Aninvestor Manual FMW, Compendium Reportpdf

R O A D I N F R A S T R U C T U R E & R E L A T E D D E V E L O P M E N T
I N N I G E R I A - AN INVESTORS MANUAL
C o m p e n d i u m R e p o rt o n
Federal Ministry Of Works
Federal Ministry of Works
Headquarters, Mabushi,
FCT Abuja
Email: info@works.gov.ng
Website:www.works.gov.ng
This report was published by Pison Real Estateand I nfrastructureProfessional
Practice& Services: PI SON-REI PPS (an associateCompany of Pison Housing) for
theFederal Ministry of Works, Abuja, Nigeria.
Copyright 2013 by Pison HousingCompany
www.pisonhousing.com
All rights reserved, includingtheright toreproducethis book or portions thereof
in any form whatsoever
Designed by frost Media
Federal Ministry Of Works
i
Table of content
Honourable Ministers
Message
Picture Portico
Executive Summary
Introduction
Objectives of the Report
01
Overview of Nigeria
Overview of Road Infrastructure in Nigeria
Road Infrastructure Development in Nigeria
Overview of Selected Road Infrastructure Projects In
Nigeria
Conclusion
Reference
6.1. Demographics
6.2. Topography
6.3. Economic Review
7.1. Classification of Road Infrastructure in Nigeria
7.2. Ownership & Economic Service Structure
8.1. Strategy and Policy Initiatives
8.2. Road Infrastructure Finance Mechanism
9.1. In-depth Analysis of Selected Road Projects
9.2. Future Key Pipeline Road Infrastructure Project
also available for investments
9.3. Case Studies of Successful Road
Projects/ Program Funded by Alternative
Sources
01
02
02
07
03
09
04
11
05
13
06
19
07
24
08
55
09
121
10
123
11
Third Mainland Bridge, Lagos.
02
02
01
01
This CompendiumR e p o rt o n R o ad s I n frastru ctu re
an d R e late d D eve lo p m e n t in N ig e ria A n in ve sto rs'
Man u al is an insight into the development of the
road sector under the administration of President
GoodluckEbeleJ onathan,GCFR.
A careful study of this report highlights the
importance that the Federal Government attaches
to infrastructuredevelopment especiallytheroads.
Thisemphasisre-affirmsMr. President'sdeclaration
that, the transformation agenda in the road sector
seeksto deliver better and safer roadsto Nigerians,
as well as to link the six geo-political zones in the
countrywithdual carriageways.
In furtherance of the transformation agenda in the
road sector and in its urgent bid to meet the
yearnings of the public, the Federal Ministry of
Works has also embraced some institutional
reforms which will pave way for private sector
financing of road infrastructureinNigeria.
In order to achieve this aim, the Ministry has
embarked on the development of human capacity
to cater for this new trend of road infrastructure
development throughthePublicPrivatePartnership
(PPPs).Already,anumber of OutlineBusinessCases
(OBC) hasbeenprepared for candidateroadsunder
thisscheme.
c o m p e n d i u m re p o rt o n
R O A D I N F R A S T R U C T U R E & R E L A T E D D E V E L O P M E N T IN NIGERIA
Honourable Ministers
Message
Picture Portico
Honourable Ministers Message
Ahmadu BelloWay, Victoria I sland, Lagos All of these could not have been possible without
the management reforms in the Ministry. These
reforms at the inception of this administration in
2011, gave room for the creation of Six Zonal
directorates of Highway Construction and
Rehabilitation, and the restructuring of the former
Departments of Highway Planning and Designinto
six Departments at the Headquarters (Planning &
Development, Road Design, Bridge Design,
Materials; Geotechnics &Quality Control, PPP and
RSDT).
The Zonal Directorates are each headed by a
Director domiciled in the six zones and this has
helped in close grassroots supervision and
monitoring of projects.
The Federal Ministry of Works is also in close
collaborationwithmulti-lateral agenciessuchasthe
African Development Bank and World Bank in the
financing of therehabilitationof somecritical roads
acrossthecountry. Thereisno doubt that theroads
inNigeriaaregetting better and thehopes arestill
high.
I am therefore using this opportunity to call for
private investors' participation in the financing of
road infrastructureand development inNigeria.
A rc. Mike O . O n o le m e m e n . FNIA, FNIM
HonourableMinister of Works,
Federal Ministry of Works.
02
03
02
04
Carter Bridge, Lagos I sland.
Nigeria ranks tops compared with other countries in Sub-
Saharan Africa in terms of road network. The country has the
largest road network in West Africa and the second largest, south
of the Sahara with an estimated 200,000km of road network
connecting villages to cities, the distant with the near and the
inter-land with the urban market.
