Thursday, 29 August 2013
Babatunde Raji Fashola announces the termination of its concession agreement with the Lekki Concession Company.
The State Government came to a decision to buy back the rights in the light of several developments clearly not envisaged in the 2006 Concession Agreement (which became effective in 2008) a few of which are highlighted below.
The project, given its pioneering nature, had some underlying assumptions and market indicators under which the transaction was concluded which have since drastically changed in a manner that it can no longer be sustained in its current form. Such include the devaluation of the Naira and costs of construction.
The LCC, which is the special purpose vehicle representing the investors, formally brought it to the attention of the State Government that given the rapid rise in interest rates on local loans, and other cost parameters, it is compelled to raise tolls currently being charged at Toll Plaza One from N120.00 to N144.00 per Car.
The Concessionaire also brought it to the attention of the State Government, that as provided for under the agreement, tolling would have to commence at Toll Plaza Two.
In addition, the Concessionaire indicated that unless it realised more income from increased rates at Toll Plaza One and commence tolling at the same rate per Car at Toll Plaza Two, it would not be able to meet its commitments to investors in the project and continue to fund completion of the remaining sections of the road.
Sent from my BlackBerry® wireless handheld from Glo Mobile.