The deal between the Federal Government and private firms to fix collapsed highways raises hope of a superb road networks across the country, writes ROBERT EGBE.
July 2018. It was a month Godwin Efiko remembers well.
For one week – 11th till 19th – the Abi, Cross River State-born driver slept in his container-laden Mac Truck on the Mile 2 section of the Oshodi-Apapa Expressway, inward Tin Can Island/Apapa.
“I joined the queue at Second Rainbow Bus Stop on a Wednesday morning and I was there till the next Wednesday night,” he told The Nation.
The 35-km Apapa-Oshodi Expressway, stretching from Lagos’ biggest port in Apapa that Efiko spoke of, is one of the best places to start if one wants to get an understanding of Nigeria’s baffling road infrastructure challenges.
It is one of the many roads, including the Enugu-Onitsha Highway, Lagos-Ibadan Expressway, Minna-Suleja Expressway, critical sections of which collapsed, after being abandoned for decades by successive government.
They caused nightmare traffic for motorists and residents and took a heavy toll on businesses and government revenue.
History of bad roads
Nigeria’s road networks have traditionally, or at least for decades, been very poorly maintained. Only a limited number of the 195,000 km networks are also tarred.
The Infrastructure Concession Regulatory Commission notes that about 32,000 km of the 195,000km are federal roads while 31,000 km are state roads. Of this number, only about 60,000 km are paved leaving 135,000 km of road untarred. A large proportion of the paved roads are in bad conditions due to poor maintenance.
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Why the roads are in bad shape
In 2009, a senate ad-hoc committee on transportation, led by Mr Heineken Lokpobiri, prepared a report detailing how a former works minister and then leader of the ruling Peoples Democratic Party (PDP), Tony Anenih, allegedly mismanaged billions of naira meant for the rehabilitation and construction of Nigerian roads.
The report blamed Anenih, now deceased, and his successors in the ministry, for the poor state of the country’s highways during the period and called for their prosecution.
Lokpobiri is now Minister of State for Agriculture and Rural Development.
The report, which took the ad hoc committee 18 months to produce, was listed for debate – three times in a row – by the Senate but was never considered on the floor of the upper chambers.
The transport probe report showed how, in 10 years (1999 to 2009), through multiple contract inflation frauds, connivance between contractors and government officials, some N645 billion was spent on 4,752 kilometres of the road; shortchanging the government of N49 million on each kilometre of road worked on, amounting to approximately N233 billion.
The committee said the report contained details of what was one of the nation’s largest portfolio of official scams at the time.
The committee said ministers and other senior officials of the ministries of transportation and Finance between 1999 and 2009 awarded multiple contracts for the same roads and paid for unapproved contracts.
According to the report, between 1999 and 2009, the ministry of transportation gave contracts for the construction and rehabilitation of 11, 591 km roads at a cost of N1.008 trillion – about N87 million per km.
During the same period, only 41 per cent of the roads were worked on, after close to 64 per cent of the contract value was paid.
In the 10-year period, work was done on only 4,752 kilometres of roads for N645.8 billion, at a very high cost of N135.8 million per kilometre, defrauding the government N49 million on each kilometre.
“There was no commensurate value for funds expended on the roads from 1999 to 2009,” the committee said.
But corruption and years of neglect are not the only sources of the problem.
Poor federal and state budgetary allocations to roads have also been the norm. In 2018, the Federal Government budgeted about N138.8 billion for construction and rehabilitation of roads. In the same year, N159.5 billion was budgeted for road repairs.
Last year, the figures were even lower. The sum of N124 billion was proposed for road construction while N103.3 billion was budgeted for the repair of the federal roads across the country. Even at that, hardly will half of the sum be released eventually.
There has also been the problem of explosive growth in vehicular numbers in the country, worsening pressure on the roads.
A National Bureau of Statistics / Federal Road Safety Corps (FRSC) report estimated Nigeria’s vehicular population at about 11.8 million at the end of 2018, compared to 11.6 million in the corresponding period of 2017.
It was not always this high. In 1983, for instance, there were just about 150, 000 vehicles in the country. But population growth boosted demand for vehicles. This spurred a rapid influx of imported second-hand vehicles into the country through official and unofficial borders.
Role of private capital
Experts have long understood that for Nigeria to get the roads back in shape, a new way of approaching the problem is required.
The Director-General, Infrastructure Concession Regulatory Commission (ICRC), Mr Chidi Izuwah told the News Agency of Nigeria (NAN) on September 7, 2017, that Nigeria needed to borrow a leaf from abroad and harness private resources.
Izuwah said: “Private capital and management expertise will help in this area as has happened in Malaysia, India and South Africa.”
He noted that Nigeria’s investment in road and rail remained low and had led to the continued underdevelopment of the country, adding to joblessness and poverty.
