One of the targets of the Federal Government, as contained in the Economic Recovery and Growth Plan, is to use infrastructure development to build a competitive economy for Nigeria. IFEANYI ONUBAexamines the need to attract private sector funding for critical road and power projects across the country
Nigeria’s strong fundamentals such as natural resources, large market, and young population make it an attractive destination for private sector investment.
However, Nigeria is considered a challenging place to do business because of the difficulties in accessing finance, inefficient bureaucracy, ambiguous and inconsistent regulations, corruption and poor infrastructure.
Based on official statistics, the value of Nigeria’ total infrastructure stock (road, rail, power, airports, water, telecoms, and seaports) represents only 35 per cent of the country’s Gross Domestic Product. This is far below the level of peer emerging market countries where the average is 70 per cent.
To optimise the contribution of the sector, Nigeria needs to invest $3tn in infrastructure over the next 30 years according to the National Integrated Infrastructure Master Plan.
The Federal Government cannot provide the resources all by itself. It will be leveraging private sector capital in a variety of ways such as public-private partnerships, special purpose vehicles, investment funds, and various guaranty arrangements.
In these arrangements, government does have a key role to play. One of the plans of the Federal Government is to make strategic use of the Nigerian Sovereign Investment Authority, which manages the national sovereign wealth fund.
In a bid to eliminate the risks of project funding, cost variation and completion that have plagued the development of the nation’s critical infrastructure assets, the Presidential Infrastructure Development Fund was established by the Federal Government for five critical road and power projects across the country.
The PIDF currently being managed by the NSIA with a seed funding of $650m was targeted to catalyse funding for second Niger Bridge, Lagos-Ibadan expressway, East-West road, Abuja-Kano road, and Mambilla Hydroelectric Power.
As of December 5, a total amount of N33bn had been released for the implementation of the second Niger bridge project.
Orji visited the site with the Obi of Onitsha, Igwe Nnaemeka Achebe, who was accompanied by some of his chiefs.
The second Niger bridge project which is being handled by Julius Berger Plc was awarded in 2014 by the administration of former President, Dr Goodluck Jonathan.
The project which is estimated to gulp about N220bn had been experiencing delays as politicians find it easy to play politics with the implementation of the project, pretending to move to site as elections approach.
It involves the construction of an 11.9km, three lane Greenfield highways as an alternative connection between Asaba (Delta State) and Onitsha (Anambra State), within reasonable distance from the existing Niger Bridge.
The project scope also includes the construction of a full clover-leaf interchange at the Onitsha-Owerri Expressway and additional secondary bridges at the Amakom Village (Delta side) and the Atani Road (Anambra side).
The NSIA’s involvement with the project started in 2014 through its wholly owned subsidiary, NSIA Motorways Investment Company Limited.
However, Orji said the NSIA’s role in the project had evolved with the establishment of the PIDF in 2018. He expressed optimism that the project would not experience further delay.
He said that the private sector funding for the project was being planned to be raised by 2020 through a combination of bond and equity.
The NSIA boss said that the PIDF would eliminate the risks of project funding, cost variation and completion that have plagued the development of the nation’s critical infrastructure assets.
He added that the PIDF programme was an initiative of President Muhammadu Buhari designed to facilitate the rapid completion of key infrastructure projects that had been stalled for years.
According to him, the bridge and roads will be tolled on completion to recoup the money spent in building them.
He said the PIDF with a seed funding of $650m was targeted to catalyse funding for the second Niger Bridge, Lagos-Ibadan expressway, East-West road, Abuja-Kano road, and Mambilla Hydroelectric Power.
According to him, the funding sources for the PIDF include: N585bn from the Nigerian Federation (Federal, State and Local Governments), N97bn from NSIA, N1.5bn from export credit agencies, and N372bn from private investors.
Orji noted that NSIA was working closely with the Federal Ministry of Finance and the Federal Ministry of Power, Housing and Works to ensure proper financing and completion of the projects.
