Lekki-Epe PPP Concession vs UK PFI: How Terms Compare

In 2011, the ₦120 a car paid at the Admiralty Circle toll plaza was worth about 79 US cents. Had the ₦200 tariff set in 2018 stayed in force, it would have been worth roughly 13 cents at 2025's average official rate of ₦1,544 to the dollar (Central Bank of Nigeria data). That slide shows how far the Lekki-Epe public-private partnership (PPP) concession sits from the UK's Private Finance Initiative (PFI).

The Lekki-Epe PPP concession is a 30-year build-operate-transfer deal in which the private operator is repaid from tolls, so traffic, tariff politics and the exchange rate land on its balance sheet. Under UK PFI, government pays a contractual annual sum, and those risks sit mainly with the taxpayer. Below: both life cycles, a toll calculation you can rerun, and a checklist for UK reviewers.

Lagos is still trying to finance new toll assets on similar logic, as Fourth Mainland Bridge: Why Three Toll Models Failed explains, and 20 years after signature the Lekki-Epe record is the best evidence available.

⭐The Lekki-Epe PPP concession is a 30-year build-operate-transfer toll deal in which Lekki Concession Company recovers its costs from drivers, so it carries traffic and tariff risk. UK PFI typically works differently: government pays a fixed annual charge for availability and performance, so lenders take little traffic risk but taxpayers carry the long-term bill.⭐

What did Lagos actually sign at Lekki-Epe?

Lagos State advertised for private road proposals in 2000 and mandated a developer in 2003. Lekki Concession Company Limited (LCC), a special purpose vehicle (a company set up to deliver a specific project), signed the concession agreement on 24 April 2006, according to Trinity International LLP (2009). LCC may design, rehabilitate, build, operate, maintain and toll the road for 30 years, after which the assets pass to the state (IJGlobal).

The scope was upgrading 49 kilometres of two-lane dual carriageway to three lanes, building three toll plazas and adding a new 20-kilometre coastal road (Rendel). Financial close, the point at which financing agreements become binding, came in October 2008 on US$426 million (₦50.1 billion). Lenders included the African Development Bank (AfDB, US$85 million over 15 years), Standard Bank (a US$93 million, 15-year international tranche) and local banks. Lagos State added US$42 million of mezzanine debt, which ranks behind senior loans, and equity totalled US$58.9 million (IJGlobal).

Published case material describes an agreed schedule of payments based on expected traffic and toll revenue (The Case Centre, 2013), which suggests some revenue support. We found no public copy of the full agreement, so "pure private demand risk" is a simplification.

How does UK PFI pay for a road, and why is that different?

The Private Finance Initiative, announced in 1992, has a private consortium finance, design, build, operate and maintain a public asset, typically for around 25 years. The state repays through an annual unitary charge, one payment covering construction, financing, maintenance and services, reduced when performance slips (HM Treasury, 2018). Roads used a variant, Design, Build, Finance and Operate (DBFO), with 30-year contracts and shadow tolls: a government fee per vehicle-kilometre, set in capped bands, instead of charges on drivers. A 1997 House of Commons Library paper says this route emerged partly because private appetite for pure toll roads was limited.

In January 2018 the National Audit Office (NAO) counted over 700 operational PFI and Private Finance 2 (PF2) deals worth about £60 billion, with £199 billion of future charges running into the 2040s. Financing costs matter: the NAO showed interest on a £100 million loan over 30 years rising from £34 million at 2% to £118 million at 6%, and MPs on the Public Accounts Committee (2018) said private borrowing could cost up to 3.75 percentage points more than public borrowing. Budget 2018 then ended PF2, the 2012 successor, for new UK government projects.

The nearest UK match to Lekki-Epe is the M6 Toll, not PFI. Midland Expressway Limited holds a 53-year concession running to 2054, bears traffic risk and sets tolls without a cap. Its owner, Macquarie Infrastructure Group, called traffic disappointing in May 2005.

Where do the terms diverge?