Picture Portico
02
05
02
06
Third Mainland Bridge, Lagos Rehabilitation work on Third Mainland Bridge
Picture Portico
02
08
03
07
In Nigeria, socio-economic development goes as far as road
infrastructure improvement can attain. This is simply because to
connect means to grow. In order to catalyze the present rate of
growth and development of the economy, the requisite road
infrastructure must be put in place. According to a report
(Reforming Road Transport in Nigeria, 2009), Nigeria ranks tops
compared with other countries in Sub-Saharan Africa in terms of
road network. The country has the largest road network in West
Africaand thesecond largest,southof theSaharawithanestimated
200,000km of road network connecting villages to cities, the
distant withthenear and theinter-land withtheurbanmarket.
Today,95%of bothpassenger and freight movementsareby road in
Nigerialargely dueto inadequacy of other forms of transportation
inthecountry. Thefederal roadsaccount for only about 17%of the
total national road network but accommodate more than 80%of
national vehicular and freight traffic bearing in mind a 2.533%
population growth rate per annum. In addition, new vehicle
importation in the country increased by 45%in 2011, and the first
half of 2012recorded anincreaseby 15%compared withthesame
period in2011. Apparently, Nigeriaisgetting morecarsontheroad
making reformationand maintenanceof theroadsvery essential.
All of these indices clearly justify the need to enhance road
infrastructure delivery to support this expanding populace.
However, thetask isenormousand requireshugeinvestment, for a
country of its size, an assessment of the current state of road
Executive Summary
3. Executive Summary
infrastructure is indicative of the fact that the country has fallen
short of international benchmarks.
Against this background, the Federal Government of Nigeria has
recognized the challenges and opportunities inherent within the
nation's road infrastructure sector. Moreso, the government of
Nigeria has also identified a workable approach to tackling the
challengesfacing thesector whileharnessing theeconomic gainsof
an enhanced road network. As a proactive approach, the Federal
Government has embarked onroad sector reforms whichbasically
seek to improve service delivery, enhance management capacity
and create a conducive institutional, legal and regulatory
framework through joint participation with the private sector in
financing and management of theroad sector. Also inaddition, the
government has beenableto secureconcessionloans frommulti-
lateral and bi-lateral agencies for road sector development. The
RSDT programisbeing funded by thesetypesof concessionloans.
Furthermore, it is the view of the government that with the
involvement of the private sector in the road sector, growth and
development will befacilitated.Typically,good roadsimply reduced
travel timeand vehicleoperating costs and providethenecessary
ingredient for development of other forms of transportation. In
addition, economic, commercial and business activities will also
thrive along these routes by virtue of increased traffic flow and
hence profitability. This is evident by the visible effect of road
infrastructure development on real estate property values. One of
the critical factors that determine the value of any real estate
property or itslocationaretheamenitiesavailableinproximity and
oneof suchamenitiesisprovisionof road infrastructure.
Essentially,thisreport wasgenerated to document thestateof road
InfrastructureinNigeriaand theinvestment potentials inNigeria's
road infrastructure sector. In addition, the report highlights the
existing opportunitiesthat theprivatesector investorscantakehold
of in partnering with the public sector. Both parties will partner,
through a Public Private partnership (PPP) structure, to provide
good roadsfor strategic routeswithvery highpotentialsasregards
returnonequity.
Whilethis report is intended to beaveritableadvocacy document
that will guide potential private sector investment, it would also
proveuseful to relevant stakeholdersinvolved inthedevelopment,
construction, maintenanceand management of road infrastructure
inNigeria.
Lafenwa Bridge, Ogun State
04
10
04
09
Introduction
4. INTRODUCTION
The total road network in Nigeria is estimated at 200,000kmand this
represents the principal means for freight and passenger movements
1
across thecountry. TheRoad transport assumed amoresignificant role
and most utilized modeof freight movement sincethecollapseof therail
systemin the 1970s/80s. Today, road transportation accounts for nearly
95%of all modes of transport and estimated N200b growing at 10%per
annumcompared withother developed economiessuchasSouthAfrica,
UK and US.
2
Transport is the cornerstone of civilization as it is an essential part of
human activity. As society and economic organizations become more
complex, the relevance of transport grows. Road transportation in
particular plays a significant role in the economic development of any
nation, reasonbeing that alargeproportionof itseconomicactivitiesare
largely dependent on an efficient network of roads. Indeed, no two
locations will interact effectively without a viable means of movement
fromonepoint to another.
3
A 2005 study by Willoughby underscored the correlation between
transport and economic development. The studies advocate that socio-
economic development can be catalyzed by the presence of
infrastructure. If thesefacilitiesand servicesareabsent, development will
beverydifficult and infact canbelikened to averyscarcecommoditythat
canonlybesecured at averyhighpriceand cost.
