The  Lekki-Epe  express road concession project may yet to have its fair share of accolades as well as  disapproval.  The recently announced  plan to re-acquire the concession rights on the project  by Lagos State Government opens up a new vista of debate on the continuing controversies over the project.

The buy-out which has already passed legislative approval and perhaps conceded  to by the other parties suggests  the failure of the much ailed project among the bourgeoisies. It has remained difficult for the common man, particularly those that are directly affected by the additional tax on their hard earned income, to understand the project as structured.

The reasons why the Lagos State Government decided to buy out  the  private parties in the concession include the request by  the  Lekki-Epe  Concession Company, LCC, the concession company,  to raise the tolling rate on the first toll plaza by 20% from a minimum of N120 to N166 for a car  at the minimum; to commence toll collection at the second toll plaza- 10km from the first- at  the new rate;  and insisting that toll must commence  at the second toll plaza  to be able to raise fund for further construction, despite the obvious public opposition to such.

According to LCC, the costs of construction have risen as a result of rising interest rate. There are also unconfirmed reports  that the concessionaires wanted to increase the number of toll points to four from three in the concession agreement.  The government perhaps thought it wise to step in early and rescue an already bad situation.

The concession  right  on  the  road is to be bought at an estimated sum of N25.3 billion; N15 billion would be expended for the buyback of the right; N6.8 billion to service existing debt obligations and N3.5 billion for third-party liability.  This is after an estimated N35  billion has been expended to construct only 30% of a road, five years into commencement in 2008.  The estimated total cost of construction of the entire road at financial close in 2008 was N55 billion  with an estimated construction time of four years. At the end of the buyback, the LCC would become a quasi-private investment company fully owned by the state government and would continue to manage the concession.

In addition to the obvious failure of the project with the attendant implications for public private partnership projects in Nigeria, the decision leaves a number of questions unanswered.  The first is,  what  the government paying  for as assets,  when it buys back the concession right from  the private partners  and what  liabilities will it inherit?

The second is how much of the tax payers’  money would be  further  expended to complete  the road and at what costs in toll fees to the people? Finally how much has been generated in actual revenue from toll collection thus far and  how  was it shared between the parties?  The answers  to these questions  should  show  whether Lagosians  are better off with the decision  of  their government to reacquire this concession right or  whether the government has acted on its own interest and its patrons.

Unfortunately, the Lagos State Government has not been forthcoming in providing clear and detailed information about the project since inception and  on  the current decision.  It therefore leaves the public with conjectures and rooms for misinterpretation of its intention.  There  exists  no current official  information on the  Lekki-Epe  Concession project in public domain. Both the Lagos State Government and the LCC  have  refused  to make available such information.  It appears that the governance is carried out in secrecy and Lagosians  are fed the information the administration wish them to know.

The  49.4km  road starting from  Ozumba  Mbadinwe  in Victoria Island through  Lekki  and  Ajah  to  Epe  was conceived for reconstruction  through  public private partnership arrangement via concession  in 2006.  The project involves the upgrade, expansion and maintenance of the expressway (Phase I), and construction of approximately 20km of the coastal road (Phase II) on the  Lekki  Peninsular.

The project is designed  as a  Build-Operate-Transfer, BOT, model of infrastructure delivery,  under a 30-year  concession agreement,  after which the assets  was to  be transferred to the Lagos State Government in good condition.  Revenue from toll collection would provide the concessionaire with the cash inflow required to recover the cost of investments,  service and repay the debts  whilst meeting capital and operating costs.

The LCC as  a  special purpose vehicle for the management of the concession is made  up  of the Lagos State Government representing the interest of the Lagos citizens, the Asset and Resource Management Company, ARM, as the key investor, and  Hitech  Construction Company, Hitech,  as the engineering, procurement, and construction management, EPCM, partner.  In addition to financial contribution in the form of a mezzanine loan, LagosState,  who  owns the road, also provided  public guarantee, backed by an irrevocable standing payment order, ISPO, over its statutory revenue,  on all debt incurred to construct road. ARM is the key sponsor and strategic technical investor with equity shareholding in the project.  Hitech  also holds a ‘tied’ equity shareholding.

In  2008,  when the project was brought back to life after a  two years  lull, the total costs of the project for which fund was raised was estimated at  US$460m  (N55  billion  at 2009 exchange rate of N118/$1).  Funding for the project was principally through a combination of debt and equity, obtained locally and overseas.  At financial close, US$370m (N43.6 billion) was gotten in financial commitment from the investors and financiers made up of seven lenders and three equity providers.

