BREACH OF DEVELOPMENT LEASE AGREEMENT: ABIA GOVERNMENT SETTLES DISPUTE WITH INVESTMENT GUARANTEE LIMITED, RETAKES POSSESSION OF ABIA HOTELS

The Abia State Government has officially concluded a protracted contractual dispute with Investment Guarantee Limited over the failed redevelopment of Abia Hotels Limited, Umuahia, following a negotiated settlement that led to the payment of ₦450 million in compensation and the repossession of the hotel property.

BACKGROUND OF THE AGREEMENT:

On October 7, 2013, the Abia State Government entered into a 25-year Development Lease Agreement with Investment Guarantee Limited to redevelop Abia Hotels into a 3-star Protea-standard facility. Under the agreement, the company was obligated to upgrade the hotel within 24 months, source funding for the redevelopment, submit all necessary architectural and development documentation, and remit an annual royalty fee of ₦3 million to the state.

FAILURE TO MEET OBLIGATIONS:

Twelve years after signing the agreement, Investment Guarantee Limited had not fulfilled any of its core obligations. The company failed to upgrade the hotel, did not provide evidence of funds sourced for redevelopment, neglected to submit required development drawings, and defaulted on annual royalty payments.

GOVERNMENT ENGAGEMENT AND CLAIMS BY THE DEVELOPER:

The Umuahia Capital Development Authority re-engaged the company in 2024, formally notifying it of the breaches.

Investment Guarantee Limited responded with a letter dated December 23, 2014, claiming the previous administration granted it a 10-year moratorium on royalty payments to allow it recover investments within the 25-year lease period.

In subsequent correspondence, including a letter dated December 23, 2025, the company claimed to have invested over ₦900 million in the property. The state government, in a letter dated January 14, 2025, demanded evidence of the purported investment. An independent valuation by Jide Taiwo & Co., dated August 22, 2025, assessed the property at ₦708.9 million, far below the company’s claim.

NEGOTIATED SETTLEMENT AND COMPENSATION:

Seeking an amicable resolution, the state government initiated negotiations involving the legal representative of Investment Guarantee Limited, Barr. Martin Uchehara Okoroafor of Umezurike Chambers appointed by the Managing Director via a letter dated September 24, 2025, alongside government officials including Hon. Obi Aguocha and Hon. Lookman Ukara.

After several negotiation rounds, both parties agreed on a compensation sum of ₦450 million. On October 30, 2025, the company’s legal representative formally requested the release of the payment into the Managing Director’s Keystone Bank account.

PAYMENT CONFIRMATION AND FINAL RESOLUTION:

The compensation was subsequently credited to the Managing Director’s account, with confirmation provided by the Bank in Umuahia. This payment marked the final step in resolving the dispute.

GOVERNMENT RETAKES ABIA HOTELS FOR REDEVELOPMENT:

According to the Chief Press Secretary to the Executive Governor, Ctz. Ukoha, Njoku Ukoha, the government has now regained full possession of Abia Hotels Limited, Umuahia. He reaffirmed that the Otti administration remains committed to investment-friendly policies and has commenced fresh plans to redevelop and upgrade the facility in line with its urban renewal agenda.

“The payment of ₦450 million compensation to Investment Guarantee Limited brings this longstanding matter to a close,” the CPS stated, emphasizing that the state is now moving forward with the hotel’s redevelopment.

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PRESS RELEASE:

BREACH OF DEVELOPMENT LEASE AGREEMENT: ABIA STATE GOVERNMENT VS. INVESTMENT GUARANTEE LIMITED.

BACKGROUND:

On October 7, 2013, Abia State Government entered into a Development Lease Agreement with Investment Guarantee Limited to Redevelop and Upgrade Abia Hotels Limited, Umuahia to a 3-star Protea Standard Hotel. The agreement spanned 25 years, with specific obligations for Investment Guarantee Limited, including upgrading the hotel to a 3-star Protea Standard within 24 months, sourcing funds for the project, and paying an annual royalty of Three Million Naira (N3 Million) to the State Government.

BREACH OF OBLIGATIONS:

Twelve years (12 years) after signing the agreement, Investment Guarantee Limited has failed to meet its obligations, including:

1. Upgrading the Hotel to a 3-Star Protea Standard.

2. Sourcing funds for the project.

3. Preparing and submitting necessary drawings and development documentation.

4. Paying annual royalties to the Government.

CORRESPONDENCE AND NEGOTIATIONS:

The Abia State Government, through the Umuahia Capital Development Authority, engaged Investment Guarantee Limited in 2024, notifying them of the breached obligations. The company responded by submitting a letter dated December 23, 2014, claiming that they were granted a 10-year moratorium by the Government on royalty payments to enable them to Redevelop and Upgrade the hotel and recoup their investment within the agreed 25 years period. Further correspondence revealed that Investment Guarantee Limited claimed to have invested over N900 million through a letter dated December 23, 2025. The Government requested evidence to support this claim in a letter dated January 14, 2025. An evaluation report by Jide Taiwo dated August 22, 2025, later valued the property at N708,900,000.

NEGOTIATED SETTLEMENT:

The Government, in a bid to resolve the matter, initiated negotiations with Investment Guarantee Limited. After several discussions, a compensation package of N450 million was agreed upon, involving the company’s legal representative, Barr. Martin Uchehara Okoroafor of Martin Okoroafor & Co (Umezurike Chambers) appointed by the Managing Director of Investment Guarantee Limited via a Letter to the Government titled, “Notification of Absence on Health Grounds and Appointment of a Legal Representative” dated September 24, 2025, the Government team, Hon. Obi Aguocha (Member representing the Managing Director’s Constituency in the Green Chamber), and Hon. Lookman Ukara. On October 30, 2025, the Legal Representative of the Managing Director officially wrote to the Government requesting for the payment of the agreed compensation sum into the Managing Director’s Keystone Bank account.

PAYMENT DETAILS:

The payment of N450 million was credited to the account of Managing Director and confirmed by the Bank in Umuahia following a letter from Barr. Martin Uchehara Okoroafor, dated October 30, 2025, requesting for the payment and providing the bank account details of the Managing Director.

CONCLUSION:

The Abia State Government has acted in good faith to resolve the breach of agreement, prioritizing the investment-friendly policies of the Government. The payment of N450 million compensation to Investment Guarantee Limited marks the conclusion of the matter and the Government has retaken possession of Abia Hotels Limited, Umuahia and currently working on the intended Redevelopment and Upgrade.

Ctz. UKOHA, NJOKU UKOHA

Chief Press Secretary to the Executive Governor of Abia State.

November 21st, 2025.