The Judgment Banning Tolling on the Lekki-Ikoyi Bridge

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On the 27th of March 2014, the Federal High Court, sitting in Lagos, held that “there was no existing law in Lagos State, permitting the collection of toll on the newly constructed Lekki-Ikoyi Suspension Bridge in Lagos.” Now, lawyers are usually wary about commenting on a judgment that they have not read in its entirety, but various newspapers quoted the judge’s ratio (i.e. the thinking behind the court’s ruling) extensively. This commentary will be based on the quoted excerpts and the provisions of the Lagos State Public Private Partnership Law of 2011.

 

The PPPL establishes an Office of Public Private Partnerships and gives it powers and responsibilities. It sets the framework for entering into Concession Agreements and states that they must be ratified by the House of Assembly before implementation. Good, so far? Okay then. Let us return to the court’s judgement briefly.

 

Justice Saidu is reported to have held as follows:

“The third respondent [i.e. the Attorney-General of Lagos State] tried to justify the collection of such toll in paragraph 26 of their counter affidavit, by stating that when the bridge is erected, its proceeds will be applied to the consolidated revenue fund of the LASG.

“The question now is, has the LASG made the appropriate law to enable her collect such toll on the bridge? The third respondent only cited sections 27, 28, and 29 of the Lagos State Public Private Partnership Law 2011 as making provision for the collection of revenue. There is nothing before me to show that the subject matter in this case was as a result of any Public Private Partnership law, to enable the law of 2011 be extended.”

 

–       (See more at: http://www.vanguardngr.com/2014/03/lekki-ikoyi-link-bridge-law-backs-tolling-says-court/#sthash.iy4mkUCe.dpuf)

 

The thrust of His Lordship’s judgement therefore appears to be that toll cannot be collected on the bridge pursuant to a provision in the PPPL because the bridge was constructed with funds from the public purse and is therefore not a PPP project.

 

Is this a correct position to hold? Does the title of a law limit the scope of the law? Let us examine the referenced sections of the PPPL and then discuss the rudiments of statutory interpretation.

 

Section 27: Notwithstanding the provisions of any Law [of Lagos State], the [Governing] Board [of the Office of PPP] may designate any public infrastructure or public asset, any road, bridge or highway within the State as public infrastructure[i] or public assets[ii] with respect to which user fee or toll shall be payable for the purpose of this Law subject to the approval of the House of Assembly.

 

Section 28: Notwithstanding the provisions of any Law, the Board may in the relevant concession or other agreement, authorise any person, in return for undertaking such obligations as may be specified in a concession or project agreement with respect to the design, construction, maintenance, operation, improvement or financing of public infrastructure or public assets, to enjoy specific rights as may be stated in the concession or project agreement including the right to levy, collect and retain service charges, user fees or tolls in respect of the use of the public infrastructure or public assets.

 

Section 29 is long and boring but can be summarised as providing for regulating tolls and conditions under which the public will access the infrastructure. You can view the full PPPL here.

 

In simpler English, section 27 says that regardless of what any other Lagos law says, the PPP Board has the power to designate public infrastructure or assets for tolling, subject to the approval of the state’s House of Assembly. Section 28 says that a person/company can be authorised to levy and collect tolls in return for fulfilling its (i.e. the authorised person’s) obligations under a concession agreement or other agreement, regardless of what any other law of Lagos State says.

 

Bearing the foregoing in mind, was the judge correct to hold that public infrastructure and assets may only be designated for tolling under PPPs? I would respectfully disagree with the honourable judge for the reasons that follow.

 

1. Long Title: Laws generally have a long title at the beginning, as well as a short title at the end. Both are aids for interpreting laws. The short title of the law we’re considering is The Lagos State Public Private Partnership Law. This might lead readers to think the law only legislates on PPPs but I think the long title suggests otherwise – A Law To Provide For Public Private Partnerships, Establish the Office of Public Private Partnerships, Enhance Infrastructure and Service Development in Lagos State and for Connected Purposes. The purpose of the law is four-fold, one of which is enhancing infrastructure and service development in Lagos State. It is not solely concerned with PPPs. My learning friends at the Law School would probably support me if I went further to say that the phrase “and for connected purposes” is added to the long title of every law specifically to avoid being put in a straight-jacket as the Federal High Court did here.

 

2. Sections 27 & 28: Even if the law were held to only apply to PPPs, sections 27 & 28 begin with the words ‘notwithstanding the provisions of any Law’. This expression recognises that laws overlap each other in practice, even if this is not the intention of the House of Assembly; laws do not exist in isolation to each other. This means that unless expressly excluded (as done here), other laws can impact on the PPPL. The inference is also thus that unless sections 27 and 28 limited their application to PPPs, courts should not impute this restriction unless not to do so would lead to an absurdity.

 

3. Section 27, again: Section 27 gives the power to designate public infrastructure and public assets for tolling. ‘Public Infrastructure’ and ‘Public Assets’ as defined by the PPL (and reproduced below) have not been defined as assets/infrastructure that were built/developed under PPPs. Now, it might scare us to know that the government can wake up and decide to toll any public facility or amenity but ratification by the House of Assembly has been inserted as a check on the executive (we know they’re more often than not the rubber-stamp of the executive but the principle can’t be faulted).

