As the blame game over the failed Lagos-Ibadan expressway concession project continues to fester in paid advertorials between the Federal Ministry of Works (FMW) and its concessionaire, Bi-Courtney Highways Services Ltd, a Federal Government appointed umpire has vindicated the firm’s complaints in a report submitted to the president.
In the report delivered to President Goodluck Jonathan by Chief Ernest Shonekan, who heads the Infrastructure Concession Regulatory Commission (ICRC) possible reasons that led to the failure of the Lagos-Ibadan Expressway concession were identified in line with Bi-Courtney’s allegations.
Bi-Courtney won the concession to reconstruct, expand and modernise the 34-year-old 105km expressway under a Build, Operate and Transfer (DBOT) arrangement in 2009.
But the concession agreement was abruptly by the Federal Government on November 19, over claims that the company breached the terms of the agreement with regard to the duration of reconstruction works.
However, in the 2011 annual report of the ICRC presented to the President last week, the commission noted that the implementation of the project was delayed due to various issues that were not addressed by both parties prior to the execution of the contract.
While exonerating Bi-Courtney of blames for the project delay, 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 of the road, the report indicated 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.
In line with Bi-Courtney’s claim, the report said that approval for a final design was granted on May 10, 2011, two years after the concession agreement was signed.
“It is evident that the scope of the work was not fully documented and outline design provided before the concession was awarded,” said 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 read 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 stated 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.