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Why Lagos – Badagry Expressway may take 48 years to complete

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The Lagos – Badagry Expressway project that is dear to the hearts of all residents of Lagos living in the Mile-2 to Agbara axis of the State, may sadly take up to 48 years to complete.

Lot 1 – the first phase of expansion of the expressway – is just nearing completion after a decade of construction work, while the 24.5 kilometer Lot 2, which stretches from Mile 2 down to Agbara, has been recently awarded to the China Civil Engineering and Construction Company (CCECC).

Lagos State just issued a N 100 Billion Series III 10-Year 12.25% Fixed Rate Bonds due 2030. The Bonds are part of its N500 Billion Shelf issuance Programme.

The good thing about bond issuances is that the issuer has to provide information for prospective investors about what it intends to use the proceeds of the bond for.

The estimated net issue proceeds of the Series III Bonds will be utilized for purposes of financing a couple of projects in various Ministries and Departments including Works, Education, Healthcare, Housing, LAMATA and Environment and water resources, according to data from the bonds pricing supplement seen by MoneyCentral.

The Lagos – Badagry Dual Carriage Expressway is listed as one of the projects to be funded by proceeds of the bond.

The cost of the project is put at N141.1 billion, while N2.9 billion is allocated to it as payment from the bond, meaning it would take 48 years to complete at this rate, assuming there is no upwards review of the cost of the contract in the intervening period due to inflation.

It is instructive to note that construction of the 10 -lane road with service lanes has been ongoing for more than 12 years, so while it is unfathomable that it will take another 48 years to complete, it is not improbable.

Lagos State recently reduced its 2020 budget by 21 percent to N920.5 billion from N1.169 trillion, due to the fallout from the Coronavirus pandemic, meaning less funds may be available for infrastructure spending as a 28% reduction has been proposed for Total Capital Expenditure from N711.033 billion to N508.861 billion.

The Lagos State Government had total indebtedness of N683.53 billion as at October 31, 2019 which constitutes loan capital, debentures, mortgages, overdrafts, short term loans, charges or similar indebtedness, according to the bond supplement.

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