A Senior Advocate of Nigeria (SAN), Abiodun Olatunji, has expressed concerns over the federal government's plan to unilaterally revoke the 25-year concession agreement for the Benin-Asaba Expressway. Olatunji, who reviewed the concession agreement and the dispute between the Federal Ministry of Works and Benin-Asaba Expressway Concession Company Limited (BAECC), stated that the government's concerns over the condition of the road might not be enough to terminate the concession.
The concession agreement, which was signed on May 23, 2023, and approved by the Federal Executive Council on January 16, 2023, allows for a 25-year concession period, including the construction phase, under a Design, Finance, Build, Operate and Transfer (DFBOT) model. Olatunji noted that the minister of works does not have the authority to revoke the concession at will, as the contracting party is the federal government acting through the ministry.
Olatunji's opinion was sought on the federal government's powers under the concession agreement and the circumstances under which the agreement could be terminated. He stated that emergency intervention on the highway could be justified where public safety was at risk, but such intervention should not automatically extinguish the underlying concession arrangement.
The dispute between the Federal Ministry of Works and BAECC is over the condition and reconstruction of the 125-kilometre highway, with the ministry raising concerns over alleged breaches of provisions of the concession agreement. The Works Minister, David Umahi, had expressed dissatisfaction with the condition of the road after inspecting the corridor with Edo State Governor, Monday Okpebholo.
BAECC has disputed suggestions that the project was abandoned, attributing some of the challenges to heavy rainfall, increased traffic volumes, and the difficulties of reconstructing a major highway while maintaining traffic flow. The concessionaire cited ongoing earthworks, drainage construction, asphalt laying, carriageway expansion, and other construction activities along sections of the corridor.
Olatunji's opinion emphasized that public-interest considerations might not constitute a contractual basis for terminating the concession, particularly where the agreement provides for procedures relating to default, cure periods, compensation, and lender protections. He added that a permanent takeover of the project could go beyond the scope of emergency intervention unless carried out through mechanisms provided under the agreement.
The Benin-Asaba Expressway concession is one of the road concessions being implemented under the Federal Government's Highway Development and Management Initiative (HDMI), which seeks to attract private-sector financing and technical expertise to federal road development and management. The highway serves as a major link between parts of the South-South, South-East, and South-West regions, running from Ring Road Roundabout in Benin City to Summit Junction in Asaba.
Key points
- The federal government is cautioned against unilaterally revoking the Benin-Asaba Expressway concession without complying with the terms of the contract.
- The concession agreement provides for procedures relating to default, cure periods, compensation, and lender protections.
- The dispute has implications for the contractual relationship between the government and private concessionaires involved in long-term road infrastructure projects.
