THE HIGHWAY CONCESSION PLAN
The decision to leverage private sector funds in the development of infrastructure is laudable
The federal government’s decision to concession 12 major highways across the nation follows its realisation that budgetary allocation, which had been the practice over the years, will never be enough for road development and maintenance. These roads being considered for the pilot Public-Private Partnership (PPP) are Benin-Asaba, Abuja-Lokoja, Kano–Katsina, Onitsha-Owerri-Aba, Shagamu-Benin, Abuja-Keffi-Akwanga, Kano-Shuari, Potiskum-Damaturu, Lokoja-Benin, Enugu-Port Harcourt, Ilorin-Jebba, Lagos-Ota-Abeokuta, and Lagos-Badagry-Seme.
While we support the idea of PPP in the development of our road infrastructure, there are several issues that need to be highlighted. Perhaps the most important is that federal roads are too many because some that belonged to state governments were taken over by the federal government during the military era because of politics. We believe some of these roads can be given back to the states for their construction and maintenance as a development strategy. Incidentally, as Lagos State Governor, current Works and Housing Minister, Babatunde Fashola advocated this strategy, and we wonder why he is not implementing same now that he is in charge. It is also important to learn lessons from the past because there is nothing new in this arrangement.
The late Umaru Musa Yar’Adua administration had started concession by establishing the Infrastructure Concession Regulatory Commission (ICRC) as a regulatory body. The ICRC is charged with the responsibility of developing guidelines for monitoring contract compliance during construction, operation, and termination and supporting government in achieving such compliance. In January last year the ICRC gave a certificate of compliance to the Works Ministry to enable it to begin the procurement process for the 12 roads under its Highway Development and Management Initiative (HDMI). But the failure of the PPP concession of the 105-kilometre Lagos-Ibadan Expressway to Bi-Courtney consortium remains a sore issue.
The government believes that the HDMI would facilitate further development of Nigeria’s federal highway network by bringing in investment to improve efficiency, accountability, and profitable entrepreneurship to the operation, management, and maintenance of all assets. It even projects that the initiative would attract investments to the tune of over N1.134 trillion. We endorse the commitment to leverage private sector funds in the development of critical infrastructure such as the major highways. Currently, the federal government is using the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme (RIDRITCS) Order of 2018 to reconstruct the Apapa-Oworonsoki concrete road; Obajana road in Kogi; Ota-Idiroko road in Ogun State; and the 21 roads for which the Nigeria National Petroleum Company (NNPC) will advance its tax credit of N621 billion.
There are other roads being funded with the Presidential Infrastructure Development Fund (PIDF) that are managed by the Nigeria Sovereign Investment Authority (NSIA) and the SUKUK Fund. The HDMI is expected to be implemented in two parts comprising Value Added Concession (VAC) and Unbundled Assets Approval (UAA). Apart from infrastructure and assets development, thousands of jobs are expected to be created for Nigerians, as the initiative will open the highway economy with opportunities in various economic activities, including fabrication of gantries, directional signages, towing van operations, auto repair stations, rest areas and emergency services, etc.
However, while the federal government is employing several funding arrangements to salvage the highways, it is imperative that these ideas be properly monitored. A crucial issue that needs to be addressed at this stage is what it will cost commuters to use these roads. It is important to involve Nigerians through their representatives in arriving at this cost. Also to be included in the agreement is the issue of alternative routes, where available, for people who may not wish to pay toll at any time.
