SAN Cautions Federal Govt Against Unilateral Revocation Of Benin-Asaba Concession

A Senior Advocate of Nigeria (SAN), Abiodun Olatunji, has cautioned the federal government against unilaterally revoking the 25-year concession agreement for the Benin-Asaba Expressway without complying with the terms of the contract.

Speaking in Lagos yesterday, Olatunji, who reviewed issues surrounding the concession and the dispute between the Federal Ministry of Works and Benin-Asaba Expressway Concession Company Limited (BAECC), said the reported condition of the highway and ongoing repair activities might not, on their own, establish sufficient grounds for terminating the concession.

His opinion followed a request for legal advice on the federal government’s powers under the concession agreement, the circumstances under which the agreement could be terminated, and the distinction between emergency intervention on the highway and termination of the concession.

He said the government’s concerns over the condition of the road could justify urgent intervention where public safety was at risk. Still, such intervention should be distinguished from the permanent termination of the concession.

According to him, the Minister of Works does not have 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,” Olatunji stated. He also questioned whether allegations of abandonment, repudiation or total failure of performance could be established where construction activities were still ongoing along the highway.

The lawyer said the Federal Government could exercise emergency intervention or step-in rights where provided for under the concession agreement, particularly where the condition of the road posed an immediate danger to motorists.

Such intervention, he said, should ordinarily be limited to addressing the immediate problem without automatically extinguishing the underlying concession arrangement. The opinion further stated that public-interest considerations, by themselves, 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.

Olatunji said a permanent takeover of the project, removal of the concessionaire, redesign of the route or appointment of replacement contractors could go beyond the scope of emergency intervention unless carried out through mechanisms provided under the agreement.

These, he said, could include a negotiated amendment, a valid change in scope, termination for convenience with applicable compensation, or termination following established default procedures. The legal opinion comes amid a dispute between the Federal Ministry of Works and BAECC over the condition and reconstruction of the 125-kilometre highway.

The ministry has raised concerns over alleged breaches of provisions of the concession agreement and has reportedly proposed a mutual termination of the arrangement. Works Minister, David Umahi, had previously expressed dissatisfaction with the condition of the road after inspecting the corridor with Edo State Governor, Monday Okpebholo. The deteriorating condition of parts of the highway has also resulted in prolonged traffic congestion and hardship for motorists travelling between Benin City and Asaba, particularly during the rainy season.

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 has also cited ongoing earthworks, drainage construction, asphalt laying, carriageway expansion and other construction activities along sections of the corridor.

Olatunji, however, stated that his opinion was based on the documents made available to him and should be regarded as provisional pending a review of the complete concession agreement and other relevant contractual documents.

The Federal Executive Council approved the Benin-Asaba concession on January 16, 2023, while the concession agreement was signed on May 23, 2023.

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

The highway runs from Ring Road Roundabout in Benin City to Summit Junction in Asaba and serves as a major link between parts of the South-South, South-East and South-West regions.

The project is among 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 dispute, therefore, has implications for the contractual relationship between the government and private concessionaires involved in long-term road infrastructure projects.

The immediate issue remains the restoration of the highway, while the Federal Government and BAECC continue to address the contractual and operational questions surrounding the concession. This version removes much of the argumentative language, reduces repetition and keeps the legal opinion, the ministry’s position and the concessionaire’s position clearly attributed.