The Lagos State Government has justified the acquisition of the concession rights of the Lekki Concession Company (LCC), the concessionaire for the Eti-Osa Lekki-Epe Expressway, as an attempt to curb unwarranted increment in the tolls being collected.
But a source close to the Governor’s Office also said on Wednesday that this decision being taken just after two years of the 30-year Build, Operate and Transfer agreement to upgrade, expand and maintain the about 50-kilometre road, was a result of heated controversy since commencement.
Besides, while presenting the request of government for approval of supplementary on Tuesday, the State Commissioner for Budget and Economic Planning, Ben Akabueze, told the State Executive Council that he current concessionaire has in fact proposed another 20 per cent increase in current toll rate collected on the road.
Akabueze said that the government’s intervention would not only disallow an increase but will also be able to determine the tolling rate, number of tolling points among others.
The anonymous source also revealed the government’s decision was politically-motivated and linked to 2015 elections in the state.
“Again, you will recall that the 2015 elections are around the corner and the opposition is looking to cash in on the controversy the toll generated in 2011 to smear the name of the APC since it would be a level playing field for all the contestants this time”
“This is perhaps for me a good strategy by the government. In the first instance, this would put power back in their hands to control the rate of the toll and they can decide to halt it or suspend it at any time since they have the 100 per cent rights”, the source said.
In a statement on Wednesday, Lagos State Government denied the termination of concession agreements, saying “it has neither terminated nor cancelled the Concession Agreement it entered into with the Lekki Concession Company Limited (LCC) to reconstruct and expand the 49.36 km Eti-Osa Lekki-Epe Expressway.”
The Government said it “engaged in buying back the rights pertaining to the concession ahead of the 30-year period stipulated in the Design, Build, Operate and Transfer (DBOT) Concession Agreement. This is to be achieved by purchasing all the shares in LCC”, in order to clarify the issue.
“The State Government came to this decision to buy back the rights in the light of several developments clearly not envisaged in the 2006 Concession Agreement (which became effective in 2008)”the statement further read.
The statement said given the pioneering nature of the concession, some underlying assumptions and market indicators under which the transaction was concluded had since drastically changed in a manner that it can no longer be sustained in its current form.
It said the significance of the buy-back, “is that it allows the Government to take full control over the determination of the toll rates in order to continue to make it affordable for road users. The LCC shall therefore continue to operate as a fully commercial entity for the benefit of taxpayers and the larger society”, it was affirmed.
In his presentation to the lawmakers, Akabueze said “the principal basis for the supplementation of 2013 budget was due to the decision to acquire the 100 per cent concession of the Eti-Osa-Lekki-Epe expressway and have it entirely under the control of the state government.”
The commissioner said the economic condition of the state has improved compared to what prevailed about 10 years ago when it entered into the concessioning of the N50 billion worth of expressway.
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