Lagos denies taking over LCC, Lekki-Epe road

Lagos State Government has denied the reports that the State House of Assembly has given it the go-ahead to take over the Lekki Concession Company.

State Commissioner for Information and Strategy, Mr Gbenga Omotoso, who made the clarification in a statement, said the state government never made such request.

The LCC is a special purpose vehicle set up to execute the Eti-Osa/Lekki-Epe toll road concession project. The project is designed to deliver essential road infrastructure and services along the Lekki area of Lagos.

Omotosho’s statement read in part, “The government did not make such a request. Its request was to convert the African Development Bank loan from a private sector (commercial) loan to a sovereign (public sector) loan, which attracts a lower interest rate. This will enable the company to make some savings.

“The government, in fact, acquired the full shares/equity of the former owners of the company in 2014. There was no need to take such a request to the House.

“Following the Lagos State Government’s full ownership of the LCC in December 2014, the loan became eligible for conversion to a sovereign facility with an attendant significant lower interest rate of LIBOR plus 80 basis points and extended tenor.

“In the recent past, there have been discussions amongst LCC/LASG, AfDB and the relevant Federal Government ministries and agencies concerning conversion of the loan to a Sovereign facility. Upon the completion of the conversion, there will be a significant reduction of applicable interest rate and extended tenor.

“The sovereign loan conversion will also lead to a crash of the applicable interest rate on the facility to circa 1.8 per cent p.a compared to the current interest rate of circa 4.12 per cent p.a.

“Besides, the conversion will increase the tenor of the facility from the current five years to 15 years. This has the impact of spreading the cash flow impact by an additional 10 years.

“One of the requirements stipulated by the Federal Ministry of Finance for the loan conversion is the approval of the Lagos State House of Assembly. This is the approval given by the Lagos State House of Assembly on August 5, and NOT an approval for taking over of LCC, as reported. As stated earlier, LASG took over the shares of the previous private shareholders of the company since December, 2014.

“Therefore, the state government, after due consultation with all major stakeholders, entered into an Amicable Settlement Option with the shareholders of the LCC with a view to bringing the project back on the path of long-term sustainability, acquired the full shares/equity of the previous owners, thereby assuming full ownership of LCC in December, 2014.

“This approach would particularly allow the Government to take full control over the determination of toll rates in order to continue to make them affordable.”