Olatunji cautions FG against revoking Benin-Asaba expressway concession

A Senior Advocate of Nigeria (SAN), Abiodun Olatunji, has cautioned the Federal Government against the recent pronouncements and actions concerning the state of the Benin-Asaba Expressway and the ongoing intervention activities on the highway.

He advised that the government should tread cautiously in considering any revocation of the subsisting concession agreement governing the expressway. According to him, the absence of evidence of abandonment, repudiation or unreasonable delay in the execution of repair works may not constitute sufficient grounds for the unilateral revocation of the 25-year concession.

Olatunji was invited to provide his legal opinion on the issues surrounding the Benin-Asaba Expressway concession, including the dispute between the Federal Ministry of Works and the Benin-Asaba Expressway Concession Company Limited (BAECC). In formulating his opinion, he reviewed a summary of the Concession Agreement and assessed the relevant contractual and legal implications.

His review considered, among other things, the extent of the Federal Government’s powers to intervene in the project, the circumstances under which the concession may be terminated, and the distinction between emergency intervention measures and termination of the concession itself.

His opinion was subject to the provisions of the full concession agreement, including clauses relating to default, cure periods, step-in rights, termination, compensation, lender protections, and other contractual safeguards governing the relationship between the Federal Government and the concessionaire.

The legal opinion came amid an escalating dispute between the Federal Ministry of Works and BAECC over the condition and reconstruction of the 125-kilometre highway. The Ministry has alleged breaches of certain provisions of the concession agreement by the concessionaire and has reportedly proposed a mutual termination of the arrangement.

He cautioned that while the Federal Government’s concerns regarding the condition of the Benin-Asaba Expressway may justify urgent intervention, they may not, in themselves, provide a legal basis for the unilateral revocation of the concession.

According to the Ministry, deteriorating road conditions have contributed to severe gridlock and hardship for motorists travelling between Benin and Asaba. Minister of Works, David Umahi, had previously expressed dissatisfaction with the state of the project following an inspection of the road alongside Edo State Governor Monday Okpebholo.

Umahi subsequently outlined possible options for resolving the dispute. However, Olatunji’s review raises questions about the extent to which the concession agreement can be altered or terminated without strict adherence to the procedures stipulated in the contract.

He stated that the Minister of Works does not possess a general or personal power to revoke the concession at will, noting that the contracting party is the Federal Government acting through the Ministry.

“Our considered opinion is that the Minister has no general or personal authority to revoke the concession at will,” the senior lawyer stated.

He further argued that the fact that construction activities are ongoing could make allegations of abandonment, repudiation, or total failure of performance more difficult to establish.

The legal opinion nevertheless recognised the Federal Government’s responsibility to intervene where road conditions pose a danger to motorists and the public.

According to Olatunji, the condition of the highway may justify “immediate and proportionate emergency intervention,” particularly where the concession agreement grants the Government step-in rights.

He explained that any emergency step-in action would ordinarily be limited to addressing the immediate danger while preserving the underlying concession arrangement.

The legal opinion also contends that reliance on broad public-interest considerations, without more, may not amount to a contractual basis for terminating the concession. While public interest may justify certain government actions aimed at protecting lives and property, it does not automatically extinguish contractual rights relating to compensation, cure periods, or lender protections provided under the agreement.

He further noted that a permanent takeover of the project, the removal of the concessionaire, the redesign of the entire route, or the appointment of replacement contractors may extend beyond the scope of a limited emergency intervention unless undertaken through mechanisms expressly provided for in the agreement.

Such mechanisms could include a valid change in scope, a negotiated amendment, a termination-for-convenience clause accompanied by compensation, or a properly executed default-termination process.

He also emphasised that his review and conclusions were based solely on the documents made available to him and should therefore be regarded as provisional, pending a review of the complete Concession Agreement and all related contractual documents.

The concession dates back to 2023. The Federal Executive Council approved the project on January 16, 2023, while the concession agreement was signed on May 23, 2023.

The project was structured as a Design, Finance, Build, Operate and Transfer (DFBOT) arrangement with a concession period of 25 years, including the construction phase. A 2026 transport-sector study prepared for the Japan International Cooperation Agency (JICA) also records the Benin-Asaba concession as running from May 2023 to May 2048 and identifies it as being under implementation.

The highway, which stretches from Ring Road Roundabout in Benin City to Summit Junction in Asaba, serves as a critical transport corridor connecting the South-South, South-East, and parts of the South-West regions of Nigeria.

The dispute gained greater prominence after motorists experienced prolonged gridlock and worsening road conditions during the rainy season.

BAECC has consistently disputed suggestions that the project has been abandoned, attributing some of the challenges to heavy rainfall, increased traffic volumes, and the complexities of reconstructing a major highway while keeping it open to public use.

The concessionaire has also pointed to ongoing earthworks, drainage construction, asphalt laying, carriageway expansion, and other construction activities taking place along various sections of the corridor.

Notably, the Ministry itself has acknowledged some of the contractual complexities surrounding the project. During an August stakeholders’ meeting, Umahi observed that decisions taken under the concession arrangement carry significant implications and sought the concessionaire’s agreement on proposed changes.

The dispute also has implications beyond the Benin-Asaba corridor. The project is one of several road concessions being implemented under the Federal Government’s Highway Development and Management Initiative (HDMI), a programme established to attract private-sector capital and technical expertise to the development and management of federal highways.

Consequently, the manner in which the disagreement is resolved is likely to be closely monitored by investors, lenders, concessionaires, and other stakeholders involved in long-term public-private infrastructure projects across the country.

While the Federal Government has reaffirmed its commitment to restoring the highway and alleviating the hardship faced by road users, the legal opinion suggests that emergency intervention and contractual rights need not be viewed as mutually exclusive objectives.

Ultimately, the challenge will be to determine the extent of any contractual default, undertake urgent remedial works, establish responsibility for the necessary interventions, and resolve the broader concession dispute without allowing legal disagreements to delay the full restoration of this vital transportation corridor.

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