Re: Lagos-Ibadan express road: The way out
I read “Lagos-Ibadan express road: The way out”, a piece by Oluyemi Olagokun, on page 18 of The Guardian, Friday, April 29, 2016. The piece is more of sympathy solicitation than a balanced report on national issue. The expressway was concessioned to Bi-Courtney Nigeria Limited under Design, Build, Operate and Transfer (DBOT) on April 15, 2009 with the purpose of the company looking for financiers and contractors to develop the road into five lanes on each side of the dual road. This became a herculean task as it could not secure financiers for the development of the road. The South-African partners that Bi-Courtney claimed was interested in the deal reneged.
The Federal Road Safety Commission (FRSC), Ogun State Command, claimed that due to negligence, over 833 people have died on the road while 6,103 have been injured in 2,264 accidents on that road between 2009 and 2011. Between 2011 and 2012 when the contract between Bi-Courtney and the Federal Government was determined, not less than 250 people died due to the condition of the road. It is noteworthy to say that from 2012 till date, due to the intervention works by Messrs Julius Berger and Reynolds Construction Company (RCC) on the road, less than 150 accidents have occurred.
It is, therefore, surprising that Olagokun claimed that “no one can deny that Bi-Courtney, having spent three years maintaining the road with over $300 million down the drain while its concession lasted, having acquired billions of naira worth of equipment in preparation for the work to begin, and having the technical manpower and the financial muscle to execute the project, has the wherewithal to execute the concession excellently.” For over three years that Messrs Bi-Courtney was in possession of the road, it only executed paltry jobs as it had more than it could bite with the Murtala Muhammed Airport 2 hanging on its neck.
Bi-Courtney is not a construction company. As a concessionaire, it was expected that it will source for a construction company and financiers to fund the development of the Lagos-Ibadan Expressway, a task that it showed all signs that the project will not be done. It is no wonder then that Bi-Courtney, at a snail pace, went into patching of the road against the dictates of the contract terms and conditions between it and the Federal Government (represented by the Public-Private Partnership (PPP) Unit of the Federal Ministry of Works and Housing).
As bad as the government of the former President Goodluck Ebele Jonathan was, it put into place an effective vehicle that could have delivered the expressway by now if not for the litigation on it courtesy of Bi-Courtney. Olagokun claimed that “it is now abundantly clear that the shenanigans concerning the road were caused by the Jonathan administration, for political gains and selfish interest.” The truth is that the debacle that plagued the road while Messrs Bi-Courtney concession lasted was due to inexperience of the parties on PPP at the conception, ineptitude of Bi-Courtney and the spate of corruption in Nigeria.
The Jonathan administration waded into the deal and terminated the concession contract when it became clear that the concessionaire was shrouded in the dark as to the direction of the concession. There was no advertisement when the road was concessioned and there is no evidence that there was bidding between Bi-Courtney and others. A pot cannot, therefore, call a kettle black. In a normal clime and with the controversies surrounding Murtala Muhammed Airport 2, , Bi-Courtney was not in a good stead to handle the redevelopment of the road.
Moreover, the contracts between the Federal Government and the duo of Julius Berger Nigeria Plc and Reynolds Construction Company (RCC) were not concessioned. It was ‘negotiation’ which is based on the duo’s previous antecedents in the construction environment in Nigeria. Julius Berger and RCC were just contractors while Asset Management is the Special Purpose Vehicle (SPV) in charge of delivering the road and Infrastructure Ban, the financiers. Most of the hospital construction projects in England are carried out by Lang O’Rouke and Nigeria Bottling Company (NBC) normally negotiates with only ARBICO Plc in Nigeria because of their long years of cordial relationship.
It is not all forms of construction procurement that require advertisement in order to choose a contractor. In selective tendering, invitation for “Expression of Interest” may be sent to only the concerned professionals or qualified contractors. In partnering, negotiation follows after one or few contractors which have long-lasting relationship with an organisation have been invited to build.
Overall, the performance of Public/Private Partnership (PPP) has not been palatable in Nigeria. Marcel Mbamalu and Geoff Iyatse in “Concessioning: A ‘Sell-out’ to Cronies?”, The Guardian, Sunday, July 21, 2013, page 42, stated that “today, questions are being asked as to why the collective patrimony of the world’s most populous black nation would be ceded to a few individuals in the name of privatization, or better still, concessioning”. The buy-out of the remaining lease period of the Lekki-Epe Expressway by the Lagos State Government from the Concessionaire – Messrs Lekki Concession Company Limited (LCC) – speaks for itself.
Public-Private Partnership (PPP) and concessioning, an offshoot of PPP in which an existing asset is leased to a developer for re-development, are not bad on their own. India, Canada, Ireland, France and Australia, to mention a few, have used it successfully. Countries like Scotland abhor it after its exploitation to deliver the rehabilitation of its 32 high schools failed. The problem is that technical and organisation knowledge are lacking in most of the representatives in the PPP contracts in Nigeria. In most cases, the development partners do not have the ability to bear the technical, financial and organisation risks as claimed in their proposal. UNISON, the biggest trade union in Scotland, sees PPP as off-record way of government borrowing money at exorbitant interest rate.
PPP and concession cannot do well under the kind of unbearable corruption we are experiencing in Nigeria. The institutional, organisational and legal frameworks for the successful implementation of PPP and concessioning are still weak in Nigeria. There are three constraints in project development – cost, quality and time. Three major determinants of PPP/Concession are cost of the project, rent or amount of toll and duration of the contract at which the project transferred to the owners. Serious negotiation is needed to ensure that the best deals are produced. What is expected from the deals is “win-win’ situation. The governments must, therefore, be very careful to apply PPP and Concession for public projects.
• Oyedele, estate surveyor and valuer and international project manager, is based in Osogbo, Osun State.
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