Why Julius Berger Abandons The Reconstruction of Lagos-Ibadan Expressway


The Yoruba people have an adage. They say two people don’t lose out in a lie. If the person being lied to is unaware, the liar cannot be.

But the late Russian leader, Vladimir Lenin, sees it differently. Lenin used to say: “A lie told often enough becomes the truth.”

This appears to be the tragedy of the Lagos-Ibadan Expressway reconstruction project, which former President Goodluck Jonathan flagged off with dubious fanfare on July 5, 2013.

Jonathan promised to complete the work in 48 months, but he abdicated that responsibility shortly after dancing on the road. The Ministry of Works later announced that government would only provide N50billion and leave private investors and financiers to raise N117billion balance needed to complete the project. And the whole arrangement was shrouded in secrecy.

LIE is the acronym for the Lagos-Ibadan Expressway. Could this be the reason why government officials handling the project have been living a lie?
After scratching the surface with a whooping N50billion, one of the construction firms, Julius Berger, has abandoned the road project, forcing the Federal Government (FG) to go back to the drawing board, according to the revelation of the Permanent Secretary in the Ministry of Works, Alhaji Dauda Kigbu.

Kigbu, who met President Muhammadu Buhari and tried to make him see the good in Public-Private-Partnership (PPP) arrangement, told State House correspondents after the meeting: “The President is committed to developing this country and he is passionate about roads because roads are central to national development.

“Ninety per cent of the mandate of the Federal Ministry of Works is mainly on roads… We went through all the major projects across the country and I emphasized the need for seeking other windows of funding outside the national budget; particularly, looking at the PPP model…”

Kigbu needs to be encouraged. And that takes us back to the starting block, with an echo of Murphy’s Law ringing in our ears: “When all else fails, read the instruction.”

Chief Olusegun Obasanjo built the Lagos-Ibadan expressway within 3 years, when he was Military Head of State. But for over three decades, successive governments left the road to disintegrate even as millions was being made through toll plazas on the highway.

And when the FG decided to fix the road before 2009, the financial muscle was not there because of the global economic meltdown. Then, some wise men proposed the option of PPP experiment.

The move was in line with modern approach to infrastructure development all over the world.

But the Nigerian system placed several hurdles on the path of PPP. These challenges made it unattractive to investors. There was so much frustration, because the concept of concession was new to Nigeria and Nigerians.

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Before then, there had been only one PPP success story. It was the reconstruction of the second terminal of the Murtala Muhammed Airport (MMA2) that was gutted by fire. And it was handled by Bi-Courtney, an indigenous firm that had to endure much torture in the hands of its uninformed public and the government that should protect investors.

Nobody gave the firm a chance, but it succeeded against all odds. This perhaps emboldened Bi-Courtney to also bid for the reconstruction of the Lagos-Ibadan expressway.

Bi-Courtney won the concession to reconstruct, expand and modernize the expressway under a Design, Build, Operate and Transfer (DBOT) arrangement in 2009.

But, it all turned out to be a political hot potato. And corruption in government circle allegedly turned the project into a minefield for the investor, to the extent that the final approval of the design was not obtained, as required by the terms of the concession, until May 10, 2011 – two years after the concession was granted.

The story ended, or so it seemed, with the abrupt revocation of the concession by the FG on November 19, 2012, over claims that the company breached the terms of the agreement regarding the duration of reconstruction works.

It seemed to be a good idea at the time, but if a lie travels for 20 years, as people say, the truth will catch up with it in just one day.

Jonathan’s Lagos-Ibadan expressway dance on July 5, 2013, has eventually turned out to be a smokescreen meant to conceal a grand plan to covet Bi-Courtney’s concession. And the masquerade will soon be stripped naked with Kigbu’s latest moves.

What Nigerians have not been told is that those in government then had already re-concession the project to themselves without properly resolving the Bi-Courtney issue.

It was not until after the revocation of the concession agreement that Nigerians learnt that the concessionaire could not make much progress due to politicization of the project and government’s failure to, initially, set the right tone for the commencement of work.

That much was revealed in the 2011 annual report of the Infrastructure Concession Regulatory Commission (ICRC) that was presented to Jonathan by Chief Ernest Shonekan who was the Chairman of the Commission then.
The Commission noted in the report that the implementation of the project was delayed due to various issues that were not addressed prior to the execution of the concession.

