THE Lagos State Government’s electric bus scheme appears to be suffering a setback as the implementation of the project phase two failed to commence.
The Lagos Metropolitan Area Transport Authority (LAMATA) and Oando Clean Energy Limited (OCEL) had, on April 28, 2022, signed a memorandum of understanding (MoU) to enable the deployment of electric buses and other supporting transport infrastructure systems in the state.
On April 30, 2023, Lagos State Governor Babajide Sanwo-Olu announced the arrival of the first set of electric buses for the state’s mass transit scheme.
“I am excited to announce the first set of electric buses in the Lagos Mass Transit Master Plan as part of our increased effort to modernise every sector of Lagos.
“Thanks to our partnership with @Oando_PLC, Lagosians can expect a cleaner and greener public transportation system,” the governor tweeted.
Immediately after the launch, The ICIR contacted the state’s former Commissioner for Information and Strategy, Gbenga Omotoso, for enquiries. However, there has yet to be a response from him after intensive efforts via calls, email and WhatsApp messages.
Further efforts to get the permanent secretary of the Lagos State Ministry of Transportation, Kamar Olowoshago, to comment on the project failed.
Olowoshago told The ICIR that the governor’s office procured two electric buses and that any enquiry on the project should be channelled to the office.
On May 18, The ICIR sent an enquiry to the governor’s office by mail, which was acknowledged on May 20.
“You had sent some questions to Mr Governor of the EV buses. I have been tasked to provide you with answers. I’m currently out of Lagos but shall be back tomorrow evening. I promise you will get responses to the questions on Monday,” the Head of Corporate Communications at LAMATA, Kolawole Ojelabi, said in a WhatsApp message to The ICIR‘s reporter.
Ojelabi did not respond as promised, but after much follow-up on June 26, he replied.
In the response, he stated that the MoU with Oando Clean Energy was to run into three phases of implementation, which are proof-of-concept, pilot and roll-out phases.
According to Ojelabi, the proof-of-concept phase and the pilot phase are expected to last for nine months, while the pilot phase takes six months out of the nine months.
“The two buses on the ground are for the proof-of-concept phase. According to the MoU, 50 buses would be procured for the pilot phase, which is expected to last for six months, after which the rollout phase follows with a minimum number of 100 buses.
“Phases one and two will last for nine months,” he stated.
On April 30, 2023, the Lagos government, with its Oando Clean Energy partner, flagged off two electric buses for the proof-of-concept phase implementation.
It is over seven months since the two buses were unveiled, yet the partners have yet to implement the project’s second phase.
When The ICIR contacted Ojelabi on Wednesday, November 1, to ask what was delaying the implementation of the project’s second phase, he said, “What we did was just to do a pilot. I understand those buses will run for a cumulative period of 90 days. The cumulative period excludes weekends.
“I think there was a meeting in the office earlier last week; I am sure very soon we will issue a statement on the operation of the EV (electric vehicle) buses.”
When The ICIR asked whether more electric buses had been procured, he said, “We are not the one procuring; it is Oando Energy that will procure.”
He did not answer further questions but said, “Let us wait for the process from Oando.”
This organisation sought to know if the project was suffering a setback, Ojelabi retorted, “That is your conjecture.”
The ICIR put a call through to Oando Clean Energy. The company’s General Manager, Business Support Group, Alero Balogun, declined to respond.
“I am doing something now,” she said.
When the reporter asked if he should call back later that day, she said she had a meeting.
The reporter asked if he could send a WhatsApp message instead for her to respond. She said, “You can send your WhatsApp message if you want.”
They eventually agreed to an email to which she did not respond.
Based on the MoU signed with OCEL under the Lagos State Smart City Initiative, the project is hinged on sustainable energy and environmental schemes to support the realisation of the Sustainable Development Goals and the United Nations Race to Zero campaign on climate change.
According to the LAMATA spokesperson, “OCEL indicated an interest in a PPP [public–private partnership] with LAMATA to achieve the objectives of the Lagos State Government for cleaner energy in the drive for sustainable energy and environmental schemes. OCEL will, therefore, install the EV charging infrastructure and fund the purchase of two EV buses, which LAMATA will deploy and use for the mass transit programme with the aim of gathering data to determine the viability of EV buses public transport operations.”
Ojelabi declined to comment on how much each electric bus cost the government. He said, “LASG is not funding bus acquisition. It is being funded solely by the private sector.”
A look at some of the electric bus specifications revealed it has three closed-circuit television (CCTV) cameras, 40 passengers carrying capacity, a ramp (for wheelchair) for people living with disabilities (PWDs), and the ability to travel 280 kilometres at full charge.
Oando Clean Energy’s capacity raises question
There are concerns about whether Oando Clean Energy can handle such a gigantic project that would cost a lot of money.
According to a report by BusinessDay, an electric bus costs between $400,000 and $500,000, almost four times the cost of diesel buses in Lagos.
If taken that an electric bus costs $400,000, it means the Lagos government and Oando Clean Energy would require about $60.80 million (152 buses multiplied by $400,000) to implement the planned three phases of the project.
The total investment sum will be about N60.80 billion, using the N1,000/$1 mark, which the exchange rate has already crossed.
The delay in implementing the project could have resulted from Oando Clean Energy pooling the funds.
Already, the Lagos government has said it was not funding the project, and the parent company of Oando Clean Energy, Oando Plc, has not been financially healthy in the past years.
A recent analysis by The ICIR on Oando’s audited annual reports and consolidated financial statements for the year ended December 31, 2021, released on Monday, September 18, 2023, showed that the company was not financially healthy.
It disclosed that the company’s current liabilities exceeded its assets by N237.8 billion, as it reported net current liabilities of N202.4 billion in 2020.
The company also reported net liabilities of N202.2 billion from N174.1 billion in 2020 and a total comprehensive loss of N28.12 billion from N45.31 billion in 2020.
A further look at the audited report showed that the group delivered a sign of recovery, posting a total comprehensive income of N30.6 billion in 2021 from a N132.8 billion loss in 2020. The company also suffered net liabilities of N129 billion from N67.7 billion in 2020.
Oando Group comprises Oando Trading, Oando Clean Energy, and Oando Energy Resources.
A Nigerian multinational energy company operating in the upstream, midstream and downstream, Oando had suffered a two-year run of losses that began in 2019 when it reported loss after tax of N207.1 billion in 2019 and N140.7 billion in 2020.
When current liabilities exceed current assets, the current ratio will be less than one. In that situation, the company might have problems meeting its short-term obligations, say financial analysts.
Worst off, Oando’s independent auditor, BDO Professional Services Chartered Accountants, in the statement, even expressed worries over the company’s ability to continue as a going concern.
On June 30, 2022, The ICIR reported that Oando was on the verge of voluntarily delisting from the Nigerian capital market, which it could leverage to raise funds to cover its enormous obligation.
For over three years, Oando could not produce its financial results and was suspended by the Security and Exchange Commission from holding its Annual General Meeting (AGM) in 2018.
The ICIR also asked the Lagos government why it partnered with Oando on the huge project.
The LAMATA spokesperson provided an answer: “OCEL’s proposals meet the Lagos State government’s vision to reduce its greenhouse gas (GHG) emissions from transportation and the need to transition its mass transportation scheme from internal combustion engine, ICE buses, that are dependent on fossil fuels to buses powered by cleaner energy sources like Compressed Natural Gas (CNG), electricity, hydrogen, and hybrid buses.”