Why FG abandoned PPP arrangements on Second Niger Bridge, Lagos-Ibadan expressway

The Minister of Works and Housing, Babatunde Fashola, has said the current administration abandoned the Public Private Partnership (PPP) on major infrastructure projects, including the Second Niger Bridge, and the Lagos-Ibadan expressway because investors could not secure needed funding from banks.

Mr Fashola, a former Lagos State governor, called for the audit of the existing concession agreements between the federal government and investors.

The minister spoke on Monday at the public hearing by the House of Representatives Committee on Privatisation in Abuja..

This disclosure by Mr Fashola is coming in the wake of the planned concessioning of major highways in the country.

the government plans to concession the National Arts Theatre, Tafawa Balewa Square, and all the River Basin Development Authorities at N836 million while the National Stadium in Lagos, the Moshood Abiola Stadium, Abuja, and two others were pegged for concessioning at N100 million, to fund 2021 budget deficit.

In the 2022 Appropriation Bill, the federal government is planning to get N90.3 billion from privatisation proceeds.

“We cannot do and discuss PPPs in isolation of our economy, whether at the national, state, regional or global,” he said.

“Let us take two highways that we offered for PPP. The second Niger bridge was conceived as a PPP. The Lagos-Ibadan expressway was conceived as a PPP. But if we had asked a very basic question at the time – N200 billion plus projects — which bank in Nigeria has ever lent N200 billion to any individual? We asked that question and we knew that it was not the way to go. They might have lent it but inevitably, it was more likely that they would have come back for a sovereign guarantee.

“If you are guaranteeing something, you might as well do it yourself. So, in the end, what happened? The Lagos-Ibadan expressway in 2006 and the second Niger bridge in 2010, nothing significantly happened on those projects until 2016. So, we lost like 10 years before this administration now started funding directly,” the minister said.

He also raised questions on the concession done so far by the government, noting that there is a need to probe if the efforts have achieved the desired outcomes.

“The first thing I want to ask is that, of all the assets that we have disposed of and the reasons for disposing them or for commercialising them or for privatising them, have we achieved the objective that we set out to achieve? I think we should ask that question,” he said.

“And I think apart from making this law, that undertaking would be a profound service to Nigeria, so that all of us will have a very clear understanding of the capacity, ability and what is realistic to expect of the private sector.

“Indeed, in our last (ministerial) retreat, this subject came up and I admitted to it that, ‘where is the private sector?’ I came from there; the vice-president (Yemi Osinbajo) came from there; the president came from there; many of us came from there. We are all here (in public service) now. So, who are we handing it back to?

“But I think that it would be helpful to have an audit of all the assets that have been concessioned or privatised in the name of improved efficiency and then to ask, ‘have we achieved that objective?’ I think if we do that and interrogate very honestly, some of the things that would begin to become obvious to us is that we need to be more circumspect about certain types of assets.

“There are certain types of assets that the private sector is just unable to deal with. For example, when you look at roads, not many people who claim to want to do it have the capacity or the experience to do it.

“Let us start with the Lekki-Epe expressway which was concessioned. The concession agreement — members of this committee might want to know —was signed in 2005. I was chief of staff (to Governor Bola Tinubu) then.

“They did not reach financial close until 2010 — that was five years. So, between 2007 when I became governor and 2010, the road had to start. So, for an asset we had concessioned, the Lagos State Government had to first go and borrow money to start the work meant to be concessioned.

“In terms of political arrangement, you never have five years; you have (a tenure of) four years. And within the first three years, if you are not showing results, you are going to meet the electorate. So, these are some of the real challenges when we have these expectations.”


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