Tinubu presidency, Chagoury and the N15.6trn highway controversy

By Clement A. Oloyede, Faruk Shaibu (Abuja) & Abdullateef Aliyu (Lagos)

 

The relationship between President Bola Tinubu and Gilbert Chagoury, the owner of the company awarded the N15.6 trillion Lagos-Calabar coastal highway project, has continued to raise questions about the propriety of the deal, especially amidst other priority projects competing for attention all over the country.

While there is consensus in many quarters that the coastal highway will serve as a signature project in terms of economic development when executed with all sense of appropriateness, pundits, however, believe a lot of issues did not add up, hence the barrage of questions around the motive and propriety of having the project at this time.

The federal government had confirmed not only the award of the contract to Hitech Construction Company, owned by the Chagoury family, but also gave approval for the release of N1.06 trillion for the first phase of the project, a development that experts have revealed contradicted the model adopted for the project.

The Infrastructure Concession Regulatory Commission (ICRC), which regulates private-public contracts, mandates the government to advertise all proposed projects so that interested contractors can submit bids, after which the Federal Executive Council, presided over by the president, is expected to make the final decision.

But the final decision was said to have been made without recourse to the ICRC provision, making several Nigerians, including former Vice President Atiku Abubakar, the presidential candidate of the main opposition party, the Peoples Democratic Party (PDP), question the seeming lack of due process in the award of the contract to Hitech.

While the Minister of Works, Dave Umahi, had explained that the reason for awarding the contract to Hitech without competitive bidding as laid down by the laws of the country was because of the company’s “track record”, the explanation and his revelation that each kilometre of the 700km-long road would gulp N4 billion further left many Nigerians befuddled.

The minister had also said that the contract was awarded on a counterpart-funding basis and not on a public-private partnership, as widely claimed.

 

 

Heart-rending revelation

According to a document by the World Bank on the cost of road infrastructure in low-and middle-income countries, the average cost of a new four-lane highway is $2.1 million (N2.4 billion at N1,160/USD). But there is no available data to compare the cost based on the specifications (11 inches of concrete with 20 millimetres of reinforcement for the 10-lane highway) that the federal government stated for the Lagos-Calabar coastal highway.

An analysis of the cost indicates that the cost of this project massively dwarfs the total capital budget of the ministry of works in the 2024 budget, which stands at N617, 853,474,192, with economists saying the Lagos-Calabar coastal highway might end up being a white elephant because of its long-term prospects.

Umahi’s contradictory policy assertions raise further questions

Since the President Tinubu-led administration introduced the project in 2023, the Minister of Works, Umahi, has been seen to make several contradictory policy assertions that many have said breed suspicion about the urgency of the project and raise questions about why it was awarded to Hitech in the manner in which it was awarded.

At the onset, Umahi had said the project would be run in two phases with multiple sections, each made up of three sections. Section one covers 47.47 kilometres, section two covers 57 kilometres, and the third section is about 50 kilometres. He announced in October 2023 that the project, approved in favour of HiTech, was being procured under Engineering, Procurement, Construction, and Financing, popularly referred to as EPC+F, a construction industry contracting agreement where contractors design, procure equipment, construct, and finance a project.

He said the project would be executed as a public-private partnership (PPP) and would be tolled upon completion, with the contractor already securing the necessary funding.

He, however, backtracked on the funding part in February, saying the federal government had approved the sum of N1.06 trillion for the first phase because the contractor had encountered hitches in funding.

Though he insisted while reacting to Atiku’s concern about the project that the 700km road project will cost N2.8trn with each kilometre gulping N4bn per kilometre, he had in February said the N1.06tn approval for the project by the FEC was to cover 47.47km, under 10 lanes.

He was quoted as saying: “Today, we have procured the first section, which is 47.47km under 10 lanes, and FEC graciously approved the contract for N1.067 trillion with no objection.

“FEC also approved that the second section be procured, to be funded by the federal government, which is about 57km and that runs from Lekki Deep Seaport to the boundary between Ogun and that section two of phase one.”

