Sambo said, “I would like to invite our friends and partners to come on board and take advantage of these ample opportunities with a promising return on investment and a guaranteed and secure environment for investors.”
By Uzor Odigbo
Transport Minister, Mu’azu Jaji Sambo, has assured foreign investors of huge return on investment in Nigeria’s decaying rail, road infrastructure.
The Minister’s topic of discussion which majored mainly on Financing Nigeria’s Transport Infrastructure” xtrays his ministry’s achievement in addressing and updating some of the infrastructure in Aviation, road, rail and port sectors in the country and demanded assistance from the international investors.
The Minister, while addressing a consortium of investors, diplomats, high government officials and global audience at the International Economic Partnership Forum in New York, USA, on Thursday insisted that only concerned investors with huge capitals would enjoy guarantees on investment as Nigerian Government is ready to make good it’s promises.
Hon. Sambo seized the opportunity to woo investors to partner Nigeria in the development of it’s rail, road and Port Infrastructure, while assuring them of huge return on investment.
“I would like to invite our friends and partners to come on board and take advantage of these ample opportunities with a promising return on investment and a guaranteed and secure environment for investors.”
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According to Hon. Sambo “The opportunities that exist for private sector investments in the rail subsector are limitless, some of which are enumerated hereunder:
The unbundling of the Nigerian Railway Corporation which now acts as owner, operator and regulator rolled into one is essential for efficiency, effectiveness, enhanced productivity and the creation of more jobs and revenue flows.
Concessioning of the operation of the newly constructed standard rail lines, namely Abuja-Kaduna (187.5km), Warri – itakpe -Ajaokuta ( 326km) and Lagos – Ibadan ( 118km).
Development of inter-State and intra-state train Services (Mass transit and freight/parcel Services) in the state capitals and major commercial cities. Kaduna-Zaria, Kaduna-Kafanchan, Intra-State and Kaduna-Minna inter-state mass transit train services; Kano – Challawa and Kano – Nguru intra and inter-state mass transit train services and Lagos – Osogbo inter-state mass transit train Services.
The remodeling and redevelopment of major railway stations to incorporate modern commercial outlets and warehousing facilities at the following stations: Iddo and Ebutte-Metta in Lagos; Ilorin in Kwara State; Minna in Niger State; Kaduna in Kaduna State; Kano in Kano State; Port Harcourt in Rivers State; Aba and Umuahia in Abia State; Enugu in Enugu State; Makurdi in Benue State; Jos in Plateau State; Gombe in Gombe State and Maiduguri in Borno State.
Provision of the following ancillary facilities in major rail terminals and stations along the standard gauge corridor: Restaurants, E-ticketing offices, Hotels, VIP Lounges and Industrial Parks”
The Minister, employed investors to take chances investing in any of the infrastructure of their choice as Government would guarantee security and huge return on their investment.
He reiterated that “Infrastructure is vital for the long-term growth and competitiveness of countries worldwide. It is however capital intensive as various National Governments are facing constraints in developing and funding infrastructure projects. Likewise, the Nigerian government is increasingly exploring alternative sources of finance for infrastructure development. There are two broad sources of infrastructure financing:
The transport infrastructure He Noted, can be funded through government or private sector financing.
Government funding options would include budget funding (Budgetary allocation, enhanced statutory allocation and viability gap funding) and off-budget financing (Special intervention funds, bonds, low-interest concessional loans, financing from aid and donor agencies etc).
Private Sector financing options would typically include pension funds, long-term commercial bonds, multilateral agencies, export credit finance, private equity, infrastructure funds, PPPs, etc.
Nigeria’s core infrastructure stock is estimated at 20% to 25% of GDP, for which the National Integrated Infrastructure Master Plan (NIIMP) estimates that about USD35billion is required annually over the next five years to sustain a robust economic growth and USD3Trillion is needed over 30 years”
The Minister used the opportunity to thank everyone for gracing the occasion, commend the organizers and participants alike. I am optimistic that this meeting will galvanise the much-needed traction and renewed collaboration to strengthen existing partnerships and foster new ones for the benefit of catalysing infrastructural development for Nigeria, Africa, and the World at large.
Infrastructure plays a critical role in any country’s economic development; Nigeria’s case is no different as it has been given premium priority by the current government and all relevant stakeholders in the last decade. I wish to re-emphasize that the government has placed a high premium on the role of infrastructure in reviving our economy, transforming it and placing it on a higher, more sustainable and inclusive growth trajectory. In this regard, we remain resolute in our ongoing efforts to use infrastructure to build an economy that leaves no one behind.
