Former governor of Lagos State, Babatunde Raji Fashola, SAN, has stated that it is better and cheaper to have roads where motorists pay tolls than to have ones that are toll free.
The Honourable Minister of Power, Works & Housing stated while canvassing the benefits of getting private capital to operate in areas that were once the sole preserve of government
In his Keynote Speech At The Nigerian Pension Industry Strategy Implementation Roadmap Retreat On January 21-23, 2016, Fashola hgave the example of the Lekki-Expressway, where after doing their traffic studies, and satisfying themselves that the business was “bankable”, private investors asked the Lagos State Government to pass a law; in effect to tie the hands of the next government that the concession will not be cancelled.
Today Fashola argued, “If we compare the quality of service on the Lekki-Epe Expressway where toll is paid to the Lagos-Ibadan Expressway where toll has been removed, the choice is ours to make.”
He argued that “Is it cheaper to drive on a road free of toll, and spend 5 hours for a 1 (one) hour journey? If you calculate the fuel burnt in 5 hours of standstill traffic and the stress, you will see that the toll free is not free.”
The Lekki-Epe Expresswa is a 60km road in the eastern axis of Lagos State that was built in the 1970s and has scarcely seen any maintenance.
“Potholes had taken over its surface, the population it was serving was growing daily and neither Lagos State Government had the funds to rebuild it and the Federal Government at the time was not interested even though oil income was increasing.
“Accidents were claiming lives regularly and nothing seemed to offer a solution until the Lagos State Government in 2005 signed a concession with a private group of financiers.”
The former Lagos governor revealed that private investors were initially “were very skeptical of many things not the least our political environment and behaviour. We had previously nationalized assets of investors in the oil and gas sector and other sectors before. Investors don’t like that and they don’t forget. But their sense of entrepreneurship if nothing else, keeps them from staying away. In spite of risks they sometimes come back when they think the waters have calmed. But they do so with conditions, which they hoped will mitigate risks, especially political risks.”
He continued: ” In other economies, a contract, which Lagos State Government gave them, would have been enough; however, as I said, investors never forget, so they asked for a law, which the State House of Assembly passed.
“But when we thought that will suffice, they then asked for a “Federal Support Agreement”, which was akin to a sovereign guarantee.
“Of course Lagos and the Federal Government at the time had different political colours and a Federal Support Agreement was delayed by politics for 3 years.
“During that time, prices changed, exchange rates changed, many economic indices changed leading to cost impact, but eventually one was signed, during the tenure of President YarAdua.
“This meant that with the Federal Support Agreement, Nigeria’s Sovereign credit rating had entered the equation.
“Regrettably, when the road was finally built, and tolls were to be charged to repay the financiers, all sorts of informed and misinformed players took centre stage.
“There was no resistance during the painful period of construction when children had to wake up at 4a.m to get to school at 8a.m. But as soon as the road was motorable and ready for use and Tolling , some sympathizers of the Federal Government of the day, on a political front mobilized resistance to the payment of tolls.
“They promised that if they were elected, they will cancel the toll.
“That is not good news to investors.
“I got all sort of letters from around the world. Investors sent representatives from around the world to meet with us, asking what was happening.
“All lies were told against our officials after the road was built.
“But we were undeterred. We bore the lies. We managed the orchestrated protests. Some artistes were mobilized to pour red paint on their faces and posted these on the social media as evidence to incense people falsely that we had used violence to stop their protests.
“One newspaper falsely and recklessly carried a headline that our government had killed a person protesting illegal tolls.
“That was the first and only time I used the coercive power of the State.
“We deployed Policemen to the toll plazas. They were instructed to allow protests which was legitimate, but they must also protect those who were not interested in protesting and wanted to pay tolls, because those who were opposed to paying had no right to obstruct those who wanted to pay.
“We begged, pleaded and held meetings for understanding.
“We explained that those of us who enunciated the policy were going to be affected by it as well. I drove through the toll and paid, to show this.
“In all of this, my biggest concern was not the road , it was Nigeria’s credit rating and the need to ensure that the project did not fail.
“What was at risk was now bigger than the road and the Lagos State Government. It was a national reputation in the international business climate.
“I am happy to say that we preserved our country’s business integrity against all odds and I will do it again.
“For me, the lesson of this story is that we must not play politics with our economic survival. Investors want continuity of policies, even if Government changes.
“Our politics must therefore mature to the level where we must refrain from campaigns that threaten to cancel contracts. We will be poorer for it.
“Even when we perceive that the government of the day has poorly negotiated a contract, threats of cancellation do not help.
“What we may at the worst seek to do is to re-negotiate after elections are over where it is possible to do so.”