The recent approval by the Federal Executive Council of the concessioning of the Lagos-Ibadan Expressway for 25 years to Bi-Courtney Nigeria is a call for sober reflection. Under the Public-Private Partnership (PPP), Bi-Courtney will invest N89 billion on rehabilitation and upgrade of the highway and recoup the cost of its investment through charging of tolls.
As we know, the concessionaire (Bi-Courtney) is not a new player in the emerging Nigeria PPP market; it currently operates a $250 million Build-Operate and Transfer (BOT) contract at the Murtala Mohammed International Airport Terminal 2 (MMA 2). The Lagos-Ibadan Road project will be done under a similar BOT deal with 100 per cent private investment funding.
On paper, this deal seems to represent a ‘win-win’ situation for all parties. The government will enjoy a 25-year rehabilitation and upgrade of arguably the busiest and most strategic federal highway without spending a kobo. Also, Bi-Courtney will enjoy a 25-year ‘monopoly’ on providing a strategic road link between the south-west and south-east region. And the average punter is also enjoying a well maintained road- albeit at a cost.
Countries all over the world are currently struggling to find private investors to fund toll roads projects due to the current global economic crisis and the unreliability of the traffic forecasts used in financial modelling of such projects. However, the Lagos-Ibadan Expressway will be a ‘money spinner’ because of its ‘monopoly’ status. So why is it a money spinner? There is currently no decent alternative route between the south-west and south-east region. There are also millions of religious worshippers who travel on this road on a weekly basis. And most importantly, there is no competing public transport system such as rail. And sadly, road public transport vehicles will also be subjected to toll charges. For me, this is probably the most viable PPP road project I have seen from an investment point of view. But whether it provides ‘value for money’ for the taxpayer is a different ball game altogether.
I have always questioned the rationale behind of some of these so-called PPP. The more I look into the details, the more disillusioned I get. Following my review of some of these PPP road projects and the emerging trends, I have come to a conclusion that PPP is now becoming a mode for ‘legalised’ corruption. Most of these PPP contracts lack transparency. As an example, I can’t remember seeing the public ‘Call for Tenders’ for the Lagos-Ibadan Expressway anywhere. We only got to know it’s been approved on the front pages of the newspapers. How can a contract of N89 billion not follow any ‘due process’. And if it did, we are yet to know how many investors put in a bid. Or was Bi-Courtney the sole bidder? Or are you telling me that the public procurement rules in Nigeria allows a contract of N89 billion to be awarded on the basis of ‘sole-invitation’? These issues bring me back to the issue of ‘value for money’. And the question remains, when due process is not followed, how can we be sure that the taxpayer is getting value for money?
Unfortunately when these sorts of arguments are raised at public forums, you get shouted down by other members of the public for reasons I sometimes understand but do not entirely agree with. Due to the paucity in infrastructure development since independence, an average Nigerian just wants to see things done. The way and manner such projects are undertaken seems not to bother them at this stage. When you query the underlying principles of certain projects, the quick response is “at least Governor X or Minister Y is doing something, unlike in the past when nothing was done”. But does that mean we should all keep our mouth shut even if Governor X or Minister Y is mortgaging our future as a result of his/her ignorant or corrupt actions? I strongly believe that we should not sit back and allow our future to be mortgaged to few individuals under the guise of PPP.
With the specific regards to Lagos-Ibadan Project, I do not have any problem with Mr Wale Babalakin (CEO of Bi-Courtney), as he his just a businessman looking to maximise his opportunities. But we need to challenge the system that is allowing these dubious PPP contracts to perpetuate. After reading about the Lagos-Ibadan PPP, the question I asked myself was, does it mean the government cannot undertake any project? If the government has to concession all the federal highways to the private sector, then it needs to tell us what it is set up to do. They keep complaining that the cost is too much for them to bear. But that has been the excuse for the last 20 years or so. The same excuse was given for the failure of the power sector, the same excuse was given for the failure of the refineries, the same excuse is given when civil servants are retrenched, and the same excuse is currently being paraded regarding the looming removal of petrol subsidy. But it was not the case, when the Speaker of the House of Representative and Deputy purchased five bullet-proof ‘special utility vehicles’ at a cost of N300 million! A government that cannot undertake mundane tasks such as road maintenance is nothing short of a ‘failure’. I still maintain that the government cannot abdicate its statutory responsibilities. The government is set up to promote social equity and not to encourage the rise of Oligarchs.