Term	Lekki-Epe concession	UK PFI / DBFO road	M6 Toll
Who pays the operator	Drivers, through tolls	Government: unitary charge or shadow toll	Drivers, through tolls
Traffic risk	Mostly private; reported payment schedule, terms not public	Low under availability payments; higher under shadow tolls	Private
Currency risk	Naira tolls against part-dollar debt	Minimal: sterling payments, largely sterling debt	Minimal: sterling
Tariff control	Increases follow consultation; a planned 2017 rise was suspended after protests	No user charge	Operator sets tolls, no cap
Term	30 years	25 to 30 years	53 years, to 2054
End state	Assets pass to Lagos State	Assets fully or partly revert to the public sector in 79% of contracts surveyed (NAO, 2020)	Reverts to the Secretary of State in 2054

Context widens the gap. The UK borrows in sterling from a deep domestic market and audits PFI nationally; Lagos State is a sub-national borrower with naira revenue and foreign-currency lenders, and we found no published audit of Lekki-Epe comparable to the NAO's reviews. The timeline below shows where Lekki-Epe departed from plan.

How does a toll concession run from signature to handback?

Five stages, with Lekki-Epe's actual dates set against the UK norm.

1. Mandate and procurement, 2000 to 2003. Lagos advertised in 2000 and mandated Asset & Resource Management Company Limited in 2003 after it submitted a proposal (Trinity, 2009). UK PFI relied on competitive tenders, which PF2 tried to shorten.

2. Signature to financial close, April 2006 to October 2008. Lenders took 30 months to commit. Trinity called the deal a first for West Africa and noted that many people doubted its feasibility at the outset.

3. Construction, 2008 to 2011. IJGlobal expected three years of works, and LCC dates the start of tolling to December 2011.

4. Operation and tariff setting, 2011 onwards. Tolls stayed fixed until 1 February 2018, when the Admiralty Circle car toll rose from ₦120 to ₦200 (Channels Television, 2018); LCC cited loan obligations and exchange rates. Collection at the Admiralty Circle plaza stopped after the October 2020 #EndSARS protests, and LCC announced that tolling at the Lekki-Ikoyi Link Bridge would resume on 1 April 2022. Sources differ on whether Admiralty Circle collects today. Smart Tolling Systems Driving Lagos Highway Revenue to 2052 covers the technology and wider corridor pipeline. In PFI, this is the stage where the unitary charge flows.

5. Restructuring or handback, 2014 onwards. Lagos acquired LCC's shares in December 2014, saying original assumptions no longer matched market realities and that it wanted control of toll rates (LCC). In 2021 the Lagos House of Assembly approved a structure leaving the state with 75% of LCC and the Office of Public Private Partnerships 25% (Gazette, 2021). PFI's counterpart is handback, the return of the asset to the state at contract end: the NAO (2020) counted 204 UK contracts due to end within a decade.

Who carries traffic and currency risk? A worked example

Take only the international debt: the AfDB's US$85 million plus Standard Bank's US$93 million, US$178 million in total, both over 15 years (IJGlobal). Assume 8% interest (this article's assumption, not a reported figure). The annual payment equals the loan multiplied by r ÷ (1 − (1 + r)^−n), where r is the rate and n the years. That gives 0.1168 × US$178 million, or about US$20.8 million a year.

Now ask how many paying cars a day generate that sum, ignoring operating costs, other debt and equity returns. Tariffs come from Channels Television (2018); exchange rates are annual averages compiled by StatiSense from Central Bank of Nigeria data.

Scenario	Car toll in US$	Paying cars needed daily
2011: ₦120 at ₦152 to the dollar	US$0.79	about 72,000
2018: ₦200 at ₦306 to the dollar	US$0.65	about 87,000
2025, hypothetical with tariff frozen: ₦200 at ₦1,544	US$0.13	about 440,000

An LCC publication cited in a 2013 academic study put expressway traffic above 85,000 vehicles a day. Set against that figure, the 2018 dollar debt alone demanded roughly the whole corridor's traffic paying full car tolls at one plaza. A frozen tariff would have demanded about five times that by 2025. Real traffic mixes, three plazas and other debt change the numbers, not the direction. The result also explains why LCC cited exchange rates in 2018.

Under a PFI-style deal, the same debt service would be a fixed annual payment, typically indexed to inflation and owed whatever the traffic count. The lender's question shifts from "how many cars?" to "will government pay?"

What did risk transfer actually deliver?

Both models delivered assets: Lagos an upgraded 49-kilometre corridor financed largely by private and development-bank money, with the 2008 deal winning three deal-of-the-year awards (Ingérop), and the UK more than 700 operational projects (NAO, 2018).

