Top Top Secret: Lagos – Ibadan Expressway On Paper

What you are about to read is top top secret. My secret ‘sauce’ sent me the plans for the Lagos – Ibadan expressway rehabilitation and I promised that even if I shared it, I will swear my readers to secrecy.

I take it I have your word that you wont tell anyone what you are about to read? Yes? Ok

1. The total cost for the road has been put at N167bn or roughly $1bn. The length of the road to be ‘reconstructed, rehabilitated and enhanced’ is 127.6km.

2. The road, for the purpose of this RRE (Reconstruction, Rehabilitation, Enhancement) has been split into 2 sections as follows

Section 1: From Old Toll Gate, Oregun/Ikosi-Ketu, Lagos State to Shagamu Interchange, Ogun State. The total length of this portion of the road is 43.6km and has been awarded to Julius Berger Nigeria Plc for N70,753,387,798.42. Completion time is set at 48 months.

The work on this section will include reconstruction of the existing 2 lanes as well as adding a 3rd lane after which the road will be 15.2m wide on each side, including outer and hard shoulders. There will also be an interchange around the Redemption Camp as well as, interestingly, 5 overhead pedestrian bridges. Apparently there are currently 10 existing bridges on this section of the road so JB Plc will also be required to ‘maintain’ them and also ‘install’ 2 weigh bridges (bear with me, I’m quoting from the top top secret document).

Section 2: From Shagamu Interchange, Ogun State to Ojoo Interchange, Oyo State. The total length of this portion of the road is 84km and has been awarded to Messrs Reynolds Construction Company (RCC) Nigeria Limited for N96,303,444,055.63. Completion time is set at 48 months.

This section of the road will not be expanded to 3 lanes apparently and so the road will be 11.85m wide on each side. There also wont be any pedestrian bridges or new interchange on this section however, the contract includes the maintenance of 12 bridges and the installation of 2 weigh bridges.

3. To save money on the project, there will be a 45 metres Right Of Way in both directions from the middle of the road for the first 10km of the road from the Lagos end (as this is the most built up end). After that, the Right of Way increases to 60 metres from the middle of the road. It is estimated that this will cost N10bn to compensate people who will need to have their properties removed for the road.

I am hoping that unnecessary lawsuits from property owners will not delay the road but this is Nigeria so you never know.

4. So where will the money for this road come from? The money has been split into 2 parts – N50bn and N120bn. A Special Purpose Vehicle (SPV) will be setup to manage the project i.e. all the relevant parties – FG, Ministry of Works, Ministry of Finance, The Infrastructure Bank (TIB) – to the project will be sort of shareholders in the SPV.

To set the ball rolling, the FG will fund the first part of the project i.e the N50bn through something called FGN Irrevocable Payment Undertaking (IPU). Essentially, what this means is that private sector financiers will put up the money now, while the government will repay it in 2014 and 2015 through the budget. This N50bn is being raised right now (and might have been completed even). I imagine the reason for doing it this way is because only N3bn was allocated to this particular road in the current budget so now that the government knows what its commitment will be, it can simply allocate the remaining N47bn over the next 2 years.

The second part of the financing – N120bn – will be provided purely by the private sector, at least that’s the plan. The idea is that once the contractors have been ‘mobilised’ with the N50bn and the project comes to life, it will be easier to raise money from private investors to complete it. [Personal opinion: I like this approach where the government sets the ball rolling with its own money before private investors come in. This is what I hated the most about the Lekki – Epe expressway where it was all private money from the get go].

5. An Operation, Maintenance & Tolling Company will be set up as part of the project. Wait, you thought there won’t be tolls on it? Dont be silly.

There is a National Tolling Policy that has apparently been developed and is waiting to be passed into law. This will provide the framework for how the FG will enter into tolling agreements with private companies or the conditions under which it will toll any road.

6. The tolls will be in the same place as before based on the plans – Magodo, Ogere and Ibadan. As this is a top top secret document and is likely to change, I am loath to share what the projected toll rates will be. Suffice to say, the plan is to increase them by 7% every 2 years. Also, heavy trucks will pay 5 times what cars will pay and there will be 6 different toll rates starting from motorcycles and graduating upwards.

All told, tolling will provide 95% of the revenues from the road with the Magodo toll projected to provide around 52% of the revenues based on volume of expected cars. [Personal opinion: The number of cars used to calculate the projected revenues look very very conservative to me. Indeed, if I’m not mistaken, the expected traffic is less than what was used for the Lekki – Epe expressway].

The plan is for the N120bn facility to be for 7 years but tolling will only commence once the road has been completed in year 2 i.e 2015. The first toll to commence will be Ogere while Ibadan and Lagos will start the following year in 2016.

7. The remaining 5% of revenues will come from advertising, billboards and such like. Telecoms companies will also be charged N500k per kilometre (increasing by 7% every 2 years) to lay cables on the road. Note that this will be on either side of the road and is per telecom firm so effectively, the revenues will be N1m per kilometre for cable laying.