4
Moreso, according to study byCesar and Surhid, Road infrastructurehas
been identified to form a major factor for economic growth and
development of any country. In this study, an empirical approach was
employed to explore the association between road infrastructure and
economicdevelopment. Thestudyrevealed that thereareconsistent and
significant associations betweeneconomic development, interms of per
capitagross national product (GNP), and road infrastructure, interms of
per capita length of paved road network. Furthermore, the study also
showed that road condition seems to be associated with economic
development. Indeed, good infrastructureraises productivity and lowers
production costs. Thus, it is clear that infrastructural development is a
functionof economicdevelopment.
The Federal Government has therefore embarked on bold steps in the
rehabilitation, re-construction, construction and expansion of major
arterial highwaysinthecountry. Against thisbackdrop, therehavebeena
number of challenges confronting efforts of the government in the
delivery of improved road infrastructure. One of the major challenges is
attributableto thefunding gap inroad infrastructuredelivery.
Hitherto, thefinanceof road projects has beenthroughameagreannual
budgetary allocation which has proved inadequate to fund road
infrastructural development. On the average, the annual funding
requirement isestimated at NGN500bnover thenext tenyearsagainst an
averagebudgetaryallocationof NGN120bnwithashortfall of NGN380bn.
In 2012 alone, out of the NGN133bn budgetary allocation for road
infrastructuredevelopment onlyNGN102bnwasreleased withashortfall
of NGN21bn unimplemented. These shortfalls have proven to have dire
negativeconsequencesonthedevelopment of road infrastructure.
Furthermore, it has become imperative for the Federal Government to
sourcefor alternativemeansof funding inorder to achieveitsobjectiveof
keeping roads ingood conditionand planfor futuregrowth. TheFederal
35%
65%
30%
60%
United Kingdom
2 0 1 0
United States
2 0 0 7
South Africa Nigeria
13%
87%
5%
95%
figure 1: Road Transportation in Developed Countries
Source: Model by Pison Housing Company.
Roads Others
1
Profileof Road Sector Development Team(RSDT), Federal Ministry of Works
2
Nigeria's Transport Infrastructural Development: AnIntegral Part of theNational Economic Empowerment &Development Strategy
3
Willoughby, 2004a; and World Bank, 2005
4
Cesar and Surhid, 1992World BankStudy
figure 2: Length of Road in Selected Countries
Source: Federal Ministry of Works.
0
1
0
0
0
0
0
0
2
0
0
0
0
0
0
3
0
0
0
0
0
0
4
0
0
0
0
0
0
5
0
0
0
0
0
0
6
0
0
0
0
0
0
7
0
0
0
0
0
0
Turkey
352,046
India
4,109,593
United States
6,506,204
Nigeria
200,000
South Africa
362,099
Brazil
1,751,868
China
3,806,800
Country
Length of Roasd (KM)
05
12
04
11
Introduction Objectives of the
Report
Government throughtheMinistryof worksispresentlyworking to reduce
dependenceonPublic financeby facilitating privatesector participation
as well as encouraging funding by multi-lateral Agencies on road
development.
The connection between good roads and economic development has
beenestablished, it is clear that infrastructuredevelopment plays avital
roleintheeconomicwell-being of anynation. Putting thestatisticsunder
perspective,it hasshownthat Nigeriastill hasahugetaskahead.Thetotal
road networkinNigeriacurrentlyestimated at 200,000kmremainsto be
improved in order to bring them to sync with road infrastructure
development in other thriving economies such as USA, China, Brazil,
Turkey, Indiaand South-Africa. Thecomparativeanalysisasshownbythe
figure 2 will provide a clearer view of enormity of the challenge facing
economicdevelopment of thenation.
It isagainst thisbackground that thisreport aimsto document thestateof
road InfrastructureinNigeriaand theinvestment potentialsfor investing
in Nigeria's road infrastructure. While it is intended to be a veritable
advocacy document that is envisaged to guide potential private sector
investors inmaking appropriateinformed investment decisions. It would
also proveuseful for relevant stakeholders involved inthedevelopment,
construction, maintenance and management of road infrastructure in
Nigeria.
3. OBJ ECTIVES OF THE REPORT
Nigeria is an emerging economy with exploding road
infrastructurerequirement.Typically,thereisagrowing funding
gap betweenpublicspending onroad infrastructureand capital
needed to build new roads infrastructure, upgrade and
maintainexisting ones.
Theprojected estimateof funding requirementsof about NGN
500bnontheaverageannuallymust bespent over thenext ten
years to fix, build and reconstruct Nigeria's ailing roads and
bring themto sync with road infrastructure development in
other thriving nations. Hence the need for the Federal
Government of Nigeriato turnto privateinvestorsto sharethe
costs, risks, rewards of building, financing, constructing and
operating infrastructure.
