Lagos-Ibadan Expressway: ICRC, NSIA disagree with Fashola on funding
By Maureen Ihua-Maduenyi
The Acting Director-General, Infrastructure Concession Regulatory Commission, Mr. Chidi Izuwah, and the Managing Director, Nigeria Sovereign Wealth Investment Authority, Mr. Uche Orji, have said that Public-Private Partnership is the solution to funding the Lagos-Ibadan Expressway project.
Their position defers from that of the Minister of Power, Works and Housing, Mr. Babatunde Fashola, who said on Tuesday that adequate funding by the Federal Government remained the most viable option for the reconstruction of the road.
The minister had at a public hearing conducted by the House of Representatives Committee on Works said concessionaires did not have the financial capacity in terms of the size of their balance sheets to raise the fund required for rebuilding the road and the Second Niger Bridge under a PPP arrangement.
The minister stated that for this reason and the subsisting litigation, he did not believe that a PPP arrangement was a viable option for building the road and the bridge.
Izuwah and Orji, who also spoke at the hearing, however, said the critical issue in a PPP concession was not the size of the balance sheet of the concessionaire, but the bankability of the concession agreement and the ability of the cash flows from the project to repay the facility.
Izuwah pointed out that if the country’s entire annual budget was dedicated to infrastructure without any recurrent spending, it would still not be sufficient to meet the requirements and that the only means by which the funding gap could be met was by releasing and attracting private capital through PPPs.
Orji, on his part, stated that Nigeria required $35bn yearly over the next six to seven years to breach its infrastructure deficit.
“The annual sum required already exceeds Nigeria’s entire annual budget and this need can only be met through PPPs,” he added.
According to him, the country urgently needs to execute a successful PPP road project to serve as a template for other projects and to advertise Nigeria as a viable investment and PPP destination.
He said the Lagos-Ibadan Expressway was by far the most viable road for a PPP, which could serve as a model for others and as a showcase to the world of the viability of PPPs in Nigeria.
Izuwah and Orji noted that the termination of the original concession on the road to Bi-Courtney was a bad decision, as it was bound to erode investor confidence and discourage other investors and financiers, especially foreigners from investing in the project.
They stated that all efforts should have been made to engage with the concessionaire to ensure that the arrangement succeeded, adding that the ICRC had warned against the termination at the time but its advice was ignored.