INVESTMENT OPPORTUNITIES IN NIGERIA’S TRANSPORTATION SECTOR: ROAD INFRASTRUCTURE Presented by Arc. Mike O. Onolememen Honourable Minister of Works Federal Republic of Nigeria at The Business and Investment Summit, Dorchester Hotel, London 31st July, 2012 INTRODUCTION Nigeria has a total land area of about 925,000 sq. Km and a Population of 167 Million People. Total Road Network: 200,000 km, out of which 65,000 km are paved. 90% of all inland transportation is by road. The Federal Government has embarked on programme of road rehabilitation, re-construction, expansion and construction of major arterial highways. The major source of funding for the programme has been the annual budgetary provision. In last two years a yearly estimate of $1.1bn was provided in the budget (as against annual funding requirement of a minimum of $2.6bn ) The shortfall makes it imperative for the FMW to source for alternative funding in order to keep the roads in good condition and plan for future growth. ROADS INFRASTRUCTURE: GATEWAY TO NIGERIA’S ECONOMIC PROSPERITY Ownership Structure Economic Service Structure 10% 18% Federal Roads 16% 66% State Roads Local Govt. Roads 20% 70% CURRENT SUPPORT BY DEVELOPMENT PARTNERS The Federal Roads Development Programme (FRDP): A $330m IDA credit operations support by the World Bank Group A 32.6m (GBP) Nigeria Infrastructure Advisory Facility ( NIAF) by DFID A $27m AFDB credit aimed at improving the efficiency of PPP projects. PUBLIC PRIVATE PARTNERSHIP (PPP) The PPP model now complements Government funding of infrastructure. Appropriate institution/policies such as the Infrastructure Concession and Regulatory Commission (ICRC), Public Procurement Act, National Tolling Policy and National Policy on PPP exist to guide all aspects of PPP project development and implementation. The FMW has since developed Outline Business Cases for viable and bankable major highways (Brown fields) and proposed new alignments (Green fields) in the nation to attract the private sector and direct foreign investments in the sector. The ICRC has provided the enabling environment for prospective investors. There is competitive and transparent bidding process in line with the Public Procurement Act and the National Policy on PPP Some preliminary analysis emanating from viability studies on some roads indicates need for FGN support in terms of Viability Gap Funding (VGF) to make the projects profitable for investors. This is in line with international best practice. LIST OF VIABLE HIGHWAY PROJECTS FOR PPP OPPORTUNITIES S/N ROADS/BRIDGES DISTANCE REMARKS ON-GOING PPP HIGHWAY PROJECTS 1 Lagos – Ibadan Expressway 106 Km Awarded concession being renegotiated to meet new challenges 2 Gutto – Bagana Bridge across Benue River 1.35km Bridge & 65 Km Road Concession is being reviewed to meet new challenges PPP PROJECTS UNDER PROCUREMENT 1 Construction of 2nd Niger bridge at Asaba/Onitsha 2km Appointment of TA has received a “No Objection” from BPP, and awaiting FEC’s approval. 2 Access Road to Murtala Mohammed International Airport Road, Ikeja, Lagos 2.8 Km Appointment of TA has received a “No Objection” from BPP, and awaiting FEC’s approval. 