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Concession: Twists, intrigues trail FG’s plan

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The inclusion of already concessioned Tafawa Balewa Square (TBS),  Lagos in the list of  national assets to be sold to fund the 2018 budget a few weeks after the revocation of the concessioning of International Trade Fair Complex, is brewing concerns among investors and stakeholders. Dayo Ayeyemi reports

From the revocation of Lagos-Ibadan Express road’s project over non-performance to the stop-work order on Federal Secretariat Complex, Ikoyi, Trade Fair Complex in Lagos and  recently, Tafawa Balewa Square (TBS), Nigeria is recording a lot of minus in public-private partnership (PPP).

While the dust over other failed projects is yet to settle, especially that of Trade Fair Complex,  the Federal Government, through the Director-General, Budget Office, Mr. Ben Akabueze, last week, listed TBS among other national assets to be sold to fund the current budget.

The DG stated this at the public hearing organised by the House of Representative Joint Committees on Finance, Appropriation, Loans, Debts and Aids and Legislative Budget and Research on the 2018- 2020 Medium Term Expenditure Framework and Fiscal Strategy Paper.

In a swift reaction, the concessionaire of  TBS Lagos, BHS International Limited, expressed shock over plans by the Federal Government  to sell the edifice as part of the national assets to generate sufficient revenue to finance Nigeria’s annual budgets between 2018 and 2020.

According to the  Chief Executive Officer, BHS International Limited, Otunba Olu Adenodi, TBS had been concessioned to the company for  a period  of 30  years since 2008.

He insisted that  there was no basis of listing the  edifice as part of assets that the government wants to sell to fund the budget.

Expressing shock over the announcement, he explained that the Federal Government through the Bureau of Public Enterprises (BPE) had just granted the company an indemnity to reassure their investors.

“What government should have done was to confirm from BPE before making such announcement,” he said.

Adenodi wants the government to issue a rejoinder before the company takes the next action, noting that BHS International Limited would have turned around the fortune of TBS by now if not for the obstacles posed earlier   by Lagos State Government.

“Federal Government has  just granted us an indemnity to reassure our investors. I came back from Abuja last Friday with the indemnity, which I showed to my staff and we all rejoiced over it.

“Our investors are happy,” Adenodi said, wondering why the government would list TBS among properties it wants to sell after it was concessioned a few years ago.

The BHS boss said  the TBS complex  remained the property and commonwealth of all Nigerians held in trust by the government, but leased to BHS under the privatisation policy.

“The concession of TBS to BHS International Limited is for 30 years,” he explained.

Adenodi recalled that before BHS International took over the TBS, the complex provided a haven for miscreants, street urchins and hoodlums, who used the place as a hide out to perpetrate various social vices in central Lagos.

Since the concession in 2008, Adenodi said his firm has been upgrading the facilities in the complex, creating employment for Nigerians in the process, paying taxes to the government, generating income for the Federal Government and keeping the environment clean and safe.

PPP projects

Meanwhile, stakeholders in the construction sector, especially investors, who had earlier subscribed to the government’s PPP projects  are currently regretting their decision.

Until early this year that the court ruled in favour of concessionaire of Festac Phase II project, subscribers abandoned the mixed used housing scheme because of issues bordering on ownership between the land owners and the Federal Government.

Also recently, Hotel Presidential, Enugu joined the league, following protracted litigation after its concession four years ago.

The issues surrounding the concession of Federal Secretariat Complex, which was concessioned to Wale Babalakin-led Resort International Limited,  is also yet to be resolved.

Justifying the revocation of the concession of the Lagos International Trade Fair Complex (LITFC) penultimate week, the Federal Government said it took the decision  because the concessionaire, Aulic Nigeria Limited, grossly breached the concession agreements.

Top on the contract breach is that Aulic Nigeria Limited is yet to pay a lease indebtedness of N6.542 billion accumulated over the years to the Federal Government.

The 322-hectares LITFC was concessioned to Aulic in 2007 for N40 billion lease fees to be paid over 30 years.

The concessionaire, it was gathered paid just an entry fee of N200 million and another N12.73 million for the moveable assets till date.