He said, “The PIDF is an initiative of the Presidency conceived to accelerate the execution of critical, strategic infrastructure projects essential to the rapid growth and modernisation of Nigeria’s economy.
“Already, three projects are in construction: Second Niger Bridge: A greenfield construction of an 11.9km, 2×3 lane Greenfield highway connecting Asaba (Delta State) and Onitsha (Anambra State). The project is vital for the development of the region.
“The Lagos – Ibadan Expressway involves the rehabilitation, reconstruction and expansion of that corridor.
“The 127 km highway links the city of Lagos with Ibadan and proceeding onwards to connect the northern region of the country. It is among Africa’s most important roadways.”
On the Abuja-Kano expressway, he said the project entails the modernisation of 370 kilometres of road.
“It is a critical part of the A2, which is a main artery within Nigeria’s transportation grid, enabling the movement of people and products from the north to the south and vice versa,” he said.
On the Mambilla Hydro-Power Project, Orji said it entails a 3050 MW Hydroelectric Power facility located in Sardauna Local Government of Taraba State.
He added, “On East-West road, the Project entails the construction of a 30km dual-carriage way spanning from Oron in Akwa Ibom State through to Calabar in Cross River state. The road will serve as a transit corridor for the movement of heavy equipment for oil exploration and production in the Chad Basin.
“These projects are expected to greatly enhance the prospects of Nigeria’s economic growth and will be undertaken using international best-practices.
“The approach for financing the programme is designed to eliminate risks attributable to funding, cost variation and project completion.
“At completion, it is expected that the investments in these projects will yield returns, which will diversify revenues to States, improve the fiscal sustainability profile of the Federation and ensure Nigeria benefit from modernised Infrastructure for decades to come.”
He said the Authority was pleased with the progress recorded so far on the projects.
The NSIA said, “Leveraging the financing model adopted by government under PIDF, completion-related risks on account of funding have been eliminated.
“Further, the model affords efficiency on project delivery and fund performance while allowing for value engineering which ensures completion at a reasonable cost and within the planned project timeline. It is expected that in the long-run, these investments would help improve Nigeria’s economic growth forecast.”
The PIDF, according to him, is aimed at delivering these five projects that have been stalled for several years.
He said, “Take the second Niger Bridge out of the equation for a minute and look at Mambilla power project which is 40 years in planning. Take a look at the East-West road and quite a number of things.
“It’s a matter of saying let’s have a programme that will go into the heart of these five projects and I think the NSIA is managing that programme and we are very confident that they will come to fruition.”
The Obi of Onitsha in his comments called on the government to ensure the timely completion of the project.
He said the project was strategic to the country as it would further boost economic activities in the region.
He said, “The project has been long in coming. The bridge will transform the way businesses are conducted here. It’s a big thing for Nigeria to complete the project.
“On our part, we will make sure that there is peace all along the routes for the project and if there are any problems, let us know.
“We want to make sure that nothing impedes the project. We will do our part and we hope the government does its own part too.”
He said when completed, the economic impact of the project would be massive in the area of job and wealth creation.
He said, “Compensation for the land acquired should be done. Some people have been dispossessed of their ancestral lands and there is need for them to be settled. But that should not slow down the work.
“The second point is that in terms of opportunities, we want you as much as possible to employ our young men and women in all the areas that are affected who are professionally qualified to perform the jobs.
“This will give them a sense of inclusion because the economic impact will be massive. It will help them support the project and protect it for it to be successful.
He added, “This is a bridge that connects all the parts of the country because it’s a national project. We in Onitsha will benefit because it will reduce traffic in this axis. The project will open up activities for the country.”
The Project Director, Mr Friedrich Weiser, said that the second Niger Bridge was now 15 per cent completed.
He expressed optimism that the project would be delivered by February 28, 2022.
He said about 800 people were currently working on the project with 50 per cent of them employed from the local community
Get real time update about this post categories directly on your device, subscribe now.