N11 billion was immediately drawn down. The Lagos State Government committed to N5 billion mezzanine  loans over a 20-year period in addition to  providing a  N6.5 billion abridged works guarantees as enablers to other financiers. The tenor of the debt portion of the funding ranges between 12 and 15 years with a combination of fixed and floating interest rate terms. Thirty per cent of the senior debts are at fixed rate  while  the remaining 60% are at floating rate.

Five years into the  project, which was  scheduled to be completed in four  years,  only about  15km  of the 49.4km road has been completed. Two toll gates  have  been erected 10km apart with collection being made in one since January 2012.Although no statistics is available yet on the number of vehicles plying the  uncompleted  Lekki-Epe Expressway and the figure for users of the toll plaza, over one million vehicles are believed to ply Lagos roads every day with about half of that number commuting between the Lagos Mainland and Lagos Island on a daily basis.

Lagosian, especially those living  in  and commuting through the  Lekki-Epe  corridor, were practically forced, in a military style,  into paying toll on the uncompleted road and are about to start paying  twice,  10km apart  within 15km of  the  road. Lagosians  are yet to come to terms with the realisation that there would be about four toll points, where road users would have to part with an average of N150 per toll, on a 49.4km road at  the  completion of the project.

Although the total cost of the completed section include the hurriedly put together alternative roads remained shrouded in secrecy,  information from various media sources suggests that about N35 billion in total may have been expended to construct  the  completed 15km.  that represents N2.3 billion per km in construction costs.  In  other words, about 70% of the estimated total costs of the  project, five years ago,  have  been expended to construct only 30% of the project.  If the project continues in this manner, with the new demand  from  LCC, it would not be long before it becomes clear that the project has become a fraud and negates the interests of  Lagos  tax payers.

Perhaps, the only way to cover up this disaster in waiting is the buyback of the concession  right;  the question  is  what is the state government buying?  Since it is the concession right that is being bought, it means that the state government is simply paying the  other  equity holders- ARM and  HiTech,  off the project while assuming the entire liabilities of the LCC. The  asset  that comes with that is the  completed  15km  section of the  road with toll revenue from one toll point.  At the  buy out costs of N25.3 billion the state government would have incurred a total of N30.3 billion on the road, including the N5billion  officially committed at inception.  It would also inherit the total outstanding debt of N32 billion currently outstanding on the project.

In other words, at the end of the buy back, the 15km completed section of the  Lekki-  Epe  road and the two alternative roads would have effectively costs the state government about N62.3 billion.

That is N4.15 billion per km of road in costs to the state government  after purchasing the concession right.  No one  knows  how much the state government has received in toll revenue.  The newly awarded 127.6km Lagos-Ibadan express way reconstruction is expected to cost N167 billion.  That represents N1.30 billion per  km.

The  remaining 34.4km of the road  may  now have  to be financed  with  additional debt  if it is to be speedily completed. At the LCC base rate  of  N2.3 billion per km in construction costs, additional funding requirement to complete the road could be in excess of N83 billion.

And the debt  would be repaid by a combination of tax payers’ money and proceeds from toll collection.  The current administration of Lagos state is poised to go down  the  history lane for construction  of the most  expensive infrastructure  projects  using tax payers’ money and making them pay for it again.

The recently completed Admiralty hanging bridge- a 1.35km bridge with less than 500m of that bridge in the hanging section, costs the state  government N29 billion  in direct funding.  Users now pay a minimum of  N250 per  vehicle  to another  pseudo agent of the state government-  Lagos Tolling Company, (working  with two foreign technical partners)  –  to use the road.

There is no way, given the above, that the  buyback  of the concession right can be in the interest of  Lagosians. It is apparently a badly put together cover up of a failed project that would end up a disaster for the government and its patrons  in the future.  It is hard to understand how the state house assembly was hoodwinked into allowing the request to pass without properly conducting a critical stakeholder review of the entire project considering the level of interest in that project.

Lagosians  deserve  more than the amount of information that is available on the reacquisition of the  Lekki-Epe  concession right. They deserve to decide whether truly it is in their best interest that this administration is acting in relation to this project. I do not think  it is in the interest of Lagosians.

Musiliu Obanikorois a former High Commissioner to Ghana.