The principal objective which this report aims to achieve is to
showcase to the prospective investors the investment
opportunities which exist within the road infrastructure and
related development.
Carter Bridge, Lagos.
On the average, the annual funding requirement is
estimated at NGN500bn over the next ten years against
an average budgetary allocation of NGN120bn with a
shortfall of NGN380bn. I n 2012 alone, out of the
NGN133bn budgetary allocation for road infrastructure
development only NGN102bn was released with a
shortfall of NGN21bn unimplemented.
On the average, the annual funding requirement is
estimated at NGN500bn over the next ten years against
an average budgetary allocation of NGN120bn with a
shortfall of NGN380bn. I n 2012 alone, out of the
NGN133bn budgetary allocation for road infrastructure
development only NGN102bn was released with a
shortfall of NGN21bn unimplemented.
Others
Tiv
Ijaw
Kanuri
Ibibio
Igbo
Yoruba
Hausa and Fulani
06
14
06
13
Overview of Nigeria
6. Overview Of Nigeria
Nigeria is a country blessed with the perfect combination of abundant
humanand natural resourcesand should earnitsrightful positionamong
thetop 20 economiesof theworld inlessthansevenyears,thetimelag for
thevision20:20:2020 agenda.
Nigeria operates a federal systemof administration comprising of 36
States and aFederal Capital Territory, 774 Local Government Areas. The
Capital city is Abuja and the largest state in terms of population, also
referred to asthecommercial capital of thenationisLagosstatewithan
estimated 17million.
6.1Demographics
Nigeria, Africa's most populous country, is composed of morethan250
ethnic groups. Thefigure3shows themost populous and politically
influential:
Languages:
English (official), Hausa, Yoruba, Igbo (Ibo), Fulani, over 500 additional
indigenouslanguages
Population:
th
The Federal Republic of Nigeria is ranked as the 14 largest country in
th
Africaand the40 intheworld. Nigeriais themost populous country in
5
Africa with an estimated population of 167million growing at a rate of
3.2%whichaccountsfor approximatelyonesixthof Africanpopulation(or
one fifth of Sub-Saharan African population) and 2.36%percent of the
world population
figure 3: Most Populous Ethnic Groups in Nigeria
Source: www.indexmundi.com
5
http://en.wikipedia.org/wiki/List_of_countries_by_population
Age Structure:
Themedianagestructureisfound
AgeStructure Percentageof the
Population (%)
Male Female
0-14 years 43.9 38,232,053 36,483,243
15-64 years 53.1 44,862,457 45,484,314
65 years and over 3.0 2,325,682 2,735,991
Table 1: Nigerian Population AgeStructure
Source: CI A World Fact book 2012 estimates
Median Age
Male
17.5
Female
18.4
Total (Male+Female)
17.9
Source: CI A World Fact book 2012
estimates
50%
Of Total Population(2010)
3.5%
URBAN POPULATION RATE OF URBANIZATION
3.5%Annual Rateof Change(2010-15est.)
Urbanization
21%
3.5%
29%
18%
6%
10%
2.5%
10%
16 15
Overview of Nigeria
6.2
Nigeria, thelargest countryinWest Africahasageographical coordinates
6
of 10 00 N, 8 00 E and is strategically located at the centre of
opportunities of the world. The country shares boundaries with five
different countries,theRepublicof Benininthewest,Chad and Cameroon
intheeast, and Niger inthenorthand itscoast inthesouthlieontheGulf
nd
of Guinea on the Atlantic Ocean. Nigeria ranks 32 by its total area of
923,768kmcomprising 910,768kmof landmassdelimited byinternational
boundaries and/or coastlines, excluding inland water bodies (lakes,
reservoirs,rivers) and 13,000kmof water including all inland water bodies,
such as lakes, reservoirs, or rivers, as delimited by international
boundariesand/or coastlinesaccounting for 1.4%of total area.
Nigeria'sclimateconditionsvaryfromoneregionto another. Theclimate
isequatorial insouth, tropical incenter, arid innorth. Moreso, theterrain
also vary from the southern lowlands merging into central hills and
plateaus;mountainsinsoutheast,plainsinnorthernregion.
Thecountryisblessed withabundant mineral resourcesincluding 33solid
7
minerals in commercial quantity in 450 locations across the country
Nigeriaisoneof thelargest exportersof crudeoil and natural gasand has
thebiggest cement plant intheworld.
6.3
Nigeriahasaneconomicgrowthrateof about eight percent per annum, a
8
robust GDP growthrateof about 12percent isanticipated inthenext five
years translating to anominal GDP of about USD500bn. Nigeria's vision
Topography
Nigerias Economic Outlook
6
CIA World Fact Book
7
ThePunch, 2011
8
KeynoteAddress by HonourableMinister during US-NigeriaInfrastructureConferenceOct 2012.
