FG cautioned against unilateral revocation of Benin-Asaba road concession

By Adebola Muili

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, saying any action must comply with the terms and procedures contained in the contract.

Olatunji gave the advice in a legal opinion on the dispute between the Federal Ministry of Works and the Benin-Asaba Expressway Concession Company Limited (BAECC) over the condition of the 125-kilometre highway and the ongoing intervention efforts.

The senior lawyer said the deteriorating condition of the road could warrant urgent government intervention but argued that this did not, by itself, automatically provide sufficient grounds for terminating the concession.

He said the available information did not establish abandonment, repudiation or unreasonable delay in the execution of works to an extent that would justify unilateral revocation of the agreement.

Olatunji explained that his review examined the extent of the Federal Government’s powers under the concession, the circumstances under which the agreement could be terminated and the distinction between emergency intervention and termination of the concession itself.

He noted that the full agreement contains provisions dealing with default, cure periods, step-in rights, termination, compensation and lender protections, stressing that such provisions would have to be considered before any major decision is taken on the concession.

The SAN also rejected the suggestion that the Minister of Works could personally revoke the concession at will, noting that the contracting party was the Federal Government acting through the appropriate ministry.

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

Olatunji further argued that the existence of ongoing construction activities along the highway could make allegations of abandonment, repudiation or total failure of performance more difficult to establish.

He, however, acknowledged the responsibility of the Federal Government to protect motorists and other road users where the condition of the highway poses an immediate danger.

According to him, the situation may justify what he described as “immediate and proportionate emergency intervention”, particularly where the concession agreement provides for government step-in rights.

He explained that such intervention should ordinarily be directed at addressing immediate dangers while preserving the underlying concession arrangement, unless the contract provides otherwise.

The lawyer also cautioned that reliance on broad public-interest considerations alone may not be sufficient to extinguish contractual rights, including provisions relating to compensation, cure periods and lender protections.

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

Such mechanisms, he said, could include an agreed change in scope, negotiated amendment of the agreement, termination for convenience with applicable compensation or a properly executed termination process based on established default.

The legal opinion comes against the backdrop of growing concerns over the condition of the Benin-Asaba Expressway, which has witnessed prolonged traffic congestion and hardship for motorists, particularly during the rainy season.

Minister of Works, David Umahi, had expressed dissatisfaction with the state of the highway following an inspection of the road alongside Edo State Governor, Monday Okpebholo, while the Federal Government explored measures to address the situation.

The Ministry has raised concerns over alleged breaches of the concession agreement by BAECC and has considered options for resolving the dispute, including termination of the arrangement.

BAECC, however, has disputed suggestions that it abandoned the project, pointing to construction activities taking place along various sections of the corridor.

The concessionaire has cited ongoing earthworks, drainage construction, asphalt laying and carriageway expansion among the activities being undertaken on the highway.

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

The project was structured as a Design, Finance, Build, Operate and Transfer (DFBOT) arrangement with a 25-year concession period, including the construction phase.

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

Olatunji stressed that his opinion was 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 other relevant contractual documents.

He said the immediate task was to address the condition of the highway while determining the extent of any contractual default and resolving the wider dispute within the legal and contractual framework governing the concession.