The limits are equally clear. First, risk moved back to the public balance sheet: the state bought LCC in 2014 and said in 2022 that LCC still owed local lenders about ₦11.6 billion (BusinessDay, 2022). Second, UK auditors found a parallel flaw in shadow tolls: the NAO (1998) judged that operators could barely influence traffic yet carried its risk. Lekki-Epe's equivalent is political risk, whether tolling survives unrest, which LCC could not manage either. Third, disclosure is thin on both sides: a 2006 review of the first eight DBFO roads found public financial information limited and opaque, and we found no public copy of the Lekki-Epe agreement.

Our analysis: a risk transfers only if the party accepting it can manage it. Pairing demand risk with a minimum-revenue floor or written tariff-indexation rules would change the lender's calculation, though it would also move cost back towards government.

What should a reviewer check before benchmarking a Lagos concession against PFI?

• Payment mechanism: does the operator earn from tolls, a fixed charge or a hybrid, and is any revenue floor written into the contract?
• Currency match: in which currency are tolls collected, and in which is the debt denominated?
• Tariff rules: who approves an increase, how often, and what compensates the operator if approval is refused?
• Suspension terms: what payment applies if the state halts tolling for political or security reasons?
• Handback standard: what condition must the road be in when it returns to the state, and who tests it?
• Reporting: must the operator publish traffic and performance data?

That last duty costs little to write in. Building an Urban Mobility Data Platform for Lagos: A Roadmap describes how Los Angeles made data sharing a permit condition for scooter operators, a template Lagos could adapt to concessions.

Frequently asked questions

Is the Lekki-Epe Expressway a PFI project?
No. Both are public-private partnerships, but Lekki-Epe is a build-operate-transfer toll concession in which drivers, not government, repay the operator. PFI is a UK policy under which the state pays an annual charge for an asset's availability and performance. The UK's closest equivalent to Lekki-Epe is the M6 Toll, while its DBFO trunk roads used shadow tolls instead of driver charges.

Who owns the Lekki Concession Company today?
Lagos State. LCC says the state acquired its shares in December 2014, and the Lagos House of Assembly approved a 75% state and 25% Office of Public Private Partnerships split in 2021 (Gazette). The road itself transfers to the state at the end of the 30-year term. Confirm the latest structure with LCC or the Lagos PPP office before relying on it.

Is the Lekki toll plaza collecting tolls now?
Sources conflict, so verify before planning around it. LCC announced that Lekki-Ikoyi Link Bridge tolling would resume on 1 April 2022, while reference sources describe the Admiralty Circle plaza as inoperative since October 2020. Tariffs may also have changed since the 2018 car rate of ₦200. Check LCC's notices before building a journey plan or financial model around any figure here.

Why did the UK stop using PFI?
Value-for-money concerns. PF2 replaced PFI in 2012 after criticism, was used six times for about £900 million, and Budget 2018 ended it for new UK government projects (HM Treasury, 2018). The NAO highlighted £199 billion of future charges, and MPs said private borrowing could cost up to 3.75 percentage points more than public borrowing, though the NAO's findings were not uniformly negative.

Could Lagos use availability payments instead of tolls?
In principle, yes. Availability payments would remove traffic and tariff risk from the operator, but they place the annual bill on the state budget and depend on lenders trusting that government will pay. Lenders to the Fourth Mainland Bridge have reportedly sought a sovereign guarantee, so the fiscal test comes first. Whichever route Lagos chooses, the trade-off is who carries which risk.

What would a UK consultant conclude?

Consider Helen, a UK consultant (an illustrative figure, not a real person), whom an investment committee asks whether Lekki-Epe is "basically PFI". Her answer runs through this article's numbers. Who pays? Drivers, not the state budget. What breaks? About US$20.8 million a year of dollar debt service needed roughly 72,000 paying cars a day at the 2011 toll, 87,000 at the 2018 toll and around 440,000 had the ₦200 tariff stayed frozen through 2025. Who absorbed the shock? Lagos State, through the 2014 buyout and the 2021 restructuring.

The wider lesson for emerging-market toll roads is that traffic, tariff and currency risk arrive together. Watch whether Lagos publishes concession terms and traffic data for its next toll asset. If you have driven the corridor or worked on a comparable deal, share your experience in the comments, and explore related guides on Connect Lagos Traffic.

This article is educational analysis, not investment, legal or engineering advice; readers weighing a specific transaction should consult a licensed professional.