Lagos terminates concession agreement on Lekki-Epe Expressway

                               
Less than two years into the 30-year Build, Operate and Transfer agreement of the Lekki-Epe Expressway with Lekki Concession Company (LCC), the Lagos State government on Tuesday terminated the agreement with the concessionaire.

Following a supplementary budget proposal by the Lagos State Governor,Babatunde Fashola, the State House of Assembly has approved N7.5 billion for the state to buy out the concession right from LCC.

The original concession agreement allows LCC to expand, upgrade and maintain, for the initial phase, the 50 kilometre road and to build another 20 kilometre coastal road along the Lekki axis.

The agreement allows the company to recoup its investment on the road through toll collection from road users for 30 years before transferring it to the state government.

Though work is still on-going on the first of the contract, LCC commenced the collection of tolls in 2011. The second toll collection terminus is still under construction.  The LCC planned to construct three toll collections on termini on the road.

“The proposal for further amendment is largely predicated on the need to fund the acquisition of the existing concession, right and toll revenue benefit held by the Lekki Concession Company, the concessionaire for the Eti-Osa-Lekki-Epe Expressway. This will effectively accelerate the transfer of ownership of the road to the state, leaving the state with wider policy options with regards to that important infrastructure,” the governor wrote.

The House approved the proposal on Tuesday. To underscore the importance of the proposal, three commissioners – Budget and Economic Planning, Ben Akabueze; Finance, Ayo Gbeleyi; and Works and Infrastructure, Obafemi Hamzat – were at the House to defend it.

The initial concession agreement was signed on April 24, 2006. In 2008, Mr. Fashola signed supplemental agreements with LCC enabling the firm to access long term funding for the construction.

Later that year, LCC got N50bn long-term financing lifeline from local international financial institutions.

Some of LCC’s local investors include Stanbic IBTC, First Bank of Nigeria, and African Infrastructure Investment Managers, AIIM.