3 Construction of a bridge over River Niger at Nupeko, Niger State 950m OBC concluded by the TA. LIST OF VIABLE HIGHWAY PROJECTS FOR PPP OPPORTUNITIES (CNTD.) S/N ROADS/BRIDGES DISTANCE REMARKS PROPOSED PPP HIGHWAY PROJECTS WITH OBC COMPLETED 1 Enugu – Port Harcourt Dual Carriageway 210 Km OBC completed by the TA. 2 Lagos – Isewin – Kishi – Kaiama Road 414 Km OBC completed by the TA. 3 Kiama – Bahama – Koaje – Gwambu – Fokku – Sokoto 631 Km Road OBC completed by the TA. 4 Construction of a bridge over River Benue at Buruku, Benue State OBC completed by the TA. 5 Construction of a bridge over River Benue at Ibi along 880 m Shendam - Wukari Road. 1 Km OBC completed by the TA. LIST OF VIABLE HIGHWAY PROJECTS FOR PPP OPPORTUNITIES (CNTD.) S/N ROADS/BRIDGES DISTANCE REMARKS PROPOSED PPP HIGHWAY PROJECTS WITH FEASIBILITY /VIABILITY STUDIES YET TO COMMENCE 1 Bodo-Bonny Road with a bridge across Opobo channel to the Island of Bonny in Rivers state 39 Km OBC studies to be carried out. 2 Ilorin-Jebba-Mokwa-Kaduna Road 3 Keffi-Awkwanga-Lafia-Makurdi Road 597 km OBC studies to be carried out. 4 Lokoja-Ajaokuta-Ogbulafo-9th Mile Road 160 Km OBC studies to be carried out. 5 Akwanga-Jos Road 218 Km OBC studies to be carried out. 6 Dualization of Enugu ( 9th Mile ) – Otukpo – Makurdi Road 261 Km OBC studies to be carried out. 7 Dualization of Owerri – Aba Road 60 Km OBC studies to be carried out. OBC studies to be carried out. LIST OF VIABLE HIGHWAY PROJECTS FOR PPP OPPORTUNITIES (CNTD.) S/N ROADS/BRIDGES DISTANCE REMARKS PROPOSED PPP HIGHWAY PROJECTS WITH FEASIBILITY /VIABILITY STUDIES YET TO COMMENCE 6 Phase I : 2nd Lagos outer ring Road; Tin Can Island – 74 Km Igando – Lagos/Otta road interchange – Lagos/Ibadan expressway OBC studies to be carried out. 7 Phase II : 2nd Lagos outer ring Road; Lekki – Ikorodu – - Shagamu/ Benin expressway OBC studies to be carried out. 25 Km PROCUREMENT OF THE 2ND NIGER BRIDGE LINKING ANAMBRA AND DELTA STATES Description Action by Expected Date 2012 2013 1 2 3 4 5 6 7 8 9 # # # 1 2 3 4 5 6 7 8 9 # # # Return of proposals for Transaction Advisory Services Techn. Advisors / FMW 12th April 2012 Commencement of Transaction Advisory Services Techn. Advisor 14th May 2012 Return of Outline Technical Proposals by Bidders for Techn. Advisor Concession 28th May 2012 Commencement of full ESIA by TA Techn. Advisor 4th June 2012 Submission of Draft OBC by TA Techn. Advisor 23rd July 2012 Issue of Request for Proposal (RFP) for the Concession Techn. Advisor / FMW 6th August 2012 Return of Financial Proposals for Concession Bidders 30th October 2012 Submission of Evaluation Report and Selection of Preferred Bidder Bidders 12th November 2012 Completion of ESIA Bidders 18th February 2013 Submission of Full Business Case to FEC Techn. Advisor / FMW 26th February 2013 Commercial Close Preferred Bidder 10th June 2013 Financial Close Preferred Bidder 5th August 2013 PROCUREMENT OF THE MURTALA MOHAMMED INTERNATIONAL AIRPORT Description Action by Expected Date 2012 2013 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 # # # Return of proposals for Transaction Advisory Services Techn. Advisors / FMW 12th April 2012 Commencement of Transaction Advisory Services Techn. Advisor 14th May 2012 Return of Outline Technical Proposals by Bidders for Concession Techn. Advisor 28th May 2012 Submission of Draft OBC by TA Techn. Advisor 23rd July 2012 Issue of Request for Proposal (RFP) for the Concession Techn. Advisor / FMW 6th August 2012 Return of Financial Proposals for Concession Bidders 30th October 2012 Submission of Evaluation Report and Selection of Preferred Bidder Bidders 12th November 2012 Submission of Full Business Case to FEC Techn. Advisor / FMW 26th November 2012 Commercial