Lagos state House of Assembly, in western Nigeria has approved the planned take-over of the Lekki Concession Company, LCC, by the State Government.
The House approved the takeover of the company responsible for the tolling of the Lekki-Epe expressway on Tuesday evening at a special session held for the purpose.
Members of the House had been on vacation that should ordinarily last up to a month, but they had to reconvene to grant the approval and an amendment to the Appropriation Act 2013 by increasing the figure initially approved for the executive arm of the State Government.
The current figure approved by the House through a law to amend the Appropriation Act scaled up to N507.1billion from the N499.605 billion approved on 2 January, 2013.
This means that the addition is to be sourced through bond issue while the initial budget figure has also been re-ordered to make enough money available for the purchase of the company.
To attain the new figure, the House reduced the Internally Generated Revenue (IGR) in the 2013 budget by N22.5 billion. It also reduced the External Loans by N30 billion and added both figures to a bond issue requirement now standing at N87.5 billion.
Furthermore, it approved N7.5billion addition to the existing Internal Loans of N44.419 billion in the 2013 budget making it now total N51.919 billion.
The House also reduced the Recurrent Expenditure from N229.7 billion to N214.7 billion while supplementing the Capital Expenditure from N269.8 billion to N292.3 billion.
The letter upon which the members of the Assembly acted was signed by the State Governor, Mr. Babatunde Fashola, and dated 19 August.
In it, the Governor said it had become necessary for the 2013 budget to be amended due to unforseen developments in terms of the state’s internally generated revenue performance and emerging financial commitments.
“The proposal for further amendment is largely predicated on the need to fund the acquisition of existing concession rights and toll revenue benefits held by the Lekki Concession Company (LCC), the concessionaire for the Eti-Osa-Lekki-Epe expressway.
“This will effectively accelerate the transfer of ownership of the road to the state, leaving the state with wider policy options with regards to that important road infrastructure,” the letter said.
According to Governor Fashola, to address the issue effectively, the government had proposed the re-ordering of some expenditure provisions and also direct supplementation of the 2013 budget.
“This will entail an increase in the overall budget size by N7.5 billion. This is against the background of a projected shortfall of N22.5 billion in budgeted internally generated revenues which now needs to be covered by additional borrowings.
“We also need to restructure our borrowing plan as the N30 billion World Bank DPO II will no longer materialise in 2013.
“In effect, we will need to issue bonds totaling N87.5 billion this year, instead of the N35 billion originally envisaged, in order to cover the shortfall in internally generated revenue and the delay in disbursement of the DPO II, so as to be able to finance the acquisition of the concession rights and take control of the toll regime for the benefit of our citizens,” the Governor said.
He added that the State Government had identified budgetary provisions which are not likely to be fully utilised before the end of the year from the budgets of some ministries, departments and agencies while some of them “voluntarily liberated their unutilised balances.”
He said the proposal for supplementation had resulted in a four percent increase in capital expenditure and a four percent reduction in the recurrent expenditure.
Answering questions from the lawmakers, Commissioner for Economic Planning and Budget, Ben Akabueze, said the decision to acquire the concession was for the interest of the residents of the state.
According to Akabueze who was one of the three commissioners at the sitting, the State Government would now determine how much to be paid by motorists as toll on the road instead of allowing the concessionaire to fix prices when and how it likes.
His colleague and Commissioner of Finance, Ayo Gbeleyi, also told the House that under the agreement with the LCC, the concessionaire possessed the right to increase tolling on the road at any time.
He said the government had been notified of a 20 percent increase in the tolling and another five percent increase next year adding that when the company is bought over, this would no longer be the norm.
The commissioners were accompanied by the Commissioner of Works and Infrastructure, Obafemi Hamzat.
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