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With the eyes and hearts of the nation firmly set on the economic expansion of Nigeria, one of the most important areas driving the country forward is transportation, particularly the road network.
Multi-modal transportation was a hot topic at the Golden Jubilee Business Summit, held at the Marriott Grosvenor House Hotel in London and organised by the Business in Africa Events (BIAE) UK. Mr Engr Kabir Abdullahi, MD/CEO of The Federal Roads Maintenance Agency (FERMA) was joined by an esteemed panel to discuss opportunities in Nigeria road maintenance and Output-based Performance Roads Contract (OPRC).
FERMA was established in 2002 with a mandate to ensure the efficient and effective maintenance of all federal trunk roads nationwide, and to keep them pothole-free and serviceable all year round. This included the provision and maintenance of road furniture and street lighting, all geared towards promoting the economic wellbeing of Nigerians. This is no small task – the national network is currently estimated to be nearly 200,000km, with an asset value of around $31.5bn. The Nigerian road network consists of federal roads, (17.6 per cent) state roads (15.7 per cent) and local government roads (66.7 per cent). Federal roads carry 70 per cent of freight and services and 90 per cent of the socio-economic activities in the country. However, standards are low, internationally speaking, with overall structural quality lingering around the 26 per cent mark. The goal is to increase the quality of these roads to 75 per cent by the year 2020 and this, of course, will need the injection of external funds. Like many other central governments, Nigeria cannot fund the provision of road infrastructure alone.
Models for multi-modal infrastructure
FERMA estimates the need for investment of US$1bn to recover 3,500km of federal roads per annum through its programme on pavement strengthening and general repairs. Infrastructure procurement models are constantly evolving as governments seek to obtain best value and address huge capital demands required to provide adequate infrastructure. In Nigeria, there has been a fundamental change in the way the government thinks about infrastructure. Governments are therefore seeking innovative ways of attracting private sector funding in the development and maintenance of infrastructure.
One such way is Public-Private-Partnership, (PPP) an accepted procurement vehicle for the delivery of infrastructure. Key drivers and Benefits of PPP are:
· To fulfil funding requirements on a continual basis in the provision and maintenance of infrastructure by utilising private finance.
· To improve service levels by promoting efficiency in the procurement process.
· To improve management and maintenance quality in the provision of infrastructure.
· To promote the implementation of the user-pay principle, taking into account customer's ability to pay.
The investments will be recouped through tolling and other as yet non-specific methods over the tenure of the concession programme. The focus of work will be mainly the repair of failed segments of road, pavement overlay, the provision of drainage facilities, shoulder repairs and the installation of traffic safety equipment.
OPRC is an alternative to traditional methods of procuring road reconstruction, and is designed to provide a longer-term PPP between contractor and Government. Payments to the contractor are not based on quantities of works measured by unit prices for works done, but on measured 'outputs' reflecting the target conditions of the roads under contract. The focus of the contractor will be on the Integral Management of the Road Asset over the period of contract. So, the contractor must be a firm or business venture which has the technical, managerial and financial capacity to fulfil the contract over the long term. Under an OPRC pilot road scheme, some major roads were selected including:
· Warri-Benin Dual Carriageway, 95km.
· Abuja – Keffi Dual Carriageway, 51km.
· Otta-Abeokuta Dual Carriageway, 65km.
· Saminaka-Kataf-Kafachan Single Carriageway, 114km.
· Okigwe-Afikpo Single Carriageway, 66km.
FERMA is also considering the implementation of International Vehicle Transit Charges (IVTC) at selected border posts as a reliable source of income. FERMA has carried out preliminary designs of the requisite physical structures at the indicated border posts and estimated costs of Electronic Collection and Monitoring (ECM) devices.
Timely attention to road maintenance combined with organisational efficiency is key to FERMA's policy. As high capital spending is required, investment opportunities have arisen for private businesses – the door is open for partnerships which will benefit government, business and the people of Nigeria.