Close Preferred Bidder 4th March 2013 Financial Close Preferred Bidder 1st April 2013 NIGERIA MAP SHOWING LOCATIONS OF SOME PLANNED PPP PROJECTS BRIDGE OVER RIVER BENUE AT IBI RIVER NIGER BRIDGE AT NUPEKO MURTALA MOHAMMED INT‘L AIRPORT ROAD RIVER KATSINA ALA BRIDGE AT BURUKU 2ND NIGER BRIDGE AT ONITSHA/ASABA ENUGU-PORTHARCOURT ROAD BRIDGING THE ROAD INFRASTRUCTURE GAP The FMW has developed a new plan for Green field projects; The Strategic Highway Investment for Transformation (SHIFT) Program: The Golden Triangle Super-Highway is conceived to improve the nation’s highways stock and provide the much needed support for the economy. The Project will be driven by the private sector. Federal Government to provide the Right of Way (ROW) and offer guarantees in form of Viability Gap Funding (VGF) on uneconomical stretches along the route. Project represents a Paradigm Shift in Infrastructure Development. It entails a Shift in Institutional Structures. It represents a Shift in Mechanism for financing roads. It highlights a Shift from Public to Private Sector leadership in the development of road infrastucture. SHIFT PROGRAMME (WHAT WE ARE CURRENTLY DOING) S/N Action Finance Comments 1 Completion of On-going projects at advanced stages of completion FG/SURE-P On-going 2 Routine and Periodic Maintenance of Federal Roads FG/5% FUEL SURCHARGE On-going 3 Rehabilitation of Federal Roads FG/SGs/Multi-lateral Agencies (AfDB; World Bank) On-going 4 Upgrading of Major Federal Trunk Roads PPP Feasibility studies On-going 5 Greenfield Projects (Golden Triangle Super-Highway) PPP Detailed Route identification On-going 6 Lagos Outer Ring Road PPP Design Completed 7 Institutional Reforms FMW, BPE, World Bank & DFID Process On-going GOLDEN (ECONOMIC) TRIANGLE SUPER-HIGHWAY KAN O FUNT UA ZARI A BIRNIN GWARI KADU NA SAMINA KA JO S MINN A MOK WA BIDA ABUJ A ILORI N LAFIA OGBOMO SHO LOKOJ A OSHO GBO MAKUR DI IBAD AN OTUK PA ORE LAGO S ENUG U BENI N ONITS HA OKIG WE WAR RI OWE RRI YENAG OA PORTHARC OURT UMUA HIA AB A LEGEND PROPOSED GOLDEN (ECONOMIC) TRIANGLE SUPER-HIGHWAY SUPER-HIGHWAY LINKS TO MAJOR CITIES KEY FEATURES OF THE GOLDEN (ECONOMIC) TRIANGLE SUPER-HIGHWAY 4 to 6 lanes; entirely new super-highway Connects key economic hubs in the country Within 1hr of 30 cities and state capitals Crosses or within reach of 20 states of the Federation It will add approx. 5,000km to the national network of roads in Nigeria It will ensure the provision of world leading services on public highway facilities as well as attract Real Estate development along the ROW Attraction of Direct Foreign Investment and Private sector finances with return on investment through tolling (PPP’s) New economies will be created along the super highway corridor (e.g. tourism in the coastal alignment) Precedence: High growth economies: China, India, Brazil, Malaysia etc CONCLUSION The Nigerian government has created an enabling environment for infrastructure development through the use of Public Private Partnerships (PPP). PPPs in the infrastructure sector will leverage on available huge private sector funds (DFI’s) to fill the funding gap in providing infrastructure in the country. Investment through this new approach for development of road infrastructure in Nigeria presents a lot of opportunities to local and international investors and will lead to a boost in the economy of the country and good return on investment for potential investors. THANK YOU!