Jamiu Yisa and Ayorinde Oluokun
Nigeria’s Federal government has terminated the contract concessioning the Lagos-Ibadan Expressway reconstructiona and maintenance to Bi-Courtney Highway Services, headed by the Lagos lawyer, Dr. Wale Babalakin
This development came more than three years after it awarded the road contract to the construction company.
Minister of Works, who announced the termination of the concession this evening, said that adequate measures were taken to ensure that the Federal Government abided by all its contractual obligations.
President Goodluck Jonathan had hinted a possible revocation of the concession at the media chat he had on Sunday.
Arch. Mike Onolememen, the minister of works, who read out a statement to state house correspondents on Monday said “the termination is as a result of serial breaching of the terms” of the concession by Bi-Courtney Highway Services.
Two contractors, Julius Berger Nigeria Plc and R.C.C Nigeria Limited will now handle the reconstruction of the over 100 kilometers road described as the busiest in Nigeria.
According to the minister, Julius Berger will handle the rehabilitation of Section 1 of the road which stretches from Lagos to Shagamu interchange while RCC Nigeria Limited will handle the Shagamu to Ibadan stretch.
President Jonathan had indicated that the Federal Government will revoke the concession agreement it signed with Bi-courtney on Sunday as he said the company has not demonstrated that it has the capability to handle the reconstruction of the road.
The concession for the reconstruction of the road was granted in 2007 by the administration of the late President Umaru Yar’Adua to Bi-courtney, but the company has not been able to do any serious work on the road, chiefly because the company could not raise the N100 billion loan, it claimed it needed to rebuild the road
Bi-courtney however recently moved some equipment to site and began some palliative work on the road to make it more motorable in anticipation of the usual heavy traffic associated with yuletide seasons.
But the Minister of Works said the Federal Government has no choice, but to revoke the contract, arguing that the concessionaire had committed a series of breaches in the agreement it signed with government. “We have complied fully with the provisions of this agreement. We have had cause even in the past to write the concessioner to detail the breaches which it had committed in this agreement in this particular transaction and we have also followed the minimum and maximum number of days the contractor was expected to remedy the situation but failing which the Federal Government had no alternative but to take this course of action”.
“In terms of percentage payment so far, this is a concessioned project. In other words it is different from the normal EPC contracts, so the FG in a sense did not make any direct payment to Bi-Courtney in this particular transaction. Bi-Courtney was supposed to raise, he would have been able to raise the fund from the private sector and apply it to the construction of this expressway and toll it for as many as 25 years, to recoup its investment and this has not happened, and that is why today the concession has been terminated.
The Federal Government however skirted the real reason Bi-Courtney had failed to raise the capital for the project. Analysts said Bi-Courtney Aviation Services, a sister company had gotten its hands burnt over another project, the rebuilding of the Murtala Muhammed Airport 2 at the Domestic Terminal. The project was built with bank loan but the Federal Government had frustrated all the efforts by the company to make the project profitable, breaching all the way the agreements between them.
The apparently failed airport project, with billions of loans unpaid, has been a big minus to Bi-Courtney and the Lagos-Ibadan expressway project.