Consequently, the National Council on Privatisation (NCP) has directed the relevant government authorities to recover the over N6.5 billion lease indebtedness as quickly as possible.

Experts’ perspectives

Reasons such as unfavorable policy, lack of continuity in government, inappropriate financial details, lack of depth of conception and absence of wider environmental implications among others, have been adduced for failure of PPP projects in Nigeria by experts.

According to industry’s practitioners, failure of these projects in which investors’ funds are trapped, is denting the country’s image on the international scene.

Lending credence to the above-stated factors, Managing Director, Kola Akomolede and Company, Mr. Chief  Kola Akomolede, mentioned lack of continuity in the government and  budget’s overload  among reasons for their delay.

He said: “This also affects  new Falomo Shopping Mall project, which former Governor Babatunde Fashola signed its concession, but abandoned by the incumbent.”

Rather than terminating these projects, Akomolede, a former President of Nigeria’s International Real Estate Federation (FIABCI), advised that the government renegotiate them for  their completion.

First Vice President, Nigerian Institute of Town Planners,  Mr. Toyin Ayinde, noted that various reasons might be responsible for the failure of PPP projects in Nigeria.

He said the truth is that some of the project proponents have not worked out all the financial requirements of the projects in question, while others have not seriously considered the wider environmental implications of the projects they seek to pursue.

Last line

There must be intellectual investment in PPP projects before the deals are signed. The proponents should always dialogue with representatives of the government so they can know how their minds are working in order to evolve workable projects.

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Architects task govt on affordable housing

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Issues of urban regeneration to architectural designs, smart city, affordable housing and climate change were again brought to the fore by architects and professionals in the property sector last weekend. Dayo Ayeyemi reports

Rising from a three-day brainstorming session, Nigerian architects have been tasked to mount pressure on the government to formulate policies and invest in affordable housing estates for low-income earners.

Besides, they were also urged to achieve sustainability by incorporating the use of local materials in their projects, as well as engage the government to make it a priority to stop deforestation, encroachment into bogs, wetlands, mashes and swamps.

Participants at the forum cut across diverse stakeholder groups from public service, private sector, academia, and allied professions to artisans and building construction material manufacturers and suppliers.

 

Themed: “Lagos 9.0 – An Architectural Regeneration 1 – The Lagos Response,” the experts in a communiqué issued at the end of the forum, called on architects to sensitise the government to ensure that every compound had minimum of one tree, and that the number of trees should be calculated based on size of compound.

“Architects should try to achieve sustainability by incorporating the use of local materials in their projects. They should design with identity in mind, a sense of belonging, which should be into our architecture,” they said.

The experts also urged the government to encourage and promote local materials industry and that it should concentrate resources in building up areas that will yield greater resources.

 

“Such projects would take time and as such, there is need for focus, regardless of change in administration,” they said.

 

Response

Represented by Deputy Director in the Ministry of Housing, Remi Adebo, the Governor of Lagos State, Mr Akinwunmi Ambode, said it was no longer news that the state government was working towards transiting from a mega city to a smart city.

He said his government was geared towards achieving a mega city status, adding that it starts with architects.

He noted that the theme of architectural regeneration was very relevant and in line with the government’s approach towards creating the mega city.

 

“Plans of regeneration has lead us to embarking on various projects in and around the state including some laudable projects such as the Ilubirin residential scheme, Oworonshoki mega transport hub, transformation of Epe and revitalisation of Oshodi,” Ambode said.

 

One of the speakers, Roman Oseghale, an architect, stated that the housing industry remained a major booster for economic growth, noting that the nation’s housing deficit stood at 17million as at 2013, and that the estimated worth of housing deficit was $302billion.

“About 720,000 housing are needed annually but we can only produce about 350,000. An estimated 70 per cent are living in poverty with about 8,000 added to extreme poverty daily. There was an urban population of 48.6 per cent (90.4m) at the end of 2016,” he said.

According to him, while justifying the need for regeneration of Lagos, he said it had an estimated population of 18million to 21million people and a projected population of 36million by 2050, adding that its housing demand grows by 20 per cent annually.