While the government might saved itself N89 billion, someone is still picking up the cost. And that is the average Nigerian that will be using the highway on a daily basis. And let’s not be deceived, it does not mean that the savings made by the government will be used to provide key infrastructure in other sectors of the economy.
Let’s accept that the government is a ‘failure’, but why the choice of Lagos-Ibadan Expressway? Why can’t the N89 billion be invested in providing an alternative route (i.e bypass) through a PPP and tolled accordingly.
You need not to be transport specialist to know that the strategic importance of this highway has been undermined by the proliferation of religious organisations in the last 10 years or so. Vehicular accesses have provided along this corridor without any regard for highway safety and efficient movement of through traffic. The corridor is also one of the fastest growing in the country due to rapid urbanisation. For me, it is a ‘glorified’ local road. And it is difficult for the government to remedy these inherent problems now because of public outlash. How Bi-Courtney will deal with these religious organisations will be very interesting. It would have been better if this road is ‘downgraded’ and probably handed over to respective state governments. The government should have then worked in partnership with the private sector in providing an alternative. Upgrading the road to three and four lanes in each direction will only offer little benefit in the long term.
Lastly, whether we agree or not, the monopoly advantage given to Bi-Courtney will further undermine the possibility of having a decent rail system connecting Lagos-Ogun-Oyo states at least in the short to medium term. We need to understand that the more vehicles using the road, the more money Bi-Courtney makes. Do you think Mr Babalakin will support the construction of a rail line that will have a huge impact of road traffic numbers on Lagos-Ibadan Expressway. One of the unintended consequence of the government action, is the introduction of another major player that will work against (either secretly or openly) the development of a mass transit system along the Lagos-Ibadan corridor. But having invested N89 billion can he really be blamed?
As we know, the concessionaire (Bi-Courtney) is not a new player in the emerging Nigeria PPP market; it currently operates a $250 million Build-Operate and Transfer (BOT) contract at the Murtala Mohammed International Airport Terminal 2 (MMA 2). The Lagos-Ibadan Road project will be done under a similar BOT deal with 100 per cent private investment funding.
On paper, this deal seems to represent a ‘win-win’ situation for all parties. The government will enjoy a 25-year rehabilitation and upgrade of arguably the busiest and most strategic federal highway without spending a kobo. Also, Bi-Courtney will enjoy a 25-year ‘monopoly’ on providing a strategic road link between the south-west and south-east region. And the average punter is also enjoying a well maintained road- albeit at a cost.
Countries all over the world are currently struggling to find private investors to fund toll roads projects due to the current global economic crisis and the unreliability of the traffic forecasts used in financial modelling of such projects. However, the Lagos-Ibadan Expressway will be a ‘money spinner’ because of its ‘monopoly’ status. So why is it a money spinner? There is currently no decent alternative route between the south-west and south-east region. There are also millions of religious worshippers who travel on this road on a weekly basis. And most importantly, there is no competing public transport system such as rail. And sadly, road public transport vehicles will also be subjected to toll charges. For me, this is probably the most viable PPP road project I have seen from an investment point of view. But whether it provides ‘value for money’ for the taxpayer is a different ball game altogether.
