by Afenifere, the Pan-Yoruba socio-cultural organization, which raised the alarm on the on-going resurfacing work along the expressway as against the hope of rebuilding the road.
 
“We insist that the repair being carried out is not sufficient. We ask for a rebuilt road with six lanes on each of the northbound and southbound carriages between the interchange at Ojota in Lagos and the Sagamu interchange from where it should continue with four lanes on each side to Ojoo in Ibadan. Anything short of the above is a waste of time,” the group said in a statement, indicating that government has only been papering over the cracks on the highway instead of making the necessary commitments that would deliver a world class road in due time.

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