Infrastructure Concession in Nigeria as Panacea

By Uche Ohia

At last the Federal Government has taken a strategic step towards confronting the intractable problem of infrastructural decay which, together with the Niger Delta Crisis, has provided dispirited citizens with ample reasons to taunt the Yar’Adua administration. Basic infrastructure in most parts of Nigeria, Africa’s largest country, is in such dire state of disrepair as to be tagged moribund. This decadence has made Nigeria and Yar’Adua the popular subjects of endless diatribes on various public forums. But Yar’Adua may yet have the last laugh. Last week, the president nominated Chief Ernest Shonekan, former interim Head of State, as chairman of the Board of the Infrastructural Concession Regulatory Commission (ICRC), a body set up by the Infrastructure Concession Regulatory Act signed into law by former President Olusegun Obasanjo in 2005. Other nominees of the president to the ICRC Board were Hakeem Sanusi (South-west), Bernard Verr (North-central), Clement Owunna, MFR (South-east), Comfort Saro-Wiwa (South-south), Joe Kyari-Gadzama (North-east) and Aisha Sheikh (North-west). The nominations are awaiting the nod of the National Assembly.

By the provisions of the ICRC Act (2005), ex - officio members that will also serve on the Board with the president’s nominees include the Secretary to the Government of the Federation, the Attorney General of the Federation, the Minister of Finance, the Governor of the Central Bank and the Director General of the ICRC. Already, the retired Group Executive Director (Refining and Petrochemical) of the Nigeria National Petroleum Corporation (NNPC) and a former Managing Director and Chief Executive of Port Harcourt Refining Company, Mansur Ahmed, has been nominated as pioneer Director General of the ICRC.

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Generally, infrastructure concession allows participation of the private sector in financing the construction, development, operation and maintenance of public infrastructure, development project or network for a stated period. Common concession contracts include Build, Operate and Transfer (BOT), Build, Own and Operate (BOO), Build, Transfer and Operate (BTO), lease contracts, etc. The concession process allows private investors and operators to inject much needed capital into upgrading and maintaining infrastructure. For instance, the national road network in Nigeria especially in the South has been reduced to death traps. The cumulative investment of the Federal government in the road sub-sector since independence has been enormous. In the last eight years, the Federal, state and local Governments spent a substantial proportion of their annual budgets on the construction, rehabilitation and maintenance of roads and yet the net asset value of Nigerian roads has continued to decline embarrassingly. Without requisite infrastructure such as roads, stable power supply, or transport networks to drive it, the Nigerian economy has remained virtually comatose.

With the support of the World Bank and other financial institutions, many African governments are adopting the concession option for the development of their basic infrastructure. Concessions are associated with direct payment by the user in the form of a toll. Toll systems are common in Europe for roads, bridges and tunnels. Tolls constitute veritable sources of internally generated revenue for many countries. Toll gates were also a common feature of some Nigerian highways until former President Obasanjo erased them from the landscape for reasons that were unclear. In the 1990s, concessions were chiefly employed to resolve endemic dearth of infrastructure in Latin America by bringing private sector efficiency and competition to bear on public infrastructure networks.

The “infrastructure” envisaged under the ICRC Act 2005 covers virtually every sector of the economy: power plants, highways, seaports, airports, canals, dams, water supply, telecoms, railways, land reclamation, inter sate transport systems, industrial estates or township development, housing, tourism development, waste management, ICT and database infrastructure, education, health, drainage, dredging, trade fair complexes, etc. Invariably, the ICRC is going to be faced with a big task in the months ahead. The ICRC is expected to fast-track the Public-Private Partnership (PPP) strategy that is the crux of the paradigm shift in the Reform Agenda envisioned by the Obasanjo administration. Despite previous policy somersaults, Yar’Adua has by the latest action shown a strong commitment to the PPP concept. Can the ICRC transform the bleak situation that has made Nigeria an investor’s nightmare to a country where basic infrastructure are constructed and maintained with seamless ease? Maybe.

However one looks at it, concessioning holds great promise: the ICRC holds the key to the realization of the 7-point agenda enunciated by the president. Meeting the target of the Millennium Development Goals will also, to a large extent, depend on the success of the ICRC. From the composition of the ICRC, President Yar’Adua seems to have made careful choices. The recognizable members of the board are men and women of high integrity. With an array of experiences in research, manufacturing, shipping, energy development, development finance, commerce, banking, construction, law, telecommunications, and petrochemicals many of the president’s nominees appear well equipped for the onerous task ahead.

Still, the coast is not all clear. Like privatization, not everyone accepts concession as the panacea to infrastructure problems. Labour leaders feel reasonably concerned about the impact of the process on workers. Those who do not agree that Government should divest completely from business also fear that monopolies may be created and argue that systemic neglect and inefficiencies could be alleviated by training, capacity building and anti graft sanction monitoring. In a country with poor record of continuity in governance, public policy discordance, and unbridled corruption, there is apprehension that the members of the commission may be exposed to undue influences and that concessionaires may require guarantees of protection from political instability.

All said, the Herculean task before the ICRC requires more core professionals, technocrats and corporate gurus and less jobbers, cronies and opportunists. The success or failure of the ICRC will owe a lot to how much the commission is able to show transparency in it’s actions and how far it is able to insulate itself from the shenanigans of Nigerian politicians and the vagaries of Nigeria’s deleterious partisan politics.

uchebush@yahoo.com ; 0805 1090 050