Concessioning of Nigeria’s rail sector and past bitter experiences in aviation, other sectors

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Nigeria’s rail sector
Relief is finally here for travelers on the Abuja- Kaduna rail route with the launching on Thursday, January 21, 2021 of an e-ticketing solution. The initiative, according to the Minister of Transportation, Rotimi Ameachi, is a Public Private Partnership (PPP) valued at N900 million. The concession agreement will run for 10 years.
It is not surprising that rail transportation is the latest major sector the Federal Government will invite private sector participation, going by the clamour by informed commentators and other stakeholders before the PPP arrangement. With the Kaduna – Abuja road taken over by bandits and kidnappers, the rail route has become the most viable option not only for the lower and the middle class, but also for the high and the mighty for the safety it assures. As a result of the upsurge of the number of passengers, however, some unscrupulous staff of NRC have formed alliance with touts to buy up tickets to re-sell at exorbitant rates to hapless passengers. Private sector participation in Nigeria’s critical infrastructure sector is of urgent necessity, but crux of the matter is how the Federal Government (FG) and other tiers of government can generate enough goodwill to get willing participants. This is because of the way successive administrations treated the private sector players who in the past responded to the clarion calls to bridge the infrastructure deficits in the country.
Frustration has been the recurring experience of many of such private infrastructure investors in the different sectors such as aviation, road construction, housing, power, among others, more as a result of policy summersaults by the different administrations. A major case in point is the Lagos- Ibadan expressway which the Wale Babalakin owned Bi-Courtney Consortium was granted a 25-year concession on May 8, 2009 by the administration of the late President Umaru Yar’Adua under a Design, Build, Operate and Transfer (DBOT) agreement. The concession was terminated by the succeeding administration of former President Goodluck Jonathan on November 19, 2012 and the road project handed over to Julius Berger Plc and RCC Nigeria Limited.
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Before the termination, Bi-Courtney Highways Services Limited (BCHS) had awarded the contract and completed arrangement to turn the Lagos Ibadan Expressway into a world class standard at a cost of N112 billion. Years after it should have been completed by the concessionaire, the road remains a nightmare to commuters even after gulping multiples of the original cost. Speaking at the 2019 Annual lecture of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos with the theme, “Infrastructure Development and Growth in Nigeria: Prospect and Challenges”, Babalakin, Chairman of Resort International Limited, parent company of Bi-Courtney said, “Lagos-Ibadan express way is unthinkable. We signed a contract in 2009 and we had a team of 35 foreigners, making 50. When we finished the design, we sent it to the Ministry for approval.” He said Bi-Courtney waited for 22 months to get feedback from the ministry and this never came, explaining that “Finally, on the 23 months, the project was terminated because of lack of performance. We did a review of the contract on advice and concluded that, once we harness with international standard, funding is ready. Read Also: Naira falls back to N480 on black market “This is the seventh year the project was terminated. The construction project is still between 35-40 per cent done and they are building 40 per cent of what we are building. The project has no design and it is a repeat to surfacing of 1977 road. “The architecture of Lagos-Ibadan express way has changed phenomenally from 1977. Our design accommodated all changes. We had seven overhead bridges along the express road.” The Bi-Courtney Chairman pointed out that there is no projection for any overhead bridge right now on Lagos-Ibadan expressway by the two contractors handling the project and said, “Our total cost was N112 billion. Over N350 billion has been spent on 40 per cent of what we planned to build and they are still at 40 per cent.”
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The experience of Babalakin in the provision of infrastructure in the aviation sector has not been hitch-free, though a little bit better. The Murtala Muhammed Airport, Lagos, Terminal 2 (MMA2), being operated also on DBOT basis by his firm, Bi-Courtney Aviation Services Limited (BASL) is the first of its kind in Africa in addition to being adjudged the best terminal in Nigeria. Yet, the Federal Government and its agencies which should give MMA2 every support it needs in order to encourage more private sector participation in infrastructure development have been all out to hamstring the terminal operator.
Dr. Babalakin said this much at a press conference in 2017 to commemorate the 10th anniversary of MMA2. He disclosed that the Federal Government and the Federal Airports Authority of Nigeria (FAAN) have failed to pay the damages the court awarded against them for the continuous running of illegal flight services at the General Aviation Terminal (GAT), Lagos, contrary to the concession agreement with BASL. He said “We are seeking the assistance of all and sundry for the payment of the N200 billion owed to Bi-Courtney Services by the Federal Government of Nigeria. As far back as 2012, the Federal High Court awarded damages of N132 billion to Bi-Courtney. “Six appeals against the judgment in the Court of Appeal have been dismissed. Even the appeal to the Supreme Court by Arik Airlines through Ojemaie Holdings was also dismissed. No nation can truly achieve its potential if it treats its dynamic citizens this way.” Late last year during the Public Hearings of the Senate and House of Representatives Committees on Aviation held on the amendment of the Civil Aviation Amendment Bills of the six aviation agencies, including the Nigeria Civil Aviation Authority ( NCAA), Federal Airports Authority of Nigeria ( FAAN), Nigerian Airspace Management Agency ( NAMA), Nigerian College of Aviation Technology ( NCAT), Accident Investigation Bureau (AIB) and Nigeria Meteorological Agency (NiMET), Babalakin again raised complaints about unfair treatments by the Federal Government and FAAN.
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The Federal Government is not the only culprit in discouraging private sector participation in the provision of infrastructure, while complaining that they cannot provide all the needs and soliciting for the bridging of the gaps by private investors. Many states of the federation are equally guilty as was the case of Lagos State which has made it impossible for old Federal Secretariat, Ikoyi, Lagos to be put to proper use by the concessionaire, Resort International Limited. Built in 1976, the 15-storey old Federal Secretariat Complex was in use by Federal Civil Servants until 1991 when the seat of the Federal Government moved to Abuja. It subsequently became abandoned until 2006 when the administration of former president Olusegun Obasanjo concessioned it to Resort International Limited for N7.2 billion after a rigorous open competitive bid which involved many companies, including Dangote Group. After the signing of the concession agreement and payment, Babalakin set to actualize his dream of turning the complex into a high rise housing complex of about 480 housing units of four, three and two bedroom flats in order to bridge the housing deficit in Lagos. This is however yet to materialize as the Lagos State Government, which did not raise any objection during the bidding process suddenly opposed the idea of converting the complex from its original function to a residential area. It also argued that the Certificate of Occupancy (C of O) ought to have reverted to it once the reason for its take-over by the FG ceased to exist. The state government also obtained a court injunction barring anyone from carrying out any further activity within the complex, thus throwing spanners into the whole process and leaving as an eyesore what used to be a symbol of grandeur, apart from the economic losses to the private investor. The experience of Babalakin is shared by many other private investors in Nigeria and observers are of the view that the nation’s quest to catch up in the race for infrastructural adequacy will continue to be a mirage if governments at all tiers continue to make the environment harsh for the private sector.

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