New ambitious project amidst several abandoned projects

In January, the Minister of Works stated that the federal government did not have the N1.35 trillion asking price by Julius Berger Construction Company to complete the Abuja-Kaduna section of the Abuja-Kaduna-Kano highway.

The road, which was one of the legacy projects of the immediate past President Muhammadu Buhari administration, was supposed to be completed in 2021. However, the completion did not see reality till the administration ended in 2023, even though a large chunk of the Zaria-Kano axis was completed.

Speaking with one of our correspondents, an economist, Prof. Ndubisi Nwokoma, stated that while the Lagos-Calabar coastal highway has a long-term effect, it is not critical in a short time.

According to him, there are more pressing projects that the government should focus on instead of dissipating energy on the Lagos-Calabar coastal road, which he said would end up being a white elephant.

“In a short time, I don’t think it is something very critical. There are more critical issues that need to be addressed in the short term. The economy needs to be revived. We are happy the foreign exchange market is responding to treatment, to use that terminology.

“Those are more critical issues. People need to eat and survive. The cost of living is very high. There are other questions people would want to ask. There is the East-West Road, which has not really been receiving attention the way it ought to. I am talking about the old East West Road, which is having problems from one regime to the next.

“We have existing roads across the country that are in very bad shape, existing roads that would open up the economy and enhance production. This one, to me, is like an elephant project. The benefit would come in the long term, and I don’t think there should be too much hullabaloo about it.

“It is better we stabilise as a country and people have some measure of quality of life, the plan should not be thrown away, but the minister should focus on other roads that are in bad shape,” he said.

Also speaking to Daily Trust on Sunday, the President of the Nigerian Institution of Structural Engineers, Engr. Johnson Adegboyega, said while the cost of the project cannot be contested because of the terrain, the project is not a priority.

“Coastal roads are good, but you have to ask the question: right now in Nigeria, is that what is needed? Is that what will solve the myriad of problems that face us on a daily basis? The answer is no,” he said.

He said, “What we need to do is re-establish the industries and make electricity available. It is very sad that we import virtually everything. If you want to buy a car tyre now, everything in your car is imported. There was a time we had Michelin and Dunlop working in Nigeria, and Nigerian graduates and non-graduates worked there. Even the battery—everything is imported.

“So, assuming we have a trillion naira, should it be on the coastal road? It is only the government that can justify how they are going to fund it; they have to tell us because there are more pressing assignments for the government to do.

“If the cost of something is so high, you must also tally it with the immediate benefit or the long-term effect. You must analyse. In the short term, this is what we are going to get; in the long term, this is what we are going to get, and this is how it would impact the citizenry,” he added.

All roads important but coastal highway has many economic benefits-Minister’s aide

When contacted on why the government embarked on the project while several others were abandoned, Orji Uchenna Orji, the Special Media Adviser to the Minister of Works, one of our correspondents that all roads in the country are important, but the coastal highway offers a lot of economic benefits to the nation.

He said the road, when completed, has the potential to increase Nigeria’s GDP and trigger industrialisation, create trade and more safety.

“It is important to state that the road is going to be the biggest super highway in Africa in terms of the structure and solidity as we all as utility value.

“The moment it is done, it is going to attract foreign investments to Nigeria and it is going to trigger economic development. It is going to develop the potential of our coastal businesses, the sea and all of that. There are businesses along the sea that are richer than the ones on the road,” he said.

Asked if the project would not turn into an elephant project, he said it was part of development road map of President Tinubu and assured that it would be completed within the eight-year term of the administration.

“Once it is done, you can see the power of the person that has the spirit of the private sector, if you are talking about development and don’t have a way of getting the private sector to partner in the development of the economy, you will not be getting it right.

“But with this coastal, the concept has to do with private sector participation and it will make local areas of the various states to develop and the individual organisation will be able to build industries and factories along the coast. We have a spur from the zero end up to North, in Sokoto State, through a highway. The whole of Nigeria will change with the road,” he said.

Chagoury, Hitech owner’s relationship with Tinubu

Many commentators that have questioned the propriety of awarding the contract to Hitech have made reference to the close relationship between its owner, Gilbert Chagoury, and the president, with many insinuating that the relationship might have influenced the way the contract was awarded and the subsequent u-turn as to the way the project was to be funded.