9
Stanbic IBTCAsset Management Limited Quarterly Economic ReviewQ4:2012
figure 4: Population Pyramid
Source: CI A World Fact book 2012 estimates
20:2020 aspiration to achieve a GDP of USD900bn by the year 2020 is
predicated onimproved overall sectoral performance, oneof whichisthe
road sector.
9
According to afourthQuarter 2012report ,theeconomicoutlookisstable
as S&P raised its long-termforeign and local currency sovereign credit
ratingsof Nigeriato 'BB-'from'B+', just 3pointsbelow investment grade,
Moreso, Moody's expanded its coverage to include Nigeria, assigning a
'Ba3' rating and Fitch Ratings affirmed Nigeria's Long-termforeign and
local currencyIssuer Default Ratings(IDR) of 'BB-'and 'BB' respectively.
Themainfactorsresponsiblefor theimproved rating includetighter fiscal
policy stance, improved infrastructural development, and growing
external reserves. However, there are rising concerns over the security
challengesof somepartsof thecountry,weakgovernance,relativelypoor
business climate and sticky inflation. The government of the present
administration is committed to overcoming these challenges in a bid to
making thecountrythenext investment destinationintheworld.
Thereport went further to statethat theeconomywhenmeasured bythe
Real GrossDomesticProduct (GDP) grew by6.48%inthethird quarter of
2012 as against 7.37%in the corresponding quarter of 2011.The lower
growthcanbeattributed to theimpact of flooding insomeparts of the
country which reduced the country's agricultural output given that
Agricultureisover 40%of theGDP.
This led to a rise in food prices which increased inflationary pressures.
Consequently inflation spiked to 12.30%in November from 11.70%in
October and 11.30%inSeptember.
However, the external reserve appreciated by 7.26%to close the year at
06 06
100+
95 - 99
90 - 94
85 - 89
80 - 84
75 - 79
70 - 74
65 - 69
60 - 64
55 - 59
50 - 54
45 - 49
40 - 44
35 - 39
30 - 34
25 - 29
20 - 24
15 - 19
10 - 14
5 - 9
0 - 4
Nigeria - 2012 Female Male
15 12 9 6 3 0
AgeGroup Population (in millions)
0 3 6 9 12 15
Population (in millions)
18 17
Overview of Nigeria 10
Vision20:2020 and theChallenges of Infrastructural Development inNigeria, Mobolaji Olaseni and WaleAladeFeb 1, 2012.
0 50 100 150 200 250
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003 59.121
67.66
87.85
112.25
146.867
165.92
207.12
186.567
193.668
235.92
Y
e
a
r
US$ Billions
figure 5: Nigeria's Annual GDP Values
Source: www.tradingeconomics.com
$44.178billionlargelyasaresult of increased foreignportfolio inflowsand
highoil prices. Consequently, theNairaappreciated slightly by 0.59%to
closetheyear at $155.77astheCentral Bankof Nigeriasold N3.12billionin
Q4 2012compared to N5.34 billioninQ32012at theWeeklyDutchAuction
System.
The National Assembly formally passed a budget of N4.987 trillion for
2013on20 December 2012, compared to N4.75trillionapproved for 2012.
Themainhighlightsincludeacrudeoil
budget benchmark of $79 up from$72 per barrel, a reduction in the
nation'sbudget deficit to 2.17%from2.85%and recurrent expenditurewas
slashed by over N50 billion to N2.38 trillion, while capital project
allocationswasincreased to N1.62trillionfromN1.34 trillionin2012.
Following themodest improvement in infrastructural development such
as road, power generation, key reforms in the agriculture sector and
expectationsof thepassageof thePetroleumIndustryBill (PIB) in2013,
the economy is expected to grow even further compared to 6.77%
recorded last year.
During last year,therewasageneral improvement ininvestors' confidence
dueto thereformsand initiativessuchasincreased oversight oncorporate
governance, introduction of market making and improvements in
Nigeria'smacroeconomicenvironment.
The economic profile of Nigeria shows that the country's economic
potential is very great. The trends in GDP growth rate and recurrent
expenditureaspercentageof GDP arepresented infigure5.
10
According to a publication release in 2012, Nigeria's most GDP annual
growthrateof 7.1%ismorethantheannual populationgrowthrateof 3.2%.
However, this impressive economic growth has been weakened by the
high figure of poverty of 54.4%. Among the top 60 countries, Nigeria's
poverty figure is the second highest, with Columbia's of 64%being the
worst.
