Concessioning in Nigeria: A Challenge to PPP

Proshare

 

April 10, 2012
 

 

Concessioning in Nigeria emerged out of the need to reawaken the numbing infrastructures in the country during the tenure of former president Olusegun Obasanjo. Stipulating this as a genuine policy gave birth to the launch of certain IPP and PPP initiatives under the umbrella of ‘Concessions’ in the offices of Bureau of Public Procurement (BPP) and the Infrastructure Concession Regulatory Commission (ICRC).
 

Certain infrastructures in Nigeria have for ages deteriorated in existence and services delivery, ranging from the Federal and state highways to the epileptic power generation and supply, the health and educational standards among other areas. Some of these include Nigerian Airways, NITEL, Ajaokuta Steel, Railways etc
 

Reportedly, there are several concessioning projects in Nigeria but some of the awarded infrastructural projects under the contemporary concession policy in Nigeria would include the Tinapa Free Trade zone of Cross River State, the Lekki Concession infrastructural Project in Lagos State, the Bi-Courtney Airport management of the Murtala Mohammed Airport 2 Terminal (MMA2), the Bi-Courtney Highways management project for the Lagos-Ibadan expressway, the Tafawa Balewa Square Investment project, the 26 seaports operations concessioning, the Murtala Mohammed Airport infrastructure and management concession under the aegis of Maevis Nigeria Limited, the Lagos International Trade Fair amongst so many. Others underway include, the Warri Industrial Business Park, WIBP and the Ogun State Free Trade blueprints comprising of so many projects from Agriculture, cargo airport, housing developments, industrial parks etc.
 

In monitoring the success of this initiative, there have been several reports and publications on the concession of infrastructural projects. The Tinapa Free Trade zone in Cross River State established by the former Governor Donald Duke; is today a major bone of contention in the country’s investment platform. Lingering issues revolve around the context of approved activity with regards to the zone being an Export Processing zone (EPZ) or an import processing zone (IPZ).
 

Wale Babalakin’s Bi-Courtney Highway Services Limited is also one of the failed infrastructural projects in Nigeria whilst his Murtala Mohammed Airport, MMA2 “Building, Operation and Transfer arrangements” (BOT) agreement appear to be thriving. It is a sad commentary that the 105km highway project through Lagos-Sagamu-interchange Express Way to Ibadan has since May 26, 2009 witnessed no measure of progress, bogged down with problems from access to roads upon which houses have been built and sold by the state government; approval and other access issues firmly situated within the governments control. Recently, it decided that the project will now have to conversely commence implementation from the Ibadan axis of the Express way. The hiccup experienced from the predetermined point of the project execution, Lagos old Toll-gate was said to be due to lack of cooperation from the part of Lagos and Ogun States governments. The company complained of the Ogun State government’s seizure of purchased $6.5 million asphalt plant bought for reconstruction works; amongst so many other issues – thus properly placing government as a hindrance to its own policy implementation initiative for which resources have been committed.
 

A third scenario posing concessioning challenge in Nigeria is exemplified by the Tafawa Balewa Square Agreement where there are clear cases of impediments placed before it owing to a dispute between the Federal Government and state government over ownership of land/edifice as well as allegations and counter allegations over remittance of payments and non-compliance with sections of the concession agreement. This in a sense has stalled the earlier on-going developmental approvals intrinsically and brings to fore the legal, structural and investment finance challenges related to this mode of development.
 

It is trite knowledge that with every change in governance, most if not all contracts and agreements signed by previous office holders are subject to ‘review’ and ‘probes’. It has become so cultural, it is laughable internationally that any contract drawn up in Nigeria may not be worth more than the paper upon which it was drawn.
 

 The adverse effect of modifications in governmental policies serves as a critical impediment to infrastructural development and financing in Nigeria.
 

This cuts across all sectors; from tourism to manufacturing, exploration to procession of agricultural inputs, road transportation to Aviation, and housing to education.
 

The current drama playing out with the concessioning dissent and rancour between the Federal Airports Authority of Nigeria, FAAN and Maevis Nigeria Limited represents a brand Nigeria that has emerged to define how contracts are awarded, managed and executed or cancelled.
 

With the array of controversies confronting the concessioning practice in Nigeria, it is becoming glaring from analysis that the reasons for the failure of the initiatives mentioned above is firmly situated in the competence, purpose and capacity of government to be accountable for decisions reached by it.

Frankly speaking, it is a national embarrassment that a country blessed with so much professional skills in managing complex relationships and projects cannot deliver on Public Private Partnerships (PPPs), monitor same with due diligence without the usual interference from government; who it must be said supervised and superintended over the bidding process, sub-optimal and sometimes outrageous/unrealistic financial projections and ultimatel politicisation of the concessions. Some of these concessionaires admitedly have been shown to have capacity and competence challenges, which begs the question as to how they were appointed in the first place. Other than that, it is the same government musical chair game(s).
 

If it is the aim of the Nigerian government to be ranked one of the top developed nations in the world by the year 2020, the experiences of failed concession deals and the syndrome of re-contracting of local investments to South African firms lately stretches the notion of underdevelopment farther than it is tolerable.
 

Not only will it be required for the BPP and the ICRC to wake up to their pre-award and oversight functions over these contractual deals but also the executives, the legislators and the Judiciary to activate their astuteness selflessly for a smooth running of these schemes.
 

While it is high time Nigerians awaken the esteemed values in themselves, it will be pertinent to revisit several sectors of the Nigerian economy and initiatives that have been debased in standard by the assimilation of South African Companies as replacement for infrastructural development management.

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