Several reports acknowledged that the relationship between President Tinubu and Chagoury, a Nigerian-Lebanese billionaire styled as a financial adviser to the late Gen. Sani Abacha, dated back to when the president was the governor of Lagos State. The Africa Confidential reported that after an initial clash over the sale of Lagos State shares in Eko Hotels to Chagoury by the last military governor of Lagos State, Buba Marwa, Tinubu and Chagoury buried the hatchets.

After that early clash, Chagoury’s Hitech and South Energyx Nigeria, also a subsidiary of the Chagoury Group run by Gilbert Chagoury’s younger brother, Ronald, started getting contracts from the Lagos State government. Such contracts include the upgrade of the 49.5-kilometre Lekki-Epe Expressway awarded on the Build, Operate, Own and Transfer model. South Energyx Nigeria was commissioned to take on the landfill and reclamation, then build a new city known as Eko Atlantic, a project President Tinubu has ‘proudly’ identified with.

Apart from this, the company has also been involved in several projects in Lagos State, some of which include the 8.75km Lekki Regional Road in Eti-Osa Local Government Area, which started in 2020 after it was awarded by Governor Babajide Sanwo-Olu. It also constructed the New Ajah and Abule Egba flyover bridges, commissioned in 2017 by former Governor Akinwunmi Ambode.

A check on the website of the Lagos State Public Procurement Agency showed that only the 2020 annual report was uploaded, which shows five major projects carried out by the company. They included the rehabilitation of Idowu Taylor Street, Victoria Island, Lagos, at a cost of N900,691,940.64; the rehabilitation of Adeola Hopewell Street in Victoria Island, Lagos (N1,361,503,447.38); the rehabilitation of Adeyemo Alakija Street, Victoria Island, Eti-Osa Local Government Area (N1,042,090,322.68); the rehabilitation of Afribank Road,Victoria Island, Eti-Osa Local Government Area (N352,011,052.39); and the construction of Regional Road Lekki in Eti-Osa LGA, awarded at a cost of N53,396,215,669.74.

But beyond the contracts to the Chagoury companies, the acts and words of the president have revealed that Chagoury has attained a very influential position in the Tinubu presidency. He was described as conseiller personnel (personal adviser) to President Tinubu in Nigeria’s delegation to the UN Climate Summit in Dubai in November 2023. Before then, immediately after Tinubu won the presidential ticket of the All Progressives Congress (APC) and after winning the 2023 general elections, the president jetted off to Paris and held meetings with Chagoury.

Earlier this year, in a birthday tribute, President Tinubu described Chagoury as a ‘valued and treasured person’ who was ‘generous with his heart and resources’. “With friends like him, one can sleep with a still mind,” the president said.

Presidency parries question on Tinubu, Chagoury’s alleged closeness

When contacted for comments on the reported closeness of Tinubu to the Chagoury family and whether this had any influence on the award of the contract, the Special Adviser to the President on Information and Strategy, Bayo Onanuga, told Daily Trust on Sunday that there was nothing new to such allegation, adding that former Vice President Atiku Abubakar had earlier made a similar allegation.

“You don’t have a story. Atiku made the same allegation two weeks ago. You just want to rehash Atiku allegations, which Umahi has thrashed,” Onanuga said in a terse reply to Daily Trust’s enquiry.

In an earlier response to Atiku’s allegation, Onanuga had said the former vice president got his facts wrong in challenging the president on the award of the contract.

“President Tinubu should be praised for having the courage to embark on this transformative project and not vilified as Atiku Abubakar unsuccessfully sought to do,” Onanuga had noted in a statement.

Recall that the Minister of Works, Dave Umahi, had, earlier this month, said that contrary to insinuations in some quarters, there was no personal interest in the Lagos-Calabar coastal highway project.

The minister had, on April 11, when he appeared on Channels TV’s “Morning Brief” said:  “When you say the project is about personal interest, there is a contradiction there because the former vice president, Atiku Abubakar, said the Jonathan administration wanted to do that project and put a cost at $12 billion. So, whose interest was that administration promoting and wanting to do the project?”