Infrastructure Concession Regulatory Commission PUBLIC PRIVATE PARTNERSHIP PUBLIC PRIVATE PARTNERSHIP THE NIGERIAN EXPERIENCE PRESENTED AT THE CAPACITY BUILDING PROGRAMME FOR PPP IN INFRASTRUCTURE CHIEDU NDUBISI TECHNICAL ADVISER TO THE DIRECTOR GENERAL INFRASTRUCTURE CONCESSION DELIVERY COMMISSION Mbamene, Swaziland. July 2012

Infrastructure Concession Regulatory Commission 2. Infrastructure Development in Nigeria 1. Nigerian - A Background 3. Nigerian PPP Experience 4. Challenges & Mitigation 5. Conclusion Presentation Outline 1

Infrastructure Concession Regulatory Commission 1.1 Nigerian - A Background 2

Infrastructure Concession Regulatory Commission … Macro Economic Indicators Nigerian - A Background

Infrastructure Concession Regulatory Commission 4 Traditionally, government has been the sole financier of infrastructure projects and has often taken responsibility for implementation, operations and maintenance as well. Budgetary financing are often:  Volatile and rarely meet crucial infrastructure expenditure requirements in a timely and adequate manner  Exerts constant pressure on fiscal budget due to competing demands  Funding generally inadequate  Receives a larger brunt of fiscal retrenchment in times of financial crises  Greater the potential for mismanagement and unwholesome practices  Leads to lower quantum and quality of infrastructure. … Traditional Funding of Infrastructure 2.1 Infrastructure Development in Nigeria

Infrastructure Concession Regulatory Commission … Consequences Infrastructure Development in Nigeria

Infrastructure Concession Regulatory Commission Establishment of the Infrastructure Concession Regulatory Commission. (Sec 14. 1) MDAs may enter into a contract with or grant concession to any duly pre- qualified private sector proponent for the financing, construction, operation, and maintenance of any infrastructure that is financially viable or any development facility of the Federal Government. (Section 1.1). Provides general policy guidelines, rules and regulations. Take custody of every concession agreement. Ensure efficient execution of any concession agreement or contract entered by the Federal Government Nigerian PPP Experience … Legal & Regulatory Environment

Infrastructure Concession Regulatory Commission Development PhaseProcurement PhaseImplementation Phase  Needs Analysis  PPP Options appraisal  Value for Money  Affordability  Sustainability  Prelim Risk Matrix  Viability/Bankability  VGF assessment  OBC approval  Transaction adviser  EoI and RFP  Bidding  Bidders Conference  Bid Evaluation  Value for Money Test  Preferred Bidder  Full Business Case  FEC Approval 1.Technical Adviser 2.Project Monitoring 3.Commissioning Test 4.Verify Output Requirements 5.Contract management … PPP Life Cycle Nigerian PPP Experience

Infrastructure Concession Regulatory Commission Nigerian PPP Experience … PPP Project Pipelines

Infrastructure Concession Regulatory Commission Review of legal, regulatory and institutional environment ongoing Comprehensive programme of capacity building with support of WB, DFID, AfDB in place. (Headline Presidential Retreat Held) Putting in place a coherent and effective communications strategy to ensure effective and sustained stakeholder interface and to facilitate flow of information to all key players via – Roadshows, Electronic Platforms ie. www & other networks Collaborating with NPC to restore planning culture....to be supported by legislation Collaborating with CBN, Bankers Committee, DMO, PENCOM etc to catalyse the dev. of long term financial instructments for PPP. Colloborating with FMF to establish a VGF scheme to enhance PPP projects bankability. Colloborating with state govts to establish similar subnational frameworks to ensure a robust and coherant PPP market nationwide … Other Govt Initiatives Nigerian PPP Experience

Infrastructure Concession Regulatory Commission Challenges & Mitigation Having reviewed some of these projects, some of the issues and challenges include:  Lack of national infrastructure blueprint;  Unclear political direction and support;  Weak regulatory and enforcement powers of ICRC;  Inadequate financial modelling to enable proper affordability and value for money assessments;  Technical capacity gaps;  Lack of institutional framework for PPP project preparation;  Inconsistency in the PPP Project Pipelines;  Legacy concessions. … Issues and Challenges

Infrastructure Concession Regulatory Commission 11  Undoubtedly, Nigeria’s infrastructure deficit has stymied its economic growth, restricted productivity and limited its competitiveness.  Governments all over the world have come to recognize that the collaboration between public and private sectors is crucial to securing dependable and sustainable funding  For PPPs to work:  it is absolutely vital that all PPP projects be developed and procured in line with the National Policy on PPP (N4P) and MDAs  MDAs must make adequate provisions in their annual budgets for the cost of project development which should be in the range of 3 - 5% of the estimated project cost.  unsolicited projects must be in line with MDAs investment plan and follow procedures  The financial sector including the capital market could quickly organize themselves to exploit this emerging opportunity 5.1 Conclusion

Infrastructure Concession Regulatory Commission Conclusion  Successful PPP are characterized by:  thorough planning, detailed studies and analyses of lifecycle costs and revenues  good communication, strong commitment from all parties  guided by open and transparent process and procedures.  PPP projects must be selected from a coherent infrastructure investment programme anchored in an integrated National Plan  PPP contract agreements involve long-term commitments. As such  They are also complex, often involving many parties and significant risks.  Approached with great care, due diligence and a deep sense of responsibility and accountability.  PPP arrangements involving long term relationships. As such:  There must spirit of genuine partnership, and a commitment to work for a win-win situation  full disclosure and sharing of information and concerns.

Infrastructure Concession Regulatory Commission Policy; Objectives; Roadmap Coherent Planning Framework Investment in Pace with Demand Human Capital Development Legal and Regulatory Framework Institutional Framework & Capacity Conclusion

Infrastructure Concession Regulatory Commission THANK YOU CHIEDU NDUBISI Technical Advisor to the Director General Infrastructure Concession Regulatory Commission Plot 1270, Ayangba Street, Area 11, Garki, Abuja, Nigeria Phone: +234 (9) /+234 (9) Website: