Lagos-Ibadan: How Bi-Courtney’s arbitration was ignored

IT was learnt yesterday that the rehabilitation of the Lagos-Ibadan Expressway suffered a setback because the Federal Government failed to respond to demand for arbitration by Bi-Courtney Highway Services Limited.

Sources said the Minister of Works, Mr. Babatunde Fashola (SAN), has stepped into the deadlock and the government may revisit the arbitration.

The Federal Government, in November 2012, terminated the 25-year concession given to Wale Babalakin’s Bi-Courtney Consortium for the construction and maintenance of the expressway.

The highway was conceded to Bi-Courtney in 2009 at N89.53 billion for 25 years.

The ex-Minister of Works, Mr. Mike Onolememen, said the concession agreement was revoked because Bi-Courtney failed to adhere to the terms.

In June 2013, the Federal Government re-awarded the reconstruction of the expressway to Julius Berger Plc and RCC.

In July 2013, President Goodluck Jonathan kicked off the reconstruction at a cost of N167 billion, with a completion timeline of 48 months.

Investigation showed that Bi-Courtney Highway Services Limited, on January 25, 2013, wrote Oneolememen for arbitration.

But three years after, the Federal Government is yet to take action on the matter.

The Bi-Courtney’s letter, which was signed by Chief T.K. Akinbami, said: “We refer to the letter of November 19, 2012, wherein the concession granted to our consortium vide your letter of May 8, 2009, was purportedly terminated pursuant to Article 16.1 of the Concession Agreement (“Agreement”) for failure to remedy the alleged breaches complained of in your letter of August 28, 2012.

“Please note that the consortium disputes the purported termination of the concession. We refer to our letter of September 26, 2012 (copy attached) wherein we responded seriatim to issues raised in your letter ofAugust 28, 2012, and demonstrated that the ministry’s purported notice of the non-compliance with the Agreement is premature and invalid. We also emphasised the need for the Grantor to comply with the Agreement before it alleges non-compliance by another party.

“Notwithstanding, as committed patriots to the development of Nigeria, we continued with the project and recommended palliative works of August 5, 2012. Subsequently, we engaged a major construction company to commence actual reconstruction work on September 23, 2012, and the company was active on site, until our receipt of the letter purportedly terminating the Concession.

“We believe that a dispute has arisen which should have been resolved in accordance with the dispute resolution mechanism under Article 21 of the Agreement prior to the invocation of any termination clause. In the circumstance, we demand that the Dispute Resolution Board (“the board”) be set up, to determine the propriety or otherwise of your action under the Agreement. We hereby appoint the underlisted as our nominees to the Board.

1. Mr. Justice G.A. Oguntade, retired Justice of the Supreme Court of Nigeria
2. Prince Adesupo Adetona; retired senior partner of Deloitte
3. Mr. B.G Giwa; former acting director Federal Highways

“Kindly appoint your nominees to the Board within 14 days of your receipt of this letter. As you are aware, this should have been done earlier in the transaction.

“For the avoidance of doubt, we reiterate that your purported termination of the Concession is, according to law, invalid and should be discountenanced by relevant parties.”

A top source in government said: “The Minister of Works has stepped into the controversy or challenges associated with the rehabilitation of Lagos-Ibadan Expressway.

“I am aware the government is revisiting all issues on the project, including the likelihood of concluding arbitration with Bi-Courtney.

“Fashola’s agenda is to see that the project is fully back to life and completed on time.”

Last week, the Minister of Works, Mr. Babatunde Fashola (SAN) admitted that the Federal Government was concerned about the lingering litigation on the Lagos-Ibadan Expressway.

He said: “The Lagos-Ibadan Expressway is a story of what investors don’t like. The FGN granted a concession to a private company (Company A) and later withdrew and cancelled it. The FGN then entered into a construction and financing agreement with another company (Company B). Company A went to court and got an order to cancel the financing agreement with Company B.

“As things stand, work has been stopped on the construction of the road. The construction companies cannot get financing because of the court order, so they have laid off about 2,000 workers, in an economy that has so much to do and needs to create work.

“These two companies are Nigerian companies investing in Nigeria, which is a positive sign because the local investors are the most important to any economy.

“Regrettably, while not going into the merits and demerits of the FGN’s cancellation of Company A’s “concession”, it sends a not-welcoming message to foreign investors if the decision was without basis or influenced by politics, which I cannot comment upon.

“If that was the case, as a foreign investor, I will be asking myself the kind of treatment that awaits me as a foreigner if the government does that to a citizen. But that is only one half of the story.”

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