Chikason Group set to build N452bn Abuja downtown
The Abuja City Centre Development agreement was signed last Wednesday. FCT Minister Bala Mohammed signed on behalf of FCTA while international businessman Chika Okafor signed for his firm Chikason Group. The Abuja Downtown Project is a mixture of high rise commercial and residential development aimed at reinvigorating the ‘dormant’ city centre. It is said that […]
The Abuja City Centre Development agreement was signed last Wednesday. FCT Minister Bala Mohammed signed on behalf of FCTA while international businessman Chika Okafor signed for his firm Chikason Group.
The Abuja Downtown Project is a mixture of high rise commercial and residential development aimed at reinvigorating the ‘dormant’ city centre. It is said that Abuja has no heart because there are no places that create the character for it. FCTA has allocated land to the private partner to design, finance, construct and recover its investment. The investor is to provide secondary infrastructure in the place.
It is to be built within the Central Business District (CBD) near the Federal Secretariat. It is on the most valuable land in the FCT. Chikason Group is brought in with its total investment of $2.75 billion for the development of the city centre.
The place will have shopping malls, a five-star hotel, conference centres, office complexes, underground parking lots and residential towers. The Abuja World Trade Centre is to be like this. The Central Bank of Nigeria (CBN) which acquired land in CBD is also working on something close to this. By the time all this stands, Abuja’s skyline will have been quite different.
According to the Director of Developement Control, FCTA, Yahaya Yusuf, “The intention is to put up these structures which will blow up the skyline of the city to create a focal point so visitors from variuos parts of the world will know that this is a cosmopolitan city with destination for investment, tourism and social life. The proposal has buildings rising up to over 20 floors and there are apartments that will make life bubble even at night. It is overlooking the national mall which is equivalent to the ceremonial square where various national and international ceremonies characteristic of world capital cities are held. The mall is not a market as it was ealier conceived. It is a place for recreation.”
Tackling failure risk
The question those bothered with the matter all ask is, can this be actualised? These fears are hinged on past happenings. A project of this kind initiated with the private sector in 2010 remained only paper work. It was called Abuja Boulevard. In November 2010, FCTA signed agreement with the Dallas, Texas, United States–based Balkan Center Development Group of Companies which offered to invest $2.6 billion to actualize the project covering investment in real estate, power generation, and internal infrastructure amongst others. Nothing came to fruition. FCT minister expalined cause of this failure, “Abuja Boluverd failed because it was too ambitoius. The scope has now been reduced to the level of implementation.”
The Coordinator, Abuja Infrastructure Investment Centre (AIIC), Faruk Sani maintained that government has put down safeguards to gurantee the execution of this project. He explained, “We learnt a lot from our past experiences with the private investors. In projects of this nature, there are prelinary technical work that must be done. We made it very clear to the investor that before the agreement comes into effect, such technical work must be done and they must be in line with the concept and philosophy of the Abuja masterplan.”
Our reporter gathered that the land is prime, strategic and critical to the development of the federal capital city so government recognises that this is a project that should not fail because its success is tied to the development of the city. The agreement contains a couple of safeguards.
One, government is interested in the preliminary technicalities. This is to ensure the investor engages the right competencies to do the design – a 21st Century design for that matter. The agreement provides that the developer puts down $60 million for the preliminaries and the design. The developer said he criss-crossed four countries putting together a team of world class consultants for the job.
Another safeguard borders on provision of necessary funding. In the agreement, there are milestones he is expected to achieve at different stages of the work. This means precedent conditions must be seen. Foremost, the investor must put down 15 percent of the total cost of the project. There must be money to start the project.
Very significant in the agreement is the inclusion of the clause that in event there is any problem with the project – like the investor going bankrupt – government can step in, negotiate and bring in another investor.
The investor has already expended over N3 billion for these prelimiary technical details. He has got the best for engineering design, planning design and the financial consultants. His financial consultants are Price Waterhouse Coppers. The legal consultants are Ajumogobia and Co.
Investigations revealed that the agreement has two-layered supervision of the execution of the agreement. There is an independent consultant that will be engaged by the FCTA to ensure that the project is executed in line with terms and conditions of the agreement. Then there is the residence supervision team from the Federal Capital Development Authority (FCDA).
The coming into force of this agreemen is dependent on the investor fulfilling his financial disclosure within 90 days. Within the 90 days from date of signing of the agreement, he must provide at least, 15 percent of total project cost or an undertaking by his construction contractor that he will provide 15 percent of infrastructure works on the project.
How good is Chikason Group?
Through its subsidiaries, Chikason Group is in seven countries in Africa. The group has an oil block in Ghana, it is in Sierra Leone through its subsidiary called A-Z Petroleum. It has minning projects in Seirra Leone in iron ore, gold and diamond. It is in Senegal and Kenya.
The group’s head, Chika Okafor assured, “I’m assuring you that by the time that we assemble here again to celebrate the completion of this project, everybody will be happy with what they’ll see. We have partners from China, Dubai and South Africa for this project. The cost of technical drawing we have so far is about $60 million.” The company head lamented that Abuja does not have pedestrian movement except driving through. “Cities are lived in. It is by walking. No one walks in Abuja except the underprivileged,” he observed.
A senior FCTA staff said, “We believe the man has the capacity. FCTA went looking for him. He was invited from Turkey based on what we’ve seen him do in countries like Angola, Seirre Leone and Kenya.
The FCT minister is very optimistic about this project. He said, “We’ve done it before. When we package private investments, you see them growing. We’re building the World Trade Centre by accessing $1.2 billion. They have the resources. It’s in the same template that we’re doing this. We’ve learnt from our mistakes in the past. We searched on his financials. We discovered that he has the capacity to do it.
“We’re taking equity in the investment because we want to free the resources that they would have expended to pay us for development control charges and the premium for the land so that we’ll at least grow our IGR base as a jurisdiction of the Federal Capital Territory.
“Definitely, it’s their own 100 percent investment. But within that, they have other investors in Nigeria and abroad and FCTA is taking five percent of the equity structure while the thing is 100 percent owned by them. Certainly, we’ll be getting annual returns from the business to the tune of five percent.”
The minister believes that the $2.75 worth investment will rise to $4 billion after 10 years. If this happens, FCTA will in 10 years own five percent of $4 billion.
Value of the land
If government were to sell this land, it would have cost the investor N50 billion. This will not be because the land use act forbids sale of land by government. The premium on the land and the charges are around N5 billion. The investor was favourably disposed to pay but FCTA declined collecting the premium opting to rather expand the revenue base of the administration.
Following a negotiation, the investor will build an international mall which will serve as the national park worth $40 million (N6.4 billion). FCTA is given five percent equity in the special purpose value of this company. The investment value of this five percent is $135 million. This is equivalent to N21.6 billion.
Apart from direct financial, employment generation benefits and wealth creation, this mixed use development will rescue the Abuja masterplan. The Abuja masterplan suffers abuses due to improper development or inadequate development of the city. For instance, Wuse District which was planned for residential purpose is fast being turned into a commercial area. This is because there is no city centre. The Abuja masterplan has in view a place like Oxford Street where life bubbles for 24 hours.