Revenues are also projected from towing services and speeding tickets. Dear reader, if you are already salivating at the thought of throttling the throttle on this brand new 3 lane dual carriage way road, I urge you to reconsider. Except of course you have a particular desire to ensure the financiers make their money in less than 30 years. In which case, go ahead…match am. ‘Disobedience of traffic rules’ is also listed as a source of revenue. Enough said.

8. Specifically, the type of PPP being employed for this project is being referred to as DBFOM – Design, Build, Finance, Operate and Maintain. The main point to note about this arrangement is that the SPV never owns the road (it belongs to the FG) but only has the rights to the road and to collect revenues from it.

In total, the road will cost just around N201bn. This is because no interest will be paid on the first 2/3 years of the N120bn loan. Instead the loan will be rolled up as part of the capital and will then start to be repaid once tolling commences.

9. Finally, a maintenance schedule has been built into the project as follows

Routine Maintenance – Every year

Recurrent Maintenance – Every 3 years

Periodic Maintenance – Every 5 years

Small detail I also picked up – There will be 30 Mobile Policemen employed annually once the project starts it appears. But what I found interesting is that their salary is listed at N40,000 per month. Is this what MoPols earn in Nigeria? And we give them machine guns?

 

It’s tough to summarise a 122 page document that’s also very boring. But ‘boring’ is very good for things like this. A lot of work has definitely gone into the project so far which means all the while people have been waiting for work to start, some serious work has been going on in the background. The section on risks is several pages long and considers most of the things you’d expect including the hostility of people to tolling and compensating those whose properties will be affected.

But ultimately, this is a plan and is likely to suffer changes, delays and all manner of unforeseen problems – it’s difficult trying to project 30 years into the future anywhere let alone a country like Nigeria. If all goes according to plan, people should start seeing serious work begin on the road before the end of the year.

Based on what I’ve read, I am very hopeful. Touch wood. Alas our specialty is in snatching defeat from the jaws of defeat to say nothing of the demons having fun on the road in the face of all the churches and mosques there.

 

FF

 

 

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13 thoughts on “Top Top Secret: Lagos – Ibadan Expressway On Paper

  1. Can’t the huge churches and mosques and shrines on that axis pay a healthy chunk of the total too? #AskingForAFriend -_-

  2. The plan does seem to be essentialy the same one used when the contract was awarded to Bi-Courteny that was later cancelled. It was all good on paper but the Federal Government then refused to do their own part in respect to plans,resources and financing. This lead for it to be delayed till it was cancelled from them.

    Well just hope the same same process does not repeat itself. Especially if a new government come by 2015 and does not like the contractors

  3. “Disobedience of traffic rules…” Lol! Considering how disobedient Lagosians can be, the revenue from this aspect alone may be able to fund the 4th Mainland Bridge.

    And as per the N40,000; my guess is that’s an estacode that will be paid in addition to their regular salaries. So different policemen will be rotated onto and off the assignment annually.

    Nnamdi

  4. I am hopeful. Glad to see Infrastructure Bank play an active role. Investors and interested parties will be more comfortable dealing with them instead of the good people in Abuja. It’s incumbent upon stakeholders to continuously seek alternative and innovative modes of financing.

  5. Pleased to see Infrastructure Bank actively involved. Investors will be more comfortable dealing with them instead of the good people in Abuja. Look forward to more of such deals being structure. Future projects do not necessarily have to involve tolling, they benefit for the government and most importantly tax payers will be efficient and specific use of borrowed funds.

  6. Seem like a good idea. If it works I hope this model can be extended to other major roads in the country (i’m thinking Sagum-Ore-Benin, Onitsha-Enugu, PH-Enugu). I also hoped for a plan that maybe puts a rapid transit rail line on the road (like the Lagos-Badagry) but that is wishing for too much.

  7. Did the document at any stage indicate how many toll gates will be constructed? That road will definitely become a nightmare as without tolls at the moment, it bears a lot of vehicular traffic heading towards Ojodu Berger, Mowe & Ibafo. Considering the sort of traffic snarl experienced at the Shoprite/Lekki Toll, I’d say a 20 gate on each side toll will be in order else, chaos.

  8. Pingback: Top Top Secret: Lagos – Ibadan Expressway On Paper – Y! Opinion

  9. @Ikenna u spoke my mind. Our Fed Govt so far have decided not to think outside d box. Using loans and public funds should think for the future but alas that’s not d Nigerian way. Alternative solutions for a long time benefit is not something we’re good at. Kudos to BRF for the rail idea on d Badagry axis. May God bless the Nigerian peiple with leaders who have d foresight to plan plan for tommorrow. Amen

  10. Bright idea! We are never in want of ideas anyway. Sounds pretty good on papers but more often than not there is a disconnect between a plan and it’s execution in our clime. If you are opportune to have an insight into the plans of other failed projects, they have always looked ingenious on papers. Let’s hope for the best and prepare for the worst.

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