ICRC identified some of the issues as approval for the design of the road, securing the Right of Way, financial model and environmental and social impact assessment.

On approval for the design, the report indicates that Clause 6.1 of the concession agreement identified the concessionaire as responsible for the preparation of the preliminary design for the grantor’s review and approval.
The report confirms that approval for a final design was granted on May 10, 2011, two years after the concession agreement was signed.

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“It is evident that the scope of the work was not fully documented and outline design provided before the concession was awarded,” says the report.
On the financial model, the Commission observed that the cost of the project as included in the concession agreement was not based on the necessary studies.

The report reads in part: “Without an agreed design and scope of works based on the grantor’s performance and output standards, there cannot be an agreed fixed cost for the project.

“Without a financial model setting out the expected project costs and revenues, financing costs cannot be determined.

“The cost of the project as included in the concession agreement was not based on the necessary studies (e.g. traffic forecast) required for the implementation of a road project through DBOT model.”

According to ICRC an environmental and social impact assessment should have been carried out because of the extent of the refurbishment work, the proposed widening and the effect that tolling was likely to have on the properties and communities along the road.

The report also states that further traffic data and survey work ought to have taken place to assess the willingness and ability of the road users to pay and potential diversionary effects, adding that extended right of ways ought to have been secured.

“Due to the issues identified above, the project could not raise finance from any credible investor. This made it impossible for the concessionaire to meet the conditions precedent as itemised in Article3.3 of the concession agreement,” the report says.

While Bi-Courtney was still contending with all these issues, politicians continued to harass the concessionaire, often impounding its equipment on the worksite.

Ogun State governor, Senator Ibikunle Amosun, was a strong opposition voice. He said that he could construct the road in one year. He also teamed up with other southwest governors, who collectively told Nigerians that they were going to build a by-pass through the region as an alternative to Lagos-Ibadan expressway.

Two years down the line, some of the governors cannot even pay workers’
salaries for months, not to talk of completing any major construction project. Obviously, somebody must have been talking with forked tongue. And Nigerians must be wiser now.

Going by the words of a US-based structural/civil engineer, it will cost between $2.4million to $3.5million to design and build every 1.6km lane of Interstate highway in the US. The full length of Lagos-Ibadan expressway is about 135km, and that gives a total of 780km lanes. This will probably cost about $3million per kilometre lane – a total of $2.3billion, for a complete and new interstate highway with series of bridge overpass/underpass.

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How would they have mobilised over N400billion for the original road design, considering the infrastructures expected to come with it? The Kano-Maiduguri road, that is not offering such luxury, has gulped over N300billion and still going. And Jonathan’s palliative work on Lagos-Ibadan expressway with a budget of N167billion is stuck after covering a short distance.

A major road construction like the Lagos-Ibadan expressway is not a tea party. The road carries more weights than it ordinarily should because of the failure, on the part of government, to provide alternative means of transporting heavy goods and petroleum products upcountry. Even the weigh bridges that were used in the past to take stock of the loads in vehicles are no longer functional. The road, from available statistics, is the busiest in the country.

The cost of Nigeria’s infrastructure gap is calculated at over N30 trillion, and the Ministry of Works’ N135, 943, 482, 199 budget devoted to construction is grossly inadequate.

Reports say road concession is state policy in India, where 152 roads have been delivered under the arrangement. The state of Uttar Pradesh alone delivered over 13 of its major roads through PPP.

Of a total of 51,242 km of motorways in Western Europe, 17,009 km (representing 33 per cent) were done under concession arrangement. Of this figure, while 16,356 km are toll roads, 653 km have shadow toll.

For instance, in Germany, over 12,200 km of roads have been given out as concession, UK (580 km), France (6, 705 km), Italy (5,600 km), Spain (2,255 km), and Norway (550 km).

It remains a standard practice in Europe to concession infrastructure development to private investors.

In the United States, concession covers all the sectors of the economy, including IT/Telecom, Energy, Financial services, Leisure and Entertainment, Transportation and others.

If government is now convinced that PPP holds the key to present day infrastructure development, then the old order must change. There must be transparency, and government as a partner must be seen to be supporting the efforts of its concessionaire rather than engaging in street fights as experienced by Bi-Courtney.

Another Yoruba adage translates thus: “When a child falls, he looks ahead; but the adult that falls will look back.”

This appears to be the step that Kigbu is taking now. And it’s apparently a step in the right direction.

Atanda, a project management expert writes from Osogbo

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