INVESTMENT OPPORTUNITIES IN NIGERIA’S TRANSPORTATION SECTOR: ROAD INFRASTRUCTURE

Arc. Mike O. Onolememen Honourable Minister of Works

Federal Republic of Nigeria

at

The Business and Investment Summit,Dorchester Hotel, London

31st July, 2012

Presented by

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

18%

16%

66%

Ownership Structure

Federal Roads

State Roads

Local Govt. Roads 70%

20%

10%

Economic Service Structure

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 Road

631 Km OBC completed by the TA.

4 Construction of a bridge over River Benue at Buruku, Benue State

1 Km OBC completed by the TA.

5 Construction of a bridge over River Benue at Ibi along Shendam - Wukari Road.

880 m 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 OBC studies to be carried out.

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.

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 – Igando – Lagos/Otta road interchange – Lagos/Ibadan expressway

74 Km OBC studies to be carried out.

7 Phase II : 2nd Lagos outer ring Road; Lekki – Ikorodu – - Shagamu/ Benin expressway

25 Km OBC studies to be carried out.

PROCUREMENT OF THE 2ND NIGER BRIDGE LINKING ANAMBRA AND DELTA STATES

Description Action by Expected Date 2012 20131 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 Concession

Techn. Advisor 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 20131 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

ENUGU-PORTHARCOURTROAD

RIVER KATSINA ALA BRIDGE AT BURUKU

MURTALA MOHAMMEDINT‘L AIRPORT ROAD

BRIDGE OVER RIVER BENUE AT IBIRIVER NIGER BRIDGE

AT NUPEKO

2ND NIGER BRIDGE ATONITSHA/ASABA

BRIDGING THE ROAD INFRASTRUCTURE GAP

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.

The FMW has developed a new plan for Green field projects; The Strategic Highway Investment for Transformation (SHIFT) Program:

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

KANO

KADUNA

LAFIA

ABUJA

MINNA

BENIN

ORE

OSHOGBO

ILORIN

WARRI

ONITSHA

ENUGULAGO

S

IBADAN

PORTHARCOURT

ABAYENAG

OA

OGBOMOSHO

BIDA

MAKURDI

LOKOJA

OTUKPA

OKIGWE

UMUAHIA

OWERRI

BIRNIN GWARI

SAMINAKA

JOS

FUNTUA

MOKWA

ZARIA

LEGENDPROPOSED 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!