The Lekki-Epe Road Project: The Need For Contingent Valuation (Part 1)

Written by  Adeyinka Adewale, PROPERTYGATE Published in Editorial Tuesday, 26 July 2011 11:22
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Recently, the Lagos State government chose to adopt a globally renowned strategy but nouvelle in the Nigerian context, of partnering with private investors to provide road infrastructure within the State.Prior to this time however, the constant worry of past administrations had been the enormity of costs (running into trillions of Naira) needed to cater for the infrastructure deficit in the state. The out-of-the-box solution was to initiate a public-private partnership to end the miseries of the government and spawn a smart way forward. This solution birthed the Lekki Concession Company (LCC), an initiative of the ARM group of companies.

 

LCC was an investment vehicle that sought to provide the much needed infrastructure and recoup the investment at an interest before reverting full rights to the government, in technical terms, also known as ‘Build, Operate and Transfer’. In the agreement signed with the state government, the concession term within which LCC owns full rights to  the project is 30 years. From an investment perspective, it is expected that LCC would recoup the investment within this period at an interest before conceding the rights back to the original owner – the government. Strategically therefore, the success of the project lies within the boundaries of ‘smart operations’ which raises the question - how will the investment be recouped? More importantly from a capitalist’s point of view - how can returns be maximised from the investment?

Investments in similar projects in other parts of the world were recouped by using toll-gates. The concept of toll-roads is not strange to Nigerians. In the past, some of our major inter-state high ways, for example, the Lagos-Ibadan expressway were maintained by huge sums of money motorists paid for plying the routes. As useful as this concept was, it was killed by the spirit of corruption that gradually crept up our sleeves over time. The result was the demolition of the toll gates that led to the ‘death’ of the road and other high-ways that were once maintained under the scheme.

As at today, the looming deaths on our major highways leads back to the same reason for which the toll roads were built in the first instance – to make our roads self-sustainable by using them to generate the funds needed to keep them in proper condition. Before the collapse of the toll-gates however, their successes were quite enormous. Up to the early 1990s, motorists never complained of the levies at the toll-gates because they were within their economic capacity.

Also, the fares levied by commercial vehicles plying the routes then were never as outrageous as they are today. Therefore, the costs we have incurred by killing the toll-scheme have outweighed in limitless folds the costs we could have incurred had we fought to keep the scheme alive. In other words, the levies of commercial vehicles as of today are more for ‘motor insurance’ than ‘successful commuting’ because of the obvious risks that have arisen from the appalling state of our major high-ways. It is worthy to note however, that this scheme was run by the government back in the time when Nigerians had relatively stronger confidence in the activities of their government.

Today, the dynamics have changed and the landscape is different. We live in times where every move of the government is seen as a money looting jamboree and the mind-set of the Nigerian populace is such that every penny that goes into the hands of the government is never re-invested for the good of all, but for the good of a powerful few. It is therefore important that this particular change in thinking as well as other key changes (negative ones) in the various spheres of our society be put into consideration in charting a way forward. LCC has adopted the same toll-gate principle as the strategic tool to recoup their investment in the Lekki - Epe road project.

Undoubtedly, it is the most obvious vehicle to channel huge returns back to their coffers but the key question bearing in mind the afore-mentioned changes in the Nigerian dynamics is - how can the toll-road project be made a success?

EpePlaza2_963_x_492Before projects and strategies of this kind are implemented, there are fundamental questions that need cogent answers. As a guide, the dispute that has arisen on the Lekki road project, now in court stemmed from the exorbitant fares to be collected at the toll-gates and other key issues such as the length of the concession term, the creation of an alternative route amongst others. For example, normal cars are required to pay N 120, motorcycles N 50 and other types of vehicles a lot more than these as they pass each toll gate along the project stretch.

There are three of such gates implying three times the above figures for motorists going to the Epe end. Without doing any boring arithmetic, the multiplier effects of these levies are so enormous that they will only add salt to the already open, untreated economic wounds Lagosians are carrying around this season. Given the exploitative mindset an average Nigerian has, these kinds of fares will only give an excusable opportunity to commercial motorists, commercial motorcyclists, traders and even food vendors as well as other stakeholders to hike the prices of their products and services without mercy! The outcome will only amount to more pain and suffering to the ‘common man’.

 

 

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