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Home Opinion

Re: Gateway Hotel… State’s Pride in throes of abandonment

Freelanews by Freelanews
February 3, 2021
in Opinion
0
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Our attention has been drawn to a news story with the above title published in The Guardian newspapers of Sunday 24th of January, 2021.

While we recognise that opinions and perspectives of a Writer can always reflect in their news stories and editorials, we feel highly constrained to make some clarifications on certain misrepresentation of facts.

In the report, the Writer posits:
“The Guardian investigation revealed that the problem bedevilling the hotel started during the second term tenure of former Governor Gbenga Daniel when he concessioned many state-owned properties, including Gateway Hotel, Abeokuta; Gateway Hotel, Ijebu-Ode; Gateway Hotel, Ota and Olumo Rock, among others.

“The former governor reportedly claimed that the hotels, which experts and political analysts described as the heritage of the state, were difficult to manage by the state, hence the concessioning move.

“OGD was accused of selling large state-owned lands to investors and cronies at give-away prices. According to valuation experts, over N23b was lost by the state through mismanagement of land allocations by the administration.

“Although the immediate past Governor, Ibikunle Amosun, reportedly reversed the sales or concession of the properties, while Gateway Hotel, Abeokuta and Gateway Hotel, Ijebu-Ode are being managed by private investors, Gateway Hotel, Ota is suffering utter neglect and infrastructure collapse.”

Our response

For the records, the problems of the Gateway Hotels did not start from the second term of His Excellency Otunba Gbenga Daniel as reported. Quite on the contrary, the problem of the three Gateway Hotels predates that administration. A bit of history will suffice.

The three Gateway Hotels, Abeokuta, Ota and Ijebu Ode were conceived and built during the administration of former Governor of Ogun State, late Chief Olabisi Onabanjo. Available records indicate that the hotels were built from multilateral fundings and credits at a cost in excess of $90million (at that time) which subsequent governments inherited and have to be paying back. However the hotels were being run as an arm and agencies of government and not as a business venture which they were supposed to be. It therefore suggests that government (both Military and Civilians) had been subsidizing and subventing the hotels for so many years.

In the over thirty years of the hotels existence prior to the concessioning process, from available records, the total dividend payment to government treasury by the three hotels was N24.3million and unfunded Staff gratuities was in excess of N1billion.

Aside running costs on the hotels, every successive administrations have had to carry out one renovations or the other to keep the hotels running and sometimes these expenditures come out as very outrageous. It became a statutory rights and a sense of entitlement for government to pay pensions of retired workers from the hotels whether they make money or not. For instance, shortly before the OGD administration, the previous government had just spent some two hundred million (N200m) to renovate 100 rooms of the Gateway Hotel, Abeokuta.

This was the situation that Otunba Gbenga Daniel met when he assumed the position as Governor of Ogun State in 2003. And this calls for some rethinking and creativity in line with global best practices and Business Models.

The government therefore calls for concessioning. We also need to re-emphasize for the sake of clarity, there is no such thing as “sold” in all transactions relating to Ogun State properties. There is a clear world of difference between ‘Concessions” and ‘Selling’; this is very clear in simple lexical, Corporate and Business meanings of both words. Concession is about outsourcing of Management to a Third or Secondary party; the ownership of any Concessioned assets remains with the original owners.

The process adopted by the Otunba Gbenga Daniel administration to find a solution to the challenges posed by the hotel started with an Open Stakeholders Forum that was relayed live on the Sate Controlled media houses so that contributions and suggestions can come from everyone. Various panels were then set up to review the outcomes of the fora and make recommendations.