The focus of my presentation will be on what the Ministry is thinking and doing when it comes to transport infrastructure in the maritime, inland waterways and rail subsectors, and more broadly, to build an inclusive fast-growing economy that embraces the necessities of transformation, deepening citizens’ ownership and optimising investors’ opportunities in the sector.
He said, “the critical role of transportation in the socio-economic and political development of any nation cannot be overemphasised. More so in Nigeria with a population of over two hundred million (200m) people spread across almost one million square km (1,000,000 km2) of land area. It is a coastal state with an extensive Exclusive Economic Zone (EEZ), and a natural hub for shipping and aviation transportation in Africa. Nigeria has the shortest distance from the coast to most of the landlocked neighbouring nations in the West and Central African region and enjoys a comparative advantage in air travel time to the United Kingdom, Brazil, Asia and the United States of America.
Excepts on the Hon. Mu’azu Jaji Sambo parer presentation
“I am honoured to be in your midst and highly delighted to be delivering this paper on financing Nigeria’s infrastructure at the Nigerian International Economic Partnership Forum, here in New York, USA.
Nigeria has had an unbroken democratic dispensation in the last twenty-three (23) years; a fair legal system for the protection of human rights and investments; the implementation of an Executive Order to promote the ease of doing business in the country; an articulation of robust roadmaps and policies for private sector investments in the various transportation sub-sectors based on global best practices and a successful concessioning of its seaports to private operators under a Landlord model since 2006. It is worthy of note that twenty-eight (28) of the thirty-six (36) states and the Federal Capital Territory (Abuja) are accessible through its ten thousand kilometres (10,000 km) of inland waterways, three thousand kilometres (3000 km) of which are navigable throughout the year.
The transportation sector’s contribution to the national GDP is projected to increase to 5% in the next 5 to 10 years. Nigeria, however, cannot currently meet its transport needs. Poor maintenance and insufficient investments have put an enormous strain on transport infrastructure and services. Yet, the demand for transport services has grown exponentially along with the increase in socio-economic activity.
THE TRANSPORTATION SECTOR
Nigeria’s transportation sector has four key modes – rail, road, maritime and aviation, each of which contributes to the functioning of the Nigerian economy. In this presentation, my discussion will be focusing on the Maritime, Inland waterways and Rail sub-sectors.
THE MARITIME SUBSECTOR
Nigeria’s eight hundred plus (800+) kilometre-long coastline facing the Atlantic ocean hosts its six major seaports engaged in international maritime trade with the rest of the world. The Six major ports are:
The Port of Lagos/Apapa (Built in 1921)
Port of Lagos/ Tin Can Island (Built in 1977) Calabar Port (Built in 1979)
Onne Port (Built in 1982)
Port Harcourt Port (Built in 1912)
The Port of Warri (Built in the late 1980s)
The six seaports were concessioned in 2006 to private investors in order to create efficiencies, increase revenue and the general well-being of the economy.
However, as it can be seen from their various dates of operations, the port infrastructure has suffered dilapidation and decay over the years and they now require massive capital investments for upgrade and rehabilitation; therefore, herein lies an opportunity for private capital investments in the face of highly competing demands on the nation’s income flows.
This particularly applies to Apapa and Tincan Island ports which account for about seventy per cent (70%) of the nation’s maritime trade.
The Ports of Calabar and Warri, also present investment opportunities in dredging, to maintain a regular draught of about 7.5m.
2.1.1. Deep Sea Ports
The need to attract the biggest shipping vessels to the country necessitated Federal Government initiatives of creating deep sea ports with an average draughts of 15m.
The Lekki deep sea port in Lagos, about to commence operations anytime from now was built on a BOOT basis, by the Lekki Port LFTZ Enterprise Limited with a concession period of 45 years.
The Ibom deep sea port in Akwa Ibom is in the fifth (5th) stage of the project development process (Government Approval/Procurement Stage).
The Badagry deep sea port has recently been approved by the Federal Executive Council (FEC) for construction by international private investors over three years on concession for forty-five (45) years also on a BOOT basis.
Other ongoing initiatives for deep seas ports include the ones at Bonny and Bakassi which present themselves as opportunities for private capital.
2.1.2 Inland Dry ports.
In order to decongest seaports, improve supply chain logistics and bring shipping activities closer to shippers in the hinterland, Nigeria has initiated the development through the Nigerian Shippers Council, of inland dry ports as ports of origin and destination. Nigeria now has a fully operational inland dry port in Kaduna, while other inland ports in Kano, Katsina, Aba, Ibadan, Jos and Funtua, are at various stages of development and completion.
