By Franklin Alli
During the recently held National Council of Privatisation Investors Webinar for the concession of Lagos International Trade Fair Complex (LITFC), and the Tafawa Balewa Square (TBS), organized by the Bureau of Public Enterprises (BPE), potential investors in the facilities, voiced their concerns over some issues with the previous concessions, among other concerns.
At the event, both the Director-General of BPE, Alex Okoh and the Transactions Advisor to the projects, however, put their minds to rest, saying” You have no issue getting access to your concession areas.”
An investor, who fired the first question, wanted to know if the areas being commissioned include the Auto Spare Parts and Machinery Dealers Association(ASPAMDA), and the Balogun Business Association(BBA) areas, among other existing tenants.
He was given the following reply by the Transactions Adviser: “As I have explained in my presentation, the areas that we have carved out for concession, there is probably one or two short-term tenancy in the place, and in my discussion with the Management Board of the Lagos International Trade Fair Complex, they could easily be revoked, and the concession process will take six months to complete.
” From my point of view, I see no difference between local and foreign investors as long as they can meet the requirements that we are going to put forward, in terms of the financial strength and experience we would be seeking to qualify the concessionaire”
So, to highlight your concerns about the agreement with the markets – ASPAMDA, BBA, and others, the fact that these areas, when viewed from inside they are not in the areas that are under concession. From an outside view, it may seem that they occupy 75 percent of the over 300 hectares.
But based on the preliminary measurements, it is less than that. So, 117/300 hectares of the over 300 hectares, that’s about 35 to 40 percent of the land that is available unencumbered.
So, at this point, for the concession to move ahead, we are not going to fight with the market associations, the existing tenants in those market areas.
The concession areas will be carved out. So, we are not going to touch the areas that had been developed so far. The areas that have been delineated for this concession are the Hall4 areas and the Lake area.
But you would notice that in-between the two segments, there is a concentrated development between the two areas that we are looking at.
The whole complex was envisioned as an integrated part of the facility.
So, we would still have to come back to address that key issue.
And one of the things we would be asking ourselves is 1. What is the legal status of the current development which seems to be uncoordinated now?
2. Have these developments happen in line with the approval and original design of these segments of the complex?
Also, in the design that was presented, we are contemplating a light rail that will connect the Hall 4 areas to the Lake area, under this concession, for development, so that there can be some linkage to those two segments.”
* A rail line to connect Hall 4 areas to the Lake area
Again, another investor asked for clarification if local companies can bid for the concessions.
He was told: ” From my point of view, I see no difference between local and foreign investors as long as they can meet the requirements that we are going to put forward, in terms of the financial strength and experience we would be seeking to qualify the concessionaire. Honestly speaking, we just want the best for this particular iconic asset; we don’t want a mediocre development of this infrastructure asset.”
Also, a question was asked about the total capital cost for the redevelopment of the facilities.
” To be fair, I would rather like to say that the investors themselves should come up with their estimate for the investment, rather than me telling them what investment we envisage it will be.
That is my answer to the development cost because unless somebody wants to do what we have proposed, we can say our own cost but the cost can vary depending on the estimate that you receive from the construction company or the project manager.
So, I wouldn’t want to put forward the numbers which can be subject to debate. I would rather like investors to come up with their estimate based on the designs that we have proposed for the facilities.”
“What will happen to the remaining three hectares of land in the TBS?” another person asked.
“As I mentioned in my presentation, the three hectares of land is where the Cricket Stadium is sitting. We are in discussions with the management of the TBS, and the Cricket Association of Nigeria, to be part of the areas for development by the new concessionaire. The area that is being used for remembering “Our fallen Heroes” during the Armed Forces Remembrance Day, will remain as it is.”
Another inquiry was if Lagos State Government will pay cash for its equity position in the investments?
” First, let’s play out what the conversion process is going to look like. You form an SPV, special purpose vehicle, then you bid for the project; during the bidding, you don’t involve the Lagos State Government but when you have emerged as the preferred bidder, at that point, and based on the agreement reached, LASG would take up 24 percent of the shares of the concession SPV that would be signed. So, in the agreement, there would be a development plan, and once the development plan is approved, and as the development takes place, LASG would help you with the 24 percent equity investment that should help you to carry on with the project. So, it is a win-win situation; Lagos State has confirmed to us that they will be able to take up equity in the SPV, in cash. ”
An inquirer wanted to know if multiple concessionaires can bid for the various segments of the development as opposed to one concessionaire?
” Based on my discussion with the BPE, we are envisaging one concessionaire for the TBS, and another one for the trade fair complex. So, typically, for the development of the facilities to take place in a coordinated way.
However, if there are multiple investors, they should join together to form one consortium and go-ahead to bid for it, instead of having multiple concessionaires bidding for each of the facilities. This could lead to a redevelopment structure that we are not in agreement with.
So, they can come together, and join their resources together under one concessionaire and bid for the facility.
We want a coordinated development of the projects. We want to run away from the mistakes of the previous concessions.
So, we want a one integrated super – concessionaire who can also integrate and aggregate many specialists who have competencies and the appetite for the various aspects of the development within the complex. So that is what has been envisaged. We don’t want a fragmented concessions agreement.”
Are there agreements in place for any of the activities taking place at the TBS?
“In my discussion with the TBS management and the due diligence I have conducted, there is no such agreement in place. However, we expect that the future concessionaire will honor some of the annual events being hosted at the place, such as the Independent anniversary.
As you mentioned, this is the place where Nigeria’s independence was granted, so there are sentimental values to it. I also expect that the concessionaire will continue to host the inauguration of the Governor, as well as the Oba of Lagos; and some religious concerts.
Apart from their financial values, they uplift the credibility of the place.
So, it’s up to the new concessionaire to determine how he wants to use the place. ”
On the access road to the LITFC, he said: “In my presentation, I mentioned that we would sit down and agree on the overall design.
In my thinking, is to create another access road straight- out from the Lagos- Badagry expressway, through the Balogun market area, and the idea is to fence out the entire area and create another access road from the expressway. That would be my answer.”