Indeed, manyof thecountrieslikelyto contend withNigeriato beamong
thetop 20 currently havelower poverty figures, hence, Nigerianeeds to
attainannual GDP growthinexcessof 10%per annumand striveto catch-
up and overtakesomeof thecountriesinthetop 20 largest economiesby
20:2020. Thiscanbeachieved withprudent and efficient management of
her resources.
06 06
Abakiliki-AfikpoRoad, Ebonyi State.
I ndeed, many of the countries likely to contend with
Nigeria to be among the top 20 currently have lower
poverty figures, hence, Nigeria needs to attain annual
GDP growth in excess of 10% per annum and strive to
catch-up and overtake some of the countries in the top 20
largest economies by 20:2020. This can be achieved with
prudent and efficient management of her resources.
I ndeed, many of the countries likely to contend with
Nigeria to be among the top 20 currently have lower
poverty figures, hence, Nigeria needs to attain annual
GDP growth in excess of 10% per annum and strive to
catch-up and overtake some of the countries in the top 20
largest economies by 20:2020. This can be achieved with
prudent and efficient management of her resources.
Local
State
Federal
07
20
07
19
Overview of Road Infrastructure in Nigeria
7. Overview Of Road Infrastructure In Nigeria
7.1Classification Of Roads In Nigeria
TheNigerianroad network fromthecolonial days to thepresent day, havebeenclassified into threenamely Trunk A, B &C.
Theseroadsformstheskeletonof thenational road grid. They cut acrossregional boundariesinthecountry and evenextend to
the international borders of neighbouring West African countries. These categories of roads are under Federal Governments
ownership. They aredesigned, constructed, maintained and financed by theFederal government throughtheFederal Ministry of
Works. TheFederal Road MaintenanceAgency (FERMA) isinchargeof carrying out maintenanceof thisclassof roads.
These roads are local feeder roads constructed and maintained by the Works Department of Local Government Authorities in
Nigeria. This class of roads are primarily not concrete asphalted and araffected by seasonal weather changes. The roads link
villagesand communitiesintheremotepartsof eachlocal government region.
Theseroads arethesecond category of mainroads inNigeria. They link themajor cities withinStates withtheStatecapitals.
These roads are designed, developed, financed and maintained by the State governments through their Ministries of Works,
Transport or Infrastructure. The primary objectives of Trunk B roads are to enhance the socio-economic development of the
variousStatesinthecountry.
figure 6: Classification of Nigeria's Roads
Source: Stateof I nfrastructureReport on Nigerian Highways by MCS Consulting, et al, December 2011.
A
B
C
7.2
Thetotal national road networkisapproximately200,000kmmadeup of
33,000km, 50,000km and 117,000km for Federal, State and Local
Government respectively depicted by the chart below. Only about
65,000km of the 200,000km are paved mostly in bituminous layers
others areearthroads. Out of this, theFederal Government owns about
35,000kmrepresenting 54%of the entire bituminous road network in
Nigeria. The balance is shared between the 36 States and the 774 Local
Government Areas.
Ownership And Economic Service Structure
According to the Constitution of the Federal Republic of Nigeria, the
different tiers of government have independent responsibilities for the
planning, financing, constructing and maintenanceof theroadsunder its
figure 7: Ownership & Economic ServiceStructure
Source: Pison HousingCompany/US-Africa I nfrastructureConference
Presentation, J une2012.
respectivejurisdictions.
Most of thefreight and passenger movement inthecountryareconveyed
by road. The diagram below provides a comparative analysis of the
number of vehiclesover threedecades
1983 150,226
4 8 6 10
EventhoughFederal roadsconstituteonly17%of thetotal national stock,
they carry more than 80% of the National vehicular traffic, thus
underscoring their crucial importanceto theeconomyof thecountry. The
Federal roads have been subjected to severe pressure as a result of
increased vehicular traffic as well as freight especially given the near
absence of rail, marine and other forms of transport to convey heavy
goods.
figure 8: Annual Vehicular Traffic
Source: Federal Ministry of Works
0 2
2012
2000
Y
e
a
r
9,000,000
1,300,000
Number of Vehicles (Millions)
70%
20%
10% 17%
16%
67%
Ownership EconomicService
21 22
07 07
Vom-Manchok Road, Plateau State.
Even though Federal roads constitute only 17% of the
total national stock, they carry more than 80% of the
National vehicular traffic, thus underscoring their crucial
importance to the economy of the country. The Federal
roads have been subjected to severe pressure as a result of
increased vehicular traffic as well as freight especially
given the near absence of rail, marine and other forms of
transport to convey heavy goods.
Even though Federal roads constitute only 17% of the
total national stock, they carry more than 80% of the
National vehicular traffic, thus underscoring their crucial
importance to the economy of the country. The Federal
roads have been subjected to severe pressure as a result of
increased vehicular traffic as well as freight especially
given the near absence of rail, marine and other forms of
transport to convey heavy goods.