Izuwah gave examples of successful and lucrative PPP operations in the country, especially the concessioned Apapa-Lagos container terminal, which had led to the de-congestion of the ports.
It also led to reduced congestion surcharge from 525 dollars to 75 dollars, saving the Nigerian economy an estimated 200 million dollars a year.
“We no longer hear about Wharf rats or thieves who made containers from our ports vanish into thin air easily in years gone by,” he added.
Hope rises as Federal Government wades in
But things are changing.
President Muhammadu Buhari has made infrastructure development one of the cornerstones of his second term development agenda, and, in partnership with the private sector, it is yielding fruit.
The Dangote Group kicked-off construction work on the Apapa-Oshodi Expressway in 2018 as part of a deal with the Federal Government that would see the company enjoy a 10-year tax rebate worth $201m (N72.9 billion).
This is the first attempt to rehabilitate the ever-busy road since it was first completed in 1978.
A project to rebuild the road in 2013 costing $441 million stalled in 2015.
During an inspection of the work last month, the president of the industrial conglomerate, Alhaji Aliko Dangote, said the expansion of the road from Apapa Port to Ojota, will be completed this year.
The road will last for 40 years, he added.
According to Dangote, the congestions at the ports as a result of the gridlock cost the company about N25 billion in revenue between 2017 and 2019 financial year.
On the visit to the site with Dangote, Minister of Works and Housing, Babatunde Fashola said the completion of the road would bring businesses flocking back to the area.
“Once the economy of Apapa returns, all the clearing and forwarding, shipping, newspaper companies and all others doing business will resume fully and the economy will bounce back,’’ Fashola said.
Executive Order No. 007
The Apapa-Oshodi Expressway deal was made possible following the 10-page Executive Order No. 007 signed by the President on January 25, 2019.
It is known as the “Companies Income Tax (Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme) Order, 2019”.
It is described as a Public-Private Partnership intervention to enable the government to leverage private sector funding in a manner that creates value for money through private sector discipline.
The Order is accompanied by an 11-page Regulation made up of First Schedule on the Administration and Operation of the Scheme while the Second Schedule contains a sample MoU for eligible road projects.
The Scheme will be in force for 10 years from the date of commencement of the Order. Completion of each road project shall be between 12 to 48 months.
Benefits for firms
Participants in the Scheme shall be entitled to tax credits for the project cost incurred including a single uplift equivalent at the prevailing CBN monetary policy rate plus two per cent. The uplift shall not constitute taxable income in the hands of a participant or beneficiary. Costs incurred on roads under the scheme are not eligible for any other allowances or tax relief.
Eligible participants are companies or corporations established under any law in force in Nigeria. This includes a pool of companies operating through a Special Purpose Vehicle registered with the Securities and Exchange Commission as an infrastructure Fund and Institutional Investors such as Pension Fund Administrators.
The President explained it further during the signing of the order.
He said: “Through this scheme, companies that are willing and able to spend their own funds on constructing roads to their factories or farms, will recover their construction costs by paying reduced taxes, over a period of time.
11 states, 19 roads, 794.4 kilometres
The government identified 19 roads covering about 794.4 kilometres across 11 states, under the pilot phase of the scheme.
Aside from Dangote, firms that will partner the Federal Government on the scheme are Lafarge Africa, Unilever Nigeria, Flour Mills of Nigeria, Nigeria LNG, and China Road and Bridge Corporation.
The roads
Some of the projects to be handled under the scheme are the construction of Ashaka-Bajoga Highway in Gombe State; reconstruction of Dikwa-GambaruNgala Road in Borno State; reconstruction of Bama-Banki Road in Borno State; rehabilitation of Sharada Road in Kano State; rehabilitation of Nnamdi Azikiwe Expressway / Bypass, in Kaduna State; reconstruction of Birnin Gwari Expressway in Kaduna State; reconstruction of Birnin Gwari-Dansadau Road in Kaduna State; reconstruction of Makurdi-Yandev-Gboko Road in Benue State; reconstruction of Zone Roundabout-House of Assembly Road in Benue State; reconstruction of Obajana-Kabba Road in Kogi State; reconstruction of Ekuku-Idoma-Obehira Road in Kogi State; construction of AdaviEba-Ikuehi-Obeiba-Obokore Road in Kogi State; rehabilitation of Lokoja-Ganaja Road in Kogi State; Ofeme Community Road Network and Bridges in Abia State; rehabilitation of Obele-Ilaro-Papalanto-Shagamu Road in Ogun State; reconstruction of Sokoto Road in Ogun State; reconstruction of Apapa-Oshodi-Oworonshoki-Ojota Road in Lagos State; construction of Bodo-Bonny Road & Bridges across Opobo Channel in Rivers State, and the rehabilitation of Benin-Asaba Road in Edo State.
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