Investors to raise N117bn for Lagos-Ibadan Expressway reconstruction

 

Minister of Works, Mr. Mike Onolememen

Indication emerged on Tuesday that the reconstruction of the Lagos-Ibadan Expressway would be largely private-sector financed.

The Federal Government said it had made a provision for N50bn, representing 30 per cent of the N167bn cost of the project, leaving the private investors and financiers led by the Infrastructure Bank to raise the N117bn balance needed to complete the project.

This was contained in a statement signed by the Director of Information, Federal Ministry of Works, Mr. Bisi Agbonyin.

The details of the infrastructure financing facility showed that the Federal Government would provide N50bn as its counterpart funding for the project.

The ministry stated, “The Federal Government has made a total provision for the sum of N25bn as her own counterpart funding in the 2014 budget with a view to providing the balance of N25bn in the 2015 budget.”

The Director, Public-Private Partnership in the ministry, Mr. Tunde Ekunsunmi, in a telephone interview with one of our correspondents, also said the Infrastructure Bank would lead other local and foreign banks to arrange the 70 per cent private sector share of the project’s funds.

He said the government would provide an irrevocable payment guarantee for the Infrastructure Bank to enable it to raise the government’s N25bn as provided in the 2014 budget proposals for the project pending the release of the money.

Ekunsunmi, who described the funding arrangement as an innovative system, said part of the money was already being released to the contractors handling the project.

The road, it was gathered, would be tolled after its reconstruction to enable the financiers to recoup their investment and for continued maintenance.

President Goodluck Jonathan had in July last year inaugurated the reconstruction of the road for a sum of N167bn with a completion period of 48 months.

This was after the government had terminated its earlier 25-year concession arrangement with Bi-Courtney Highway Services for the expansion and reconstruction of the road.

The 105-kilometre road project was re-awarded to Julius Berger Nigeria Plc and Reynolds Construction Company Limited.

The Minister of Works, Mr. Mike Onolememen, had said the government decided to terminate the concession because of what he called serial breaches of the agreement by the Wale Babalakin-led Bi-Courtney Highway Services.

The government had handed over the road to Bi-Courtney on May 26, 2009.

The minister said the firm had failed to achieve the target set for it under the agreement.

Julius Berger was given Section 1 of the expressway, stretching from Lagos to the Sagamu Interchange, while the RCC got the Section II, which stretches from the Sagamu Interchange to Ibadan.