The failure of the Federal Government to honour its obligations has been identified as the factor that put the brakes on the Federal Secretariat concession, for which agreement was reached in 2009.
The Chairman, Bi-Courtney Group, Dr. Wale Babalakin, whose company won the concessional rights to the sprawling secretariat complex, said the firm had suffered “colossal losses” as a result of its inability to redevelop it into residential apartments.
As part of the disposal of its many assets in Lagos following the movement of the seat of the Federal Government to the Federal Capital Territory, Abuja had called for bids for the secretariat among other choice properties, with Bi-Courtney eventually emerging victorious.
However, the redevelopment plans were stalled when the Lagos State Government, which had earlier requested to be given the complex, refused to approve them on the excuse that the area of Ikoyi, where the secretariat is located, was not meant to be residential going by its Ikoyi Model City Plan.
Babalakin, while speaking on the constraints to public-private partnerships in the country at the just concluded Nigerian Economic Summit in Abuja, highlighted his company’s experiences with the Murtala Mohammed Airport Domestic Terminal II, Federal Secretariat and Lagos-Ibadan Expressway as case study.
For instance, he said the company bid for the Federal Secretariat and won on September 28, 2006, after which the concession agreement was signed on October 10, 2009.
He said the complex was to be converted into 480 flats, adding that remodelling works commenced immediately, with all the preliminary works done.
According to him, demonstration flats had been prepared, with 50 per cent of the flats already sold and payments received.
Babalakin said, “On September 5, 2007, persons claiming to act on the instructions of the government of Lagos State stopped the project.
“The total loss on the project is in excess of N80bn. Once again, it was the failure of the government to honour its obligations under the agreement that led to the project being stalled.”
He said the Development Lease Agreement had anticipated this scenario, noting that Clause 3.2(iv) provided that the Federal Government shall facilitate the obtaining of a ‘No Objection Approval’ from the Lagos State Government to change the of use of the premises from offices to residential apartments.
According to Babalakin, the binding constraints to public-private partnerships in the country include the attitude of the government, lack of respect for sanctity of contracts and the rule of law, lack of investor security, corruption and malice.
To unlock the constraints, he stressed the need for respect for the sanctity of contracts; obedience to the rule of law and orders of court; restoration of investor security; law reforms and reviving the Nigerian intelligentsia.
While noting the imperative of PPPs, the Bi-Courtney boss said it would enable the government to harness expertise and efficiencies associated with the private sector in the delivery of certain facilities and services traditionally reserved for the public sector.
“This will bring about basic amenities that are normally government’s responsibility, thereby allowing the government to concentrate on vital areas; reduce government burden of seeking and providing capital investment; serve as source of revenue generation for government; and help to reduce corruption and bureaucracy in the procurement of social infrastructure in government agencies,” he added.
He said other countries had successfully used the PPP model to develop sectors such as energy, mining, transportation and telecommunications.
Babalakin said, “Nigeria’s budget has been totally inadequate to fund the responsibilities of government, and the country has considerable infrastructure deficit due to age, increase in population and dwindling revenue base due to the fall in global oil price.
“I am reliably informed that our recurrent expenditure exceeds our total earnings. Elementary knowledge of economics tells us that this trend will invariably lead to disaster.
“Huge debt profiles of state governments have been accentuated by government participation in projects best left for the private sector. Bureaucracy in the public service hinders rapid development.”
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