Against the backdrop of Nigeria’s extensive landmass and population, herein also lie opportunities for private capital investments in inland dry ports and rail networks targeted at the manufacturing, agriculture and solid minerals base of the country.
THE INLAND WATERWAYS SUBSECTOR
As indicated in the introductory part of this presentation, Nigeria has about ten thousand kilometres (10,000 km) of potentially navigable waterways out of which only three thousand kilometres (3,000 km) are currently navigable all year round. This creates a lot of opportunity in the inland waterways subsector as an alternative, cost-effective and environmentally-friendly mode of transport connectivity.
Capital/maintenance dredging of five hundred and seventy-two kilometres (572 km) had been concluded along the Lower River Niger inland waterways with river ports/jetties at Onitsha, Lokoja and Baro.
There are current initiatives concerning the survey and charting of the river Niger, to put in place a structured channel management programme in collaboration with private investors.
While the Onitsha port has already been concessioned to private investors, other opportunities in this subsector include the concession of Oguta, Baro and Lokoja ports; Operation of ferry (passenger) and freight (cargo) services along the inland waterways corridor; development of additional river ports and jetties along other inland waterways navigable routes on PPP arrangements and the development of tank farms along the inland waterway corridors to leverage the waterways for the carriage of petroleum and other bulk liquid cargoes to the hinterland.
THE RAIL SUB-SECTOR
Notable achievements have been recorded in the rail subsector – the commissioning and making operational for commercial activities, the Abuja- Kaduna; Warri – Itakpe – Ajaokuta and Lagos – Ibadan double track standard gauge rail lines; ground breaking of Wagon Assembly in Kajola, Ogun State; Port Harcourt – Maiduguri, Kano – Maradi (Niger Republic) and Kano – Kaduna standard gauge rail lines; connection of the Apapa Ports by rail, while that of Warri Port is ongoing.
Furthermore, other achievements include rail connection to the Inland Dry Ports in Kaduna and Kano; commencement of container movement from Apapa Port to Ebute-Metta, Ijoko and Ibadan to reduce traffic gridlock among others; rehabilitation of 3.5 km rail sidings into Futua Inland Dry Port in Katsina State as well as the commencement of rehabilitation of one hundred and ninety kilometres (190 km) Minna to Baro Line with an extension to Baro River Port, in Niger State among others.
Other achievements include the upgrade and modernization of the communication and signalling system and procurement of 84 No 1067mm Wheels on 4 No. Narrow Gauge Locomotives and 15 No coaches complete with axle and bearings. The establishment of container loading and off-loading points along the railway track at Ebute – Metta, Ijoko and Omi – Adio in Ibadan using Rail transport to reduce traffic gridlock on the Wharf/Apapa road.
TRANSPORT INFRASTRUCTURE FINANCING STRATEGIES
Against the backdrop of the huge infrastructure gap, massive capital requirements, and grossly inadequate government funding, the need for private sector participation in infrastructural development cannot be overemphasized.
Public Private Partnership.
Public Private Partnerships (PPPs) have proven a viable option to unleash unprecedented infrastructure growth.
Public Private Partnerships (PPPs) create a balance between State Ownership and Privatization. The skills, assets, risks and rewards of the Public and Private sectors are shared in delivering services or facilities for the use of the general public. Its models include:
Design, build, finance and transfer (DBFT);
Design Build Finance Operate and Transfer (DBFOT) Build, operate and transfer (BOT) Build, Own, Operate and Transfer (BOOT) Design, build, finance and Operate (DBFO).
These models have the propensity to be successful when there is access to Capital, enabling environment/institutional framework and adequate legislation.
CONCLUSION
As the government makes concerted efforts toward ensuring its infrastructural projects are viable within a stable financial ecosystem, the following summarizes priority areas in the Maritime, inland waterways and rail subsectors of the transportation sector of our country:
KEY AREAS IN THE TRANSPORTATION SECTOR
Completion of rehabilitation of all narrow-gauge rail lines and the construction of standard gauge rail lines for the carriage of goods and passengers in line with the Twenty-Five (25) – Year Railway Master Plan.
Leveraging Public-Private Partnership (PPP) arrangements for the development of Deep-Sea Ports, Inland Dry Ports and Vehicle Transit Areas (VTAs) to facilitate both local and international trade.
Effective and sustainable channel management, security and safety for the Ports and Inland Waterways respectively.
Implementation of the ECOWAS protocol on Trade Facilitation as well as the Africa Continental Free Trade Area Agreement (AfCFTA)