Private sector involvement in road infrastructure
By Taiwo Ojoye
Approval has been given to six companies to construct, reconstruct or rehabilitate 19 federal roads spread across 11 states of the federation. It is a laudable response by the Federal Government to the decrepit state of our road infrastructure, which has led to the death of thousands of people through road accidents.
To be executed under the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme that emanated from Executive Order No. 007, this novelty involves 794.4 kilometres of roads. They include the reconstruction of the Apapa-Oshodi-Oworonsoki-Ojota very busy road, starting from the country's seaports in Lagos State; Obajana-Kabba Road in Kogi State; Dikwa-Gamboru-Ngala Road in Borno State; Obele-Ilaro-Papalanto-Sagamu Road in Ogun State; and Ofeme community road network and bridges in Abia State.
The pilot scheme is being undertaken by Dangote Industries Limited; Lafarge Africa Plc; Unilever Nigeria Plc; Flour Mills Nigeria Plc; Nigeria Liquefied Natural Gas Limited and China Road and Bridge Corporation Nigeria Limited. The choice seems to be well made, considering the pedigrees of these corporations.
Unlike the other form of concession where a concessionaire will build, operate and transfer, after investment must have been recouped through many years of tolls collection, investors in these roads will recover their money through tax incentives. The Minister of Finance, Zainab Ahmed, said, "Participating investors will use tax credits to reduce corporate taxes payable to government until they recoup the value of their investments in roads and bridges."
The arrangement is a great relief to the Federal Government, which has abysmally failed to rehabilitate a majority of its roads decades after they were constructed. The most notorious example is the 127.6 kilometres Lagos–Ibadan Expressway, inaugurated in 1978. There is an ongoing reconstruction of the road, causing untold daily hardship to motorists. The road is the busiest in the country with its 25,000 vehicular traffic per hour, according to the Federal Road Safety Commission. Being an initiative that will be a great boost to the economy and welfare of the people, more of such arrangement should be made across the country.
The quality of the work and the cost involved are critical. Therefore, the BPP, which has the cost template for the construction of a kilometre of road, should carry out proper evaluation of the roads to avoid unnecessary cost inflation. Also, Auditor-General reports are replete with how government engineers saddled with supervising road constructions or certifying them on completion of work by contractors and in accordance with laid-down regulations, work against national interest, after being compromised. Such abuse should not be an integral part of this new lease of life in public infrastructure provision in the country.
The Federal Government has become so delinquent in maintaining its roads that many governors now undertake such responsibilities to avoid possible backlash, especially during election periods like now, as the electorate can hardly differentiate federal roads from those of a state. As a result, the FG has accumulated indebtedness running into hundreds of billions of naira. Ogun State alone is claiming N222.9 billion. Pleas by governors for these debts to be defrayed are not heeded due to cash constraints. As of February 2017, the Minister of Power, Works and Housing, Babatunde Fashola, had said the states would be paid through issuance of bonds.
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Nigeria has about 195,000 kilometres of roads, out of which 32,000 kilometres belong to the federal, while 31,000 kilometres fall under state control. Most of these roads are death traps, the type seen only in war-ravaged countries like Somalia and Syria. The Calabar-Ikom-Ogoja and Enugu-Onitsha highways rank among the worst in this category. According to the Director-General, ICRC, Chidi Izuwah, only about 60,000 kilometres of road network are paved. Decrying the deplorable condition of most of them, he advocated that "Private capital and management expertise will help in this area as has happened in Malaysia, India and South Africa."
There is still a long road ahead for Nigeria's transportation infrastructure to be in top shape. Definitely, government cannot do it all alone. Indeed, in many developed economies, private investors contribute significantly in providing road infrastructure, as it is the case in Sweden where concessionaires operate two-thirds of its road network. Mexico has a 108-kilometre highway leased for 99 years to a provincial government, while in the United States, 4,657 miles of roads are privately controlled out of its total of 3.9 million road network.
Therefore, the six private firms selected to drive this new initiative should discharge the jobs expeditiously, so that the gross deficits in road infrastructure can be bridged.