“In 12 years, Lagos population increased from 8million to 18million. It has a population density of 5,381 people/Sq.km, a GDP of $136 billion, and 30 per cent of Nigeria’s GDP. It also holds 70 per cent of Nigeria’s industrial capacity and accounts for 90 per cent of Nigeria’s foreign trade flow, “he said.

 

Stakeholders’ opinion

Chairman, Lagos Chapter of the Nigerian Institute of Architects (NIA), Mr. Fitzgerald Umah, said the 2018 LAF was a forum to walk the talk, get the details and proffer solutions to problems, noting that Lagos has been shrinking, not because the landmass has been reduced but because “the population is growing at a very fast rate.”

According to him, failure to respond and regenerate into a more resilient organism or organisation could only result in systemic stagnation and eventual decay.

Speaking on” regeneration – The East Village Story,” Adjunct professor at the University of Calgary’s Faculty of Environmental Design , Bill Chomik, pointed out that architects had stepped outside the box to play a seminal role by preparing the master plan, using innovation and creativity as design drivers.

This model, he stated, could readily be replicated in other cities where physical renewal and invigoration of a degenerated urban environment is envisioned.

Another expert, Rear Admiral Houtonu, who was passionate about regeneration, said that a lot of Nigerian towns and cities have been overtaken by what is called ‘the Inner City Syndrome.’

Citing what had been done in the East Village in Canada, she said that there was nothing wrong with concentrating resources in building up areas that would yield greater resources.

 

Last line

When participants coalesce next year, they want to see how architects have applied these solutions suggested to solve the issues raised.

 

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Why real estate market is yet to recover, by facility managers

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From residential to commercial, office space and retail mall, there are signs that real estate market is still struggling to recover from the lull, New Telegraph has learnt.

 

This is evident in low demand for properties, existing vacancy rates, rent service charge defaults and low construction activities in the sector – almost six months after Nigeria came out of one and half years recession.

 

Group Managing Director, Alpha Mead, Mr. Femi Akintunde, an engineer, sais despite the fact that the market characteristics have been gradually fading away owing to improving macroeconomic indices, real estate market is still struggling to recover from the lull.

 

He noted that real estate market was one of the worst hit sectors during the 15 months’ period of economic recession, which lasted from first quarter 2016 to second quarter of 2017.

 

“The sector saw its growth dim as the market was defined by low demand, widening vacancy rates, increasing case of rent service charge defaults and slowdown in construction activities,” he said.

 

Speaking during the pre-event press briefing of 2018, Nigerian Facilities Management (FM) Roundtable, Akintunde said that for real estate markets to receive a new lease of life in post- recession Nigeria, it would be determined by the roles FM would play in enabling positive experiences for its stakeholders.

 

Commenting on current situation in the real estate sector, the Alpha Mead boss stated that report from the International Real Estate Partners (IREP), Nigeria, a strategic business units of Alpha Mead, had shown that rents in commercial properties such as Grade ‘A’ office space could lightly fall below the current average of $700 (N252,000) per square metre (psqm) as the market anticipates arrival of 37,000 square metre in Victoria Island and Ikoyi, Lagos. He pointed out that demand for Grade ‘A’ office space has not been growing at the same pace, adding that report had shown that rise in neighbourhood retail stores have been decreasing footfalls at the modern retail centres.

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NHP: Contractors seek release of budgeted N35bn

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Dearth of funds may hinder full implementation of various on-going housing projects in 33 states of the federation under the National Housing

 

Except the necessary machinery is put in place, attempts by the Federal Government to build affordable housing units in all the states of the federation under its National Housing Programme (NHP) may become another white elephant project.

 

Despite the readiness of real estate developers, who are government contractors for the project, the latest threat to the initiative is fund, which is not coming as at and when due to accelerate the completion of the housing construction process.

 

The contractors, who spoke at different times in their various locations, called on the Federal Government to hasten the processes of fund disbursement to enable them complete the works at their various sites as scheduled. New Telegraph’s findings revealed that stages of work in most of the sites were very impressive. In some locations, developers have achieved between 70 and 80 per cent completion of the project, while in almost all the sites, excuses from the contractors have been lack of funds.