08
24
08
23
8. Road Infrastructure Development In Nigeria
The Federal Ministry of Works is charged with the responsibility of
developing theNation'sFederal Highwayinfrastructure.TheMinistryhasa
critical role to play in the Transformation Agenda of the present
administration. TheMinistryhasidentified road infrastructurenot onlyas
critical in the socio-economic development of the country but also a
crucial and pivotal resource required to fast track the development of
other modesof transportation.
To this end, thefederal ministry of works has afour-fold mandatewhich
includes thefollowing;
i. Planning, construction, rehabilitation and maintenance of Federal
Roads;
ii. Planning, construction, rehabilitation and maintenance of bridges
along Federal Highways;
iii. Provisionof facilities suchas street lights, road signs and markings
onFederal Roads;and
iv. Providing professional servicesto other MDAs.
In discharging its responsibilities, the ministry has a single line of
command fromtheHonourableMinister to theMinister of Statethrough
thePermanent Secretaryto theDepartmentsand Unitsand viceversa.
To re-invigorateand makethemanagement of thenation'sroad network
and on-going projects more effective, the existing two operational
departments were re-structured as shown in figure 9. In addition, the
ministryisalso charged withtheresponsibilityof supervising theFederal
Roads Maintenance Agency (FERMA) and the Office of the Surveyor-
General of theFederation(OSGOF).
In further campaign for road infrastructure development, the Federal
Government of Nigeria through the then Federal Ministry of Transport
instituted aroad reformprocesstermed asRoad Vision2000 (RV 2000)
in J une 1996. The Government-led RV2000 laid the foundation for the
creationof aNational Roads Board and aRoad Fund withamandateto
establish a stable and sustainable basis for road infrastructure
development and legal framework for private participation in
management and financing of Road projects.
The Federal Government through the Ministry of Works, with the
assistanceof World Bank, further advanced theRV2000 programto the
establishment of aRoad Sector Development and MaintenanceProgram
(RSDMP) in2004.To coordinatetheprogram,theRSDMP wasestablished
asaten(10)-year prioritized programto beimplemented byaRoad Sector
Development Team(RSDT).
TheRSDT isaself-accounting,performance-based semi-autonomousunit
withintheinstitutional frameworkof theFederal Ministryof Works.
Advancing towardsaself-governing Federal HighwayAuthority,RSDT has
amandateto initiallymanagetheimplementationof RSDMP onbehalf of
theFederal Ministryof worksover a10-year period withtheassistanceof a
USD330million credit fromthe International Development Association -
IDA (i.e. World Bank - WB), and a USD162million loan fromthe African
Development Bank(AfDB) etc.
Thefirst phaseof theimplementationprocess of theRSDMP comprised
the creation of the Federal Road Development Program (FRDP). The
FRDP isamajor investment inimproving road infrastructureinNigeria.
RaceCourseBus Terminal, Lagos.
Advancing towards a self-governing Federal Highway
Authority, RSDT has a mandate to initially manage the
implementation of RSDMP on behalf of the Federal
Ministry of works over a 10-year period with the
assistance of a USD330million credit from the
I nternational Development Association - I DA (i.e. World
Bank - WB), and a USD162million loan from the African
Development Bank (AfDB)...
Advancing towards a self-governing Federal Highway
Authority, RSDT has a mandate to initially manage the
implementation of RSDMP on behalf of the Federal
Ministry of works over a 10-year period with the
assistance of a USD330million credit from the
I nternational Development Association - I DA (i.e. World
Bank - WB), and a USD162million loan from the African
Development Bank (AfDB)...
HonourableMinister
Permanent Secretary
HonourableMinister Of State
UNITS- (Press, Internal Audit, Protocol, Reforms/Servicom, StoreVerification)
Director, Legal Services
HPDDEPT.
HBDDEPT.
HRDDEPT.
HGT DEPT.
HZODEPT. RSDT
HRMDEPT.
F&A DEPT.
PRSDEPT.
PROCDEPT.
EMSDEPT. HPPP DEPT. CWE DEPT.
EELSDEPT.
Director, Perm. Sec. Office
FERMA
OSGOF
HPD Highways Planning &Development;
HBD Highways BridgeDesign;
HRD Highways Roads Design;
M,GT&QC Material, Geo-Technics and Quality Control;
HPPP Highways Public PrivatePartnership;
HRSDT Highways Roads Sector Development Team;
HZO Highway Zonal Operations
HSW Highways SouthWest;
HSS Highways SouthSouth;
HNW Highways NorthWest;
HNE Highways NorthEast;
HSE Highways SouthEast)
HRM HumanResourceManagement;
HRM Highways NorthCentral;
F&A Finance&Accounts ;
PRS Planning Research&Statistics;
PP Public Procurement;
EMS Engineering Management Services;
K E Y D E F I N I T I O N S
08
26
08
25
ESLS Electrical Street Lighting Services;
CWE - Central Workshop & Equipment
FERMA Federal Road MaintenanceAgency;
OSGOF Officeof Surveyor General of the
Federation
To re-invigorate and make the management of
the nation's road network and on-going projects
more effective, the existing two operational
departments were re-structured as shown in
the diagram.