 

MATTERS ARISING

The Lagos State Government has filed an appeal against the judgement, though it continues to collect tolls in the interim. Did they apply for a stay of execution and if yes, was it granted? [UPDATE: I’ve just been informed that the hearing for the application for a stay of execution is fixed for April 25. With Senior Advocates of Nigeria as Governor and Attorney-General, it is somewhat surprising that toll collection continues.] The lawyer who brought the action against the government claims to have been the target of assassins. We pray for his continued safety and well-being.

 

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ENDNOTES

[i]Public Infrastructure is defined by the PPPL to include ‘public facilities and amenities including roads, bridges, highways, rail lines, water transportation facility, public water works, housing, electric power stations, hospitals, recreational parks, motor parks, waste disposal facility, amusement centres and any other infrastructure or amenities for public use.’

[ii]Public Asset is defined by the PPPL to include ‘the right of use of any property or economic opportunity of a public nature arising from the use of public property.’

The Shiny Roads & Bridges Will Not Build Themselves

A few weeks ago, I was at a lawyers’ mini confab on infrastructure and cross-border investments in Africa and learnt about Mauritius, the Netherlands and the UK being some of the most favourable countries through which to route your investment to Nigeria.

 

After the polite nattering was done and most of those in attendance, with sensitive stomachs had left, I was privileged to have drinks with some fine lawyers and one or two people representing heavy investments in PPP infrastructure in Nigeria. Experience has shown that the greatest benefit (and knowledge sharing) at these summits arise when the cameras have been turned off, the taps of the world’s greatest social lubricant, alcohol, have been turned on and people are free to speak and curse as they like. Coincidentally, the Lekki bridge judgement had just been announced, so it naturally featured in our conversation.

 

The following are some of the golden nuggets shared by the prestigious gathering. It’s all anecdotal, so it’s probably unsafe to quote any of this outside your watering hole.

 

There is a local demand for infrastructure that Nigeria on its own cannot afford to build. This is widely accepted amongst industry analysts and is the justification for public-private partnerships with the various levels of Nigeria’s government. The roads, bridges, tunnels, power stations, water and drainage networks, houses, hospitals, etc., that government should provide as basic amenities will need significant funding from private (and, usually, foreign) parties to happen.

 

The Government is sending out mixed messages on its vision for PPP. The first problem here, and this is my personal opinion, is that not enough of the decision makers know enough about the structure of PPPs, to not bungle it. The concessionaire for MMA2, for example, was frequently summoned by various committees to come and account for the money he was spending during construction! They would typically order work to stop and he would fly to Abuja at his own expense to explain that government did not give him a penny. The general aviation terminal was also supposed to be shut down and there was to be no further airport development within Lagos State. We all know how Arik refused to vacate the GAT and that a new airport will be built in Lekki. His lenders are circling.

 

Same with Lagos State and the Lekki-Ikoyi bridge. Everyone present at our soiree agreed that it was infrastructure that was needed, that it was world class and that it was properly delivered. The issue is that under the concession agreement with the Lekki Concession Company (of the Lekki-Epe toll road), reportedly, no further alternative route is to be built within 300 metres of the toll road.

 

Why the fuss? Well, when you approach lenders for project financing, it is understood that loan repayment comes from revenues generated by the project. The revenue projections determine the conditions for lending and even the slightest default could trigger significant penalties. It is estimated that 25,000 vehicles go through the Lekki-Ikoyi bridge daily and that traffic at the LCC Admiralty Toll dropped to 75,000 vehicles daily from about 90,000 after the bridge became operational. A 15,000 vehicle hit on your daily bottom line is not insignificant.

 

There are hoardes of potential investors at the gates. This conversation was had before our glorious week of rebasing, so it was not yet known for sure that we were twice as large an economy as had previously been thought. However, even with the old GDP figures, there were many people out there itching to come and invest. The snag is that most of the intended projects are not bankable. The issue with bankability is not that a healthy ROI does not exist – it is that political and local community risks are way too high. See for example, how the Chevron toll is yet to become active, then go back to the principle that a funded project repays its own debt. What happens to the deficit in actual revenue versus projected? Think also to how things can go pear-shaped if a different party/regime comes into office. We have the old Buhari and railways project as a reminder here too.

 

The Fix? The government has to decide whether it needs PPP help or not. If yes, then it should be doing all it can to boost confidence in the Nigerian PPP. Politicians and policy makers need to stop being so twitchy. Nigerians also need to decide if they’re happy with the status quo or want these new shiny roads and bridges. Yes, we pay taxes but if the 24% unemployment and 60% youth unemployment figures are to be believed, coupled with huge numbers of people either underpaying or not paying taxes at all, then it may be erroneous to think that the taxes and national income are enough to do everything.

 

There was debate on the propriety or otherwise of the Lekki-Ikoyi bridge judgement too, but that’s gist for another blog post.