Nigeria lures state government with PPP model to take over federal roads

“Nigeria Government moves to permit states government to take over federal roads in the country and rebuild them in partnership with the private sector, if necessary.

At the Niger Investment Summit, Nigeria’s Acting President Yemi Osinbajo disclosed that, President Buhari has given approval that any state that seeks to construct a vital federal road can do so even it is going to do so through public private sector partnerships.

This position of the Federal Government will come as a huge relief to states stuck with bad vital roads that they are unable to repair but which the Federal Government has also shown not any urgency to repair or does not have the budget to do so.

The Niger State Investment Summit drew participants’ attention to the very poor stare of the road connecting the Federal Capital to Minna, which is the capital of Niger State. The poor state of the road, which is a federal road, delays travel between both cities for hours and yet has not been included in the country’s budget.

Analysts also note that Niger State, which has the largest landmass in the country, does not have the financial muscle to repair the road. The total approved budget of the state in 2017 stood at N117 billion which will be hardly be enough to develop a standard road network between Minna and the FCT.

Of the N117 billion budget, N67 billions is for capital expenditure, a pittance that will not cover the construction of the vital link that could open the state to the huge spending of the FCT, which ranks behind only Lagos in terms of concentration of High Networth Individuals (HNIs).

Osinbajo cited the case of Lagos state which has been granted permission by the Federal Government to take over the Airport Road, which used to be a federal road and said it is open to such requests from other states.

Nigeria is estimated to have a total of 198,200 kilometers of road network in the country but only 28,930 kilometres are paved, the Minister of Power, Works and Housing, Babatunde Fashola disclosed recently.

The country’s poor road network development is despite the fact the 90 percent of freight operations in Nigeria is done by road, putting a lot of pressure on the motorable sections of the network.

This has a negative impact on the economy. Chidi Izuwah, acting Director-General, Infrastructure Concession Regulatory Commission (ICRC), last month said Nigeria and other African countries lose two per cent of their Gross Domestic Product (GDP) yearly due to inadequate infrastructure. For Nigeria this come to N2.03 trillion as 2016 nominal GDP is put at N101.59 trillion.

This raises the call for concessions. “Concessions are associated with direct payment by the user in the form of a toll. Toll systems are common in Europe for roads, bridges and tunnels. Tolls constitute veritable sources of internally generated revenue for many countries. It was a common feature of some Nigerian highways until former President Obasanjo erased them from the landscape,” said Uche Ohia, a legal analyst and public affairs commentator.

Nigeria has established the Infrastructure Concession Regulatory Commission (ICRC) to accelerate investment in national infrastructure through private sector funding by assisting the Federal Government of Nigeria and its Ministries, Departments, and Agencies (MDA) to implement and establish effective Public Private Partnership’s (PPP) procurement. It only needs to be strengthened, analysts say.

By declaring its intention to loosen its stranglehold on federal roads, badly needed investments may come into the sector. Fashola had said that he inherited 206 abandoned road projects from the previous government with total estimated completion cost of N1.5 trillion, three times higher than the total budget of his ministry and more than 50 percent of Federal Government planned capital expenditure for 2017.

Faced with the significant liabilities and limited resources, the Minister says that he has been forced to choose only roads it considers critical to national objectives to complete. Roads that will receive priority attention include those on critical economic routes leading agricultural and industrial hubs.”

Source: Naija 247