 

The contractors, Mathias Orove and Jude Opute, at Calabar and Uyo project sites respectively during a media tour of the project, told this newspaper that untimely disbursement of funds was hindering the progress of the project.

They appealed to government to release more funds in order to accelerate construction work of the housing units. The team leader of the project in Enugu State, Veronica Enesi, also stated that the project in the state had lifted many of the people of the state from poverty level.

 

She explained that the site had some set back from the beginning, but having overcome the challenges, the project was gaining considerable speed and would be completed soon. Both the team leaders and the contractors called on the Federal government to hasten the process of funds disbursements, so that the projects could be completed as scheduled.

 

NHP

 

Initiated in 2016, and projected to cost about N35.4 billion, NHP was conceived to address the housing needs of workers, and provide economic empowerment for local communities where the projects are located.

 

One commendable step taken by the government in prosecuting the national housing programme is not just the fact that it has mustered the political will to partly address the housing deficit in the country, but the emphasis placed on the promotion or local contents to empower the people who live around the host communities.

 

As a matter of policy, government made it mandatory that all the building materials and every other needs of the projects must be 100 per cent indigenous.

 

That is to say that the local community hosting the project must be given priority attention. This newspaper observed that in six locations of the project visited: Enugu, Ebonyi, Calabar, Uyo, Benin, and Asaba, local content policies of the government were been complied with.

 

The contractors, building materials, the suppliers, both skilled and unskilled labourers are indigenous people who have attested to the economic empowerment capability of the project. The building designs are the same in all these locations. The project, which consists of two-bedroom semi-detached bungalows, three-bedroom semi detached bungalows, three-storey condominium blocks of 24 mixed units are at various stages of completion.

 

Govt’s reactions

 

The Minister of Power, Works and Housing, Babatunde Fashola, said that the Federal Government was considering an upward review of contractors’ mobilisation fees to 50 per cent from its current status of 15 per cent. Fashola told some members of the Association of Indigenous Construction Contractors of Nigeria (AICCON), who paid him a courtesy visit recently, that there was already an executive bill at the National Assembly to address the mobilisation issue.

 

“There is a bill from the executive before the National Assembly to review the 15 per cent mobilisation fee payable to contractors requesting the NASS for an upward review to 50 per cent,” he said.

 

The Federal Controller of Housing in Uyo, Akwa Ibom State, Mrs Ikuo Uzodinma, noted that the project was gaining more speed. She said the project, which started effectively in the state, had empowered a lot of artisans and other people in the community. The Federal Controller of Housing in the ministry, Olusola Idowu, who represented the ministry at one of the project sites in Ezzamgbo, Ebonyi State, said that NHP was one of the initiatives of government designed to accommodate and empower Nigerians.

 

According to him, NHP was initiated by government, not just to provide the populace with accommodation, but to boost economic activities of people, who live around the community. He explained that the project in Ebonyi State, which comprised 72 units of affordable houses, would soon be completed as soon as funds were made available by government. He said: “Over 95 per cent of our workforce at this site are indigenes of this community.

 

Supplying of building materials is also predominantly carried out by indigenous traders, and other beneficiaries of the site include artisans and food vendors.

 

“The project is ongoing and as you can see, most of the contractors are already completing their work while others are waiting for the release of fund to speed up the work.”

 

One of the attempts made by successive governments in Nigeria to meet the housing needs of the populace is the ongoing housing programme. It is the prototype of what Shehu Shagari’s regime introduced in the Second Republic of Nigeria’s democratic journey.

 

After Shagari’s attempt, there were many other efforts at providing the missing links in the housing industry, through more of private sector interventions. Ironically, virtually in all parts of the country, there are massive housing development by private sector investors, yet accommodation gap continues to widen, putting pressure on the health of the nation’s economy. The reason for this is simply that the affordability margin is too far for the reach of the masses.

 

Some experts in the sector noted that the desire to bridge the gap and remedy the deficit had never been lacking, saying that what has ever remained the scarce commodity was the political will to take the bull by the horn.

 

Last line

 

The relevant authorities should hasten the processes of funds disbursement to the contractors in ensuring that the housing programme is sustained.

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