Third Mainland Bridge, Lagos
Figure 9: Min istry o f Wo rks O rg an izatio n al S tru ctu re.
28 27
Road Infrastructure Development in Nigeria 08 08
Kano- Maiduguri Dual Carriageway Theprincipal objectiveof theproject isthefollowing;
i. To reduceroad transport costsalong theroad linkssupported bythe
project.
ii. To introduce total asset management method for delivery and
management of Federal roadsalso referred to asunityroads.
iii. To planand facilitatesustainablefinancing arrangement for theroad
sector.
The Federal Road Development Program(FRDP) comprise of three (3)
componentsnamely;
i. Rehabilitation,upgrading and maintenanceof Federal Roads
ii. Institutional Strengthening and PolicyReforms
iii. Road safetyComponents.
figure 10: Road Sector ProgramTransitions
Model: Pison HousingCompany.
Source: Federal Ministry of Works, Abuja.
RV2000
FEDERAL MINISTRY OF WORKS
RSDMP
RSDT
FRDP
RSDT
As a proactive approach, the ministry developed
laudable policies to reaffirm its commitment towards
elevating Nigeria's road infrastructure to a standard that
will contribute immensely to rapid growth and
development of the economy.
As a proactive approach, the ministry developed
laudable policies to reaffirm its commitment towards
elevating Nigeria's road infrastructure to a standard that
will contribute immensely to rapid growth and
development of the economy.
30 29
CMS - Victoria I sland Link Road, Lagos.
08 08 11
Federal Ministry of Works Brief
Strategic Highway
Investment for
Transformation
(SHIF)
OperationSafe
PassageProgrammeto
amelioratetheeffects of
therecent flooding of
Federal highways
nationwide
Restructuring of three
existing depts. to
fourteennewdepts.
Approved theuseof
bitumenemulsiononall
road projects inline
withtheKyoto Protocol
to discourages
emission
Draft Bills for the
Establishment of the
Road Fund and the
Federal Roads
Authority
Recruitment and
documentationof 455
engineers and
technical officers
Approachto Road
Development (BOLD)
P O L I C Y
I N I T I AT I VE S
8.1
On assumption of Office, the Honourable Minister of Works, Arc. Mike
Onolememenidentified onlyameager 30%of theFederal road networkto
be in fairly good condition while 70%remained in deplorable state and
required immediate maintenance, rehabilitation, reconstruction and
expansionefforts. Inaddition, thepresent administrationalso released a
11
report that states an inheritance a total of 160 on-going projects at
variousstagesof completionwithatotal contract sumworthNGN960bn.
Furthermore, the road sector faced with other constraints such as
institutional and management problems had only two Highway
Departments responsible for management of the entire Federal road
network in the nation. As a proactive approach, the ministry developed
laudablepolicies to reaffirmits commitment towards elevating Nigeria's
road infrastructureto astandard that will contributeimmensely to rapid
growthand development of theeconomy.
In order to deliver the transformational agenda of the current
administrationintheroad sector, somepolicyinitiativeswereintroduced
into the framework to guide the administration of road infrastructure
development;
Further to thefigure11, thefollowing highlightsonlyanoverview of some
critical policiesnewlyintroduced into theroad sector development.These
policies are beginning to record tremendous success in the delivery of
road infrastructureinNigeria.
Strategy and Policy Initiatives
figure 11: Policy I nitiatives by Federal Ministry of Works.
Source: Pison HousingCompany.
32 31
Institutional
Structure
Mechanismfor
Financing Roads
Ownership from
Public to Private
throughPPP
Construction
Methodologies
Road Mainte
nance(FERMA)
Approach
to Road
Development
S H I F T
Collaboration
withDevt
&Multilateral
Agencies
(RSDT)
figure 12: Shift Paradigmby
Source: Pison HousingCompany
Federal Ministry of Works
1. The Ministry adopted a new paradigm described as Strategic
Highway Investment for Transformation (SHIFT). SHIFT was
developed asanew planto encouragepublic-privatepartnership in
GREENFIELD projects. The SHIFT paradigmcan be broken-down
to thefollowing componentsasdepicted inthediagrambelow;
2. TheMinistry adopted aBOLDapproachinthedevelopment
