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How Lagos checks infrastructure decay through PPP

With estimated population of 18 million and a  growth of eight percent, of about 600,000 persons  per annum, Lagos has been projected to emerge as the third largest mega-city in the world after Tokyo in Japan and Bombay in India by year 2015 with a projected population of 24.5 million, according to the United Nations Habitat.

With such staggering population expected by 2015, the resources of the state government will be  inconsequential to meeting the ever growing demands of the people in terms of good roads, pipe borne water, among others.

Public-Private Partnership is not new in Lagos State though.  The State Government has been collaborating with the private sector in various ventures and projects for many years.

Therefore, to ensure that available infrastructure is commensurate to the ever increasing population, and  achieve its vision of making Lagos State an investment destination of choice in Africa, the state as a matter of priority made  rapid infrastructure renewal and upgrade through the PPP initiative became a cardinal policy of the present administration.

In recent times PPP has been used to deliver various public infrastructures such as highway construction, mass transport development, airports, seaports, hospitals, schools and utilities of various kinds.

One strong point of PPP is that it offers a timely and cost effective alternative approach to financing, building, operating and maintaining infrastructure. Beyond the benefit of mobilizing private capital for the speedy delivery of public infrastructure, PPP has a considerable number of other benefits which perhaps is why it is becoming a popular tool for infrastructure finance.

Many business activities, as evident by various developmental projects in recent times have continued to spring up on a daily basis in Lagos State, particularly along the Lekki Epe axis based on the PPP initiative.

One of such unprecedented developmental projects thriving on in the axis is the Lekki Free Trade Zone, LFTZ, a state Public Private Partnership, PPP initiative.

Generally, PPP is a contract between a public sector institution, Government, and a private party in which the private party assumes significant project risk – financial, technical and operational in the design, building and operation of a project.

To achieve this objective, the government embraced as a strategic policy thrust, the PPP model, in accelerating infrastructure delivery having arrived at the safe conclusion that its current resources are insufficient to deliver the model mega-city dreams without augmenting with private sector resources, its entrepreneurial approach, innovativeness and managerial efficiency.

In the last four years, the Government of Governor Babatunde Fashola has been PPP-driven. This is to ensure that the citizens of the state derive maximum benefits from the infrastructure renewal energised by the private sector, in some cases, through Built, Operate and Transfer system, BOT.

From the administration of Asiwaju Bola Tinubu, the State Government went into partnership with AES Nigeria to build an Independent Power Plant to generate 270MW for Lagos residents. Though the power generated was consumed locally but transmitted to the national grid because of some challenges in the operational framework in the energy sector, however the initiative still added 270MW power to the national grid.

The state government has also made some major strides in the transportation sector, particularly the Bus Rapid Transit, BRT, the first of its kind in sub-Saharan Africa. The transport system which has about 200,000 daily riders has helped in reducing travel time by 30 percent and creating over 5,000 direct and indirect employments.

Presently, work has commenced on one of the Light Rail Transit System, the Blue Line, which is a 27 kilometer rail line from Okokomaiko to Marina.

The Lagos Sate Government is to design and build the rail line infrastructure, while a concessionaire is to operate and maintain the service, including rolling stock.  The project which has presently generated about 2,000 jobs during construction works at the first phase is expected to generate about 50,000 jobs on completion later this year.

Beyond the Akute Power Plant Project which is an independent power plant to generate uninterrupted power supply to the State Water plants at  Adiyan/Iju, the State Government has also delivered a 10MW independent Power Plant at Lagos Central Business District to provide uninterrupted power supply for Judicial and Health facilities as well as 20 streets within the district.

In the same vein a number of health facilities, particularly pharmacies and mortuaries are managed and operated by the private sector across public hospitals in the state.

Island Power Limited is another PPP project Lagosians are benefitting from. This is a BOT concession for a 9.7mw Independent Power Plant between the Lagos State Government and Negris Group. The project has helped in eradicating 30 diesels and petrol generators and provided a cleaner source of energy.

One other critical area the government is exploring the PPP is the Lagos Infrastructure Project: This is of 30-year concession, to design, construct, finance and operate the 49.36 km Eti-Osa-Lekki-Epe Expressway to eliminate severe traffic gridlock along the area. The transaction attained financial dose in November 2008 and expires in November 2038. The ongoing Eti-Osa Lekki Epe project has been able to generate over 1,800 jobs.

There are still opportunities to generate more jobs through other pipeline PPP projects in the Eti-Osa-Lekki-Epe corridor. Such projects include the following: Lekki Free Trade Zone; Lagos Free Trade Zone; Lekki Deep Sea Port; Lekki International Airport-expected to attract five million passengers annually and Hydrocarbon Park.

The expansion of the Lekki-Epe Expressway, being built by the Lekki Concession Company, LCC is expected to transform the entire Lekki peninsular and attract lots of foreign investment. The LCC is supposed to build the road, mount toll gates on it and recoup its investment for over a period of 30 years.

The road will lead to other PPP proposed projects in the Lekki area such as the proposed international airport, Lekki Free Trade Zone, among others. The project and the investors are being threatened by series of protest by residents of the area that they don’t want any form of toll on the road.

As a result of the contention the planned collection of tolls generated, Fashola suspended the planned tolling on the road to allow government enough time to provide alternative routes for those who felt they cannot pay toll.

According to Fashola the politically motivated resistance to the commencement of toll collection on the Eti-Osa, Lekki-Epe Expressway meant that the government had to part with N4 billion for year 2011 which could have been used to provide more schools, inner roads, hospitals and social needs in Eti-Osa, Ibeju-Lekki and Epe areas.

“This decision was sensible and necessary in order to maintain much needed and growing investor confidence in the Lagos economy, in order to maintain our credit rating and reduce our credit risk. It was critical to maintaining the stream of emerging investments required to create business opportunity and jobs for young people.

According to the Managing Director/Chief Executive Officer, LCC, Opuiyo Oforiokuma, maintenance  of  the Lekki Toll Road would be different when compared to how roads have been managed previously, saying that it would be maintained by LCC throughout the 30-year concession term, using effective and durable maintenance techniques. “This will ensure that the newly rehabilitated road infrastructure lasts, and is handed over in good condition,” he said.


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