I have always questioned the rationale behind of some of these so-called PPP. The more I look into the details, the more disillusioned I get. Following my review of some of these PPP road projects and the emerging trends, I have come to a conclusion that PPP is now becoming a mode for ‘legalised’ corruption. Most of these PPP contracts lack transparency. As an example, I can’t remember seeing the public ‘Call for Tenders’ for the Lagos-Ibadan Expressway anywhere. We only got to know it’s been approved on the front pages of the newspapers. How can a contract of N89 billion not follow any ‘due process’. And if it did, we are yet to know how many investors put in a bid. Or was Bi-Courtney the sole bidder? Or are you telling me that the public procurement rules in Nigeria allows a contract of N89 billion to be awarded on the basis of ‘sole-invitation’? These issues bring me back to the issue of ‘value for money’. And the question remains, when due process is not followed, how can we be sure that the taxpayer is getting value for money?
Unfortunately when these sorts of arguments are raised at public forums, you get shouted down by other members of the public for reasons I sometimes understand but do not entirely agree with. Due to the paucity in infrastructure development since independence, an average Nigerian just wants to see things done. The way and manner such projects are undertaken seems not to bother them at this stage. When you query the underlying principles of certain projects, the quick response is “at least Governor X or Minister Y is doing something, unlike in the past when nothing was done”. But does that mean we should all keep our mouth shut even if Governor X or Minister Y is mortgaging our future as a result of his/her ignorant or corrupt actions? I strongly believe that we should not sit back and allow our future to be mortgaged to few individuals under the guise of PPP.
With the specific regards to Lagos-Ibadan Project, I do not have any problem with Mr Wale Babalakin (CEO of Bi-Courtney), as he his just a businessman looking to maximise his opportunities. But we need to challenge the system that is allowing these dubious PPP contracts to perpetuate. After reading about the Lagos-Ibadan PPP, the question I asked myself was, does it mean the government cannot undertake any project? If the government has to concession all the federal highways to the private sector, then it needs to tell us what it is set up to do. They keep complaining that the cost is too much for them to bear. But that has been the excuse for the last 20 years or so. The same excuse was given for the failure of the power sector, the same excuse was given for the failure of the refineries, the same excuse is given when civil servants are retrenched, and the same excuse is currently being paraded regarding the looming removal of petrol subsidy. But it was not the case, when the Speaker of the House of Representative and Deputy purchased five bullet-proof ‘special utility vehicles’ at a cost of N300 million! A government that cannot undertake mundane tasks such as road maintenance is nothing short of a ‘failure’. I still maintain that the government cannot abdicate its statutory responsibilities. The government is set up to promote social equity and not to encourage the rise of Oligarchs.
While the government might saved itself N89 billion, someone is still picking up the cost. And that is the average Nigerian that will be using the highway on a daily basis. And let’s not be deceived, it does not mean that the savings made by the government will be used to provide key infrastructure in other sectors of the economy.
Let’s accept that the government is a ‘failure’, but why the choice of Lagos-Ibadan Expressway? Why can’t the N89 billion be invested in providing an alternative route (i.e bypass) through a PPP and tolled accordingly.
You need not to be transport specialist to know that the strategic importance of this highway has been undermined by the proliferation of religious organisations in the last 10 years or so. Vehicular accesses have provided along this corridor without any regard for highway safety and efficient movement of through traffic. The corridor is also one of the fastest growing in the country due to rapid urbanisation. For me, it is a ‘glorified’ local road. And it is difficult for the government to remedy these inherent problems now because of public outlash. How Bi-Courtney will deal with these religious organisations will be very interesting. It would have been better if this road is ‘downgraded’ and probably handed over to respective state governments. The government should have then worked in partnership with the private sector in providing an alternative. Upgrading the road to three and four lanes in each direction will only offer little benefit in the long term.
Lastly, whether we agree or not, the monopoly advantage given to Bi-Courtney will further undermine the possibility of having a decent rail system connecting Lagos-Ogun-Oyo states at least in the short to medium term. We need to understand that the more vehicles using the road, the more money Bi-Courtney makes. Do you think Mr Babalakin will support the construction of a rail line that will have a huge impact of road traffic numbers on Lagos-Ibadan Expressway. One of the unintended consequence of the government action, is the introduction of another major player that will work against (either secretly or openly) the development of a mass transit system along the Lagos-Ibadan corridor. But having invested N89 billion can he really be blamed?
