Emmanuel Thomas
May 1, 2015 – Lagos State Government has explained that it is impossible for it to efface payment of toll on the Lekki Expressway even after the much publicized buy back of the project.
Speaking at a press conference in Lagos, Commissioner for Finance, Mr. Ayo Gbeleyi said that though the state government paid N15 billion to buy back the project residents will continue to pay toll on the road until 2038 due to outstanding payment due a consortium of bank who made equity contribution in the project.
Gbeleyi explained that the transaction came to closure in June last year and that payment was made in two tranches of N7.5 billion and N7.5 billion.
The commissioner further explained that the state government decided to cancel the initial planned third toll plaza on the road in response to demands.
“ For the purpose of the Public Private Partnership (PPP) project finance, one will find two sources of finances that is, debt and equity. The equity is provided by promoters of the ventures. The debt is provided by various members-commercial banks and other financial institution.
“On the road, we have about N40 billion outstanding to these consortium of senior lenders which include eight financial institution including the African Development Bank, ADB, Stanbic Bank in Nigeria, First bank and others. Thus, even though the state bought out equity interest in the transaction, the debt exposure must still be honoured over agreed contracted terms and conditions.
“We must send the right signal to the community of investors and we must respect the sanctity of contract, rule of law and predictability of investment is something that is sacrosanct if we must continue to attract the right investor to the state. Across other PPP transaction ranging from the Lekki Deep Sea Port, the five IPP and various Real Estate including the Eko Atlantic City and others and close to $20 billion has been made in investment commitment”, he said.
According to him if the state government fails to respect sanctity of contract, investors will not bring their money into the country anymore.
“Our policy option is open and now that we have the equity interest and in consultation with other major investors in that road, the new administration will evaluate the various policy options that are open to the administration and they will decide how long within the residual life of the concession which terminates in 2038.
“It present another opportunity once the loan restructuring which we have now concluded is in place which was signed at the end of March this year, we can then begin to think of issuing a new concession structure by the issues that we saw before in that transaction.”
On debt, he said the state government has reserved N100.73 billion as sinking fund. “Fifteen percent of monthly IGR is transferred to a Consolidated Debt Service Account (CDSA), managed by independent Trustees, with N100.73 billion accrued in sinking fund reserve for repayment of outstanding issues, while coupons are serviced regularly
“The State has accumulated over N100.73 billion in the CDSA for the redemption the outstanding three tranches of bonds, of which the next redemption comes up in April 2017″, he said.
