How ownership dispute triggers N3.5tr revenue loss at Lagos Federal Secretariat

Amid years of unresolved issues, Nigeria’s economy is reported to have lost an estimated N3.5 trillion income to an abandoned old federal secretariat complex located in the nation’s commercial centre, Lagos.

The estimation is based on assessment by industry’s experts using the current market price of properties in the Ikoyi real estate market, which has had a land value increase on the average by about 360 to 500 per cent since 2009 till date.

The edifice, which would have been converted into 480 self-contained condominiums of luxury apartments to bridge the over 22 million housing deficit, has continued to lay in ruins for not being put to good use.
Many of the nation’s historic building projects situated in Lagos, also share the same fate. They include the Nigerian External Telecommunications (NET) building in Marina, the Defence House (formerly Independence Building) and the former Navy Headquarters building in Marina. The structures have been overtaken by ‘forests’ and presently constitute environmental menace.

The Guardian gathered that lack of political will to revive some of these monuments as well as disagreement over planning approval to convert them from office facility to residential purposes among parties, have led to the present state of one of the buildings.

Specifically, the Federal Secretariat complex developed in 1976, which served, as the engine room of the Federal Civil Service, is presently in a state where major components such as doors, windows and other fittings have broken down.
The 15-storey Complex located in Ikoyi, used to be one of the nation’s best public facilities, providing office space for government businesses, bureaucrats, departments and agencies. However, since the Federal Capital was moved to Abuja, in 1991, the edifice has over the years been stripped of its usefulness and deteriorated due to neglect.

The Federal government had advertised to the public, inviting eligible companies interested in a Public/Private Partnership arrangement for bids in a plan to concession for a number of years, to undertake the re-development of the Federal Secretariat Complex from an office complex to self-contained apartments.

Resort International Limited submitted its bid alongside several others and that of Resort International Limited was most preferred by the Federal Government. The Guardian learnt that in October 2006, Resort and the Federal government executed a Development Lease Agreement (DLA) by which the Federal Government granted a lease of the Federal Secretariat Complex Phases (I) and (II) to Resort, for a term of 99-years.

The purpose for which the lease was granted to Resort was to redevelop the Federal Secretariat Complex buildings into self – contained apartments, for sale or lease to Nigerians, particularly those in Diaspora. It was agreed in the DLA that Resort would be responsible for the financing of the entire project.

In a statement obtained by The Guardian from Resort International Limited, it revealed that the Federal Government on its part, made several covenants, representations, assurances and warranties to Resort, which provided comfort and ultimately led to sourcing funding from lender banks to invest in the project.

The statement stated: “Among the covenants made by the Federal Government in the DLA was that the Federal Government would facilitate the obtaining of a ‘no objection approval’ from the Lagos state government for the conversion of the premises from an office complex to residential apartments. After two years into the redevelopment of the project and after Resort had expended huge sums running into billions of naira on the project, the Lagos state government deployed armed policemen and other non-uniformed men to the project site to stop the ongoing preliminary works by Resort on the site.
These persons acting under the authority of the state government drove Resort’s workers and contractors away from the site and sealed up the project site. The alleged basis of State government’s stoppage of the work was that Resort did not obtain Lagos state government approval to convert the Federal Secretariat Complex from an office complex to residential buildings. It is curious that Lagos State government stopped the project ostensibly for lack of approval two years after the project commenced.”

The owner of Resort International Group, Dr. Wale Babalakin, told The Guardian that there is no litigation stopping the construction of the project, adding that the only hindrance to the construction of the project is the actions of the Lagos State government.

It was gathered that when RIL paid N7 billion for the property in 2005, Lagos State came up with the argument that the complex ought to have been sold to it, not anybody else, whereas it had all the time to participate in the bid process, but did not show any interest.

Lagos government is also said to have made other demands, including that RIL must obtain a fresh Certificate-of-Ownership (C-of-O) from it, irrespective of the documents issued by the Federal Government on the property.

It equally asked RIL to apply for the consent of the Lagos governor on the property and apply for a change of use. In addition, it asked RIL to apply for a development permit from the state government.

The state government also demanded between 15 and 50 per cent of the cost of properties from buyers as an additional condition before work can commence.

Consequently, the purpose for which Resort International Limited bought the old Federal Secretariat, which is to provide decent housing for the teaming populace was frustrated.

Meanwhile, efforts to get reaction from Lagos State government were unsuccessful, as calls and messages sent to the Commissioner for Information and Strategy, Gbenga Omotoso were not replied.

However, professionals in the building industry said the continuous abandonment of the project has robbed the nation of over N3.5t revenue.

The immediate past chairman of Lagos branch of the Nigerian Institution of Estate Surveyors and Valuers, Mr. Dotun Bamigbola, said property prices over the period from 2005 till date have been increasing in value, hence, even if the physical structure has depreciated, the land value cannot be said to have moved in the same direction.

Bamigbola said it would require a detailed study of the physical components of the existing structure by relevant structural professionals to determine the level of structural depreciation that has set in.

He said it would be difficult to project the estimated property worth on the basis of the 480 units of apartment planned for redevelopment because the types and quality of the apartment is not in public knowledge and various types and standards of apartments command different prices in the market.

However, he said drawing an estimation from the current market price of properties in the Ikoyi real estate market, which has had a land value increase on the average by about 360 to 500 per cent since 2009 till date, which is over 13-years, the property should be worth more than N2.5 to N3.5 trillion now.

He said: “That is considering the land value based on the N7 billion at the time of the transaction between RIL and the Federal Government. It can be inferred that the asset would have had at least an average of 360 per cent to 500 per cent increase in market worth if put to use, after about three years to redevelop it.”

Bamigbola said to revamp the building will require structural experts to carry out a study of the existing structure like it was done on the other towers of the collapsed building of Fourscore Heights Limited in Ikoyi.

According to him, the state government has to be involved in this because of the magnitude of the structure and the associated safety concerns, which such development may generate, as well as the extant development laws and regulations in the state, particularly the land use and Urban and Regional Planning laws.
“These are critical regulations, which have to be adhered to in all forms of development by all, ” he said.

The President, Nigerian lnstitution of Estate Surveyors and Valuers, (NIESV) Mr. Johnbull Amayaevbo, also said the economy is losing trillions of naira to what can be described as a monument wasting away.

He argued that the Olusegun Obasanjo administration missed it, as the government should have handled the Federal Secretariat project, the same way it resolved the 1004 estate in Lagos by adopting a commercialisation and privatisation policy.

Amayaevbo said: “But now, there have been issues on the project between a company and Lagos State Government. We should try as much as possible to move politics away from what will benefit the majority of Nigerians. Imagine the huge number of unemployed people the project would have taken away from the market. Imagine the number of people working in 1004 estate today and equate it to what could have been at the Federal Secretariat.”

According to him, besides wasting the asset, it is costing the society more in terms of insecurity. He said the earlier parties to the project resolved all the issues the better it will be for the country.
“ We can not rule out the possibility that the location can be used as a den for armed robbers, and to perpetuate other forms of criminality, “ he said.