All threes hotels were therefore advertised for Concessions and bids were taken from various investors. Part of the bid was that any such investors should be ready to commit funds into major renovations and bringing the hotels back to shape and meeting up with modern standards. The deal also involved the Payment of Signature Bonuses into the coffers of the Ogun State Government as a commitment of seriousness to the transactions in addition to making Annual Returns at between 7.5% to 10% of turnover during the concession period. From this, about Five Hundred and Thirty Million (N530m) was realized on all three hotels as Signature Bonuses and amounts that run into hundred of million have been realized as Annual Returns from the two operating hotels of Abeokuta and Ijebu Ode since then. Government has not needed to put a dime to support any of the hotels and neither is any liability accruing.

Silver bird Group won the bid for the Gateway Hotel Abeokuta but could not raise the credit for the Signature Bonus within the period given so the second highest bidder which was Park Inn (being promoted by Sir Kessington Adebutu) was considered on the condition they have to pay the same bid as the first preferred choice. A visit to the hotel will no doubt prove the enormous investments of Park Inn on the hotels which has brought it to International standards and being managed through the Raddison brand name.

The concession of Gateway Hotel, Ijebu Ode to Ogun State was a case of eating one’s cake and having it at the same time. Ogun State Government owns the Towergate Insurance company. At the time the Federal Government raised the Capitalisation of Insurance companies , just as they did with the Banks, Towergate merged with Equity Assurance and with a holding shares which made it (Towergate) the largest shareholder in the merger. For its control shares in the merger Ogun State Government nominated a prominent son of the State, Asiwaju Femi Somolu as the Chairman of the new Equity Assurance company. Same Equity Insurance owns the Equity Resorts which won the bid for Gateway Hotel, Ijebu Ode. This was at a time the State was also preparing to co-host the World Cup and several international matches have been ceded to be hosted at the Gateway International stadium in Ijebu Ode. The government therefore gave a strict directive to the concessionaire to bring up the hotel up to standard to host the kind of guests being expected in the state for the World Cup which they did. The place was equally running and well.

The Gateway Hotel, Ota which is the subject of the news reports was equally bided for and the process went exactly the same way like the other two. The Concessionaires paid the Signature Bonus as instructed but was slow in commencing the renovations to which warning letters were given as contained in the Concession Agreement. Eventually, the transaction was said to have been decoupled into two namely, the Mall and the Hotels. Those who had the Concession for the Mall, the Artee Group that run the SPAR retail chain commenced massive construction of the Mall and the Hotel Concessionaires, MIDC Group working with the Best Western brand had also commenced preliminary renovation work when the Senator Ibikunle Amosun regime came to power.

Contrary to the speculation in the news report, the problem of the Gateway Hotel Ota could not have started during Otunba Daniel’s administration rather from the subsequent decision taken by his successor. Senator Amosun cancelled the contracts and chased the concessionaires out of site. Some sat down with him and renegotiated or reviewed the Contracts to give peace a chance. We understand he gave them terms (just like he did for the Concessionaires in Abeokuta and Ijebu Ode) which they felt did not make any economic sense and difficult to meet. Some of them went to court, got a Stay of Execution Order and the matter subsists in court for the whole of Amosun’s eight years. Since the matter is believed to subsist in court, this we gathered has prevented any operational activities in running the place and the ongoing efforts at renovation. We equally learnt that at the tail end of that administration, Senator Ibikunle Amosun settled with the Hotel concessionaires out of Court while the Mall Concessionaires still remain court.

In his review, while the matter remained in court, we were also informed that Senator Amosun excised a large expanse of land which was considered a Choiced asset and sold same to one Tayo Amusan for the construction of the Shoprite Shopping Mall. The land was part of the erstwhile Gateway Hotel, Ota.

The Concession transactions (except the sale of land during the Amosun government) were done through the Gateway Holdings, the Investment arm of the Ogun State Government which remain so up till date and all details of transactions available in their office in Abeokuta which can be accessed and verified for any informed news reports.

Conclusion
As against the implied meanings from the news report, none of the Gateway Hotels, not in the least the Gateway Hotel, Ota was “sold” and not in the least to any cronies.

Since the concession, Ogun State Government has been collecting its dues as profit from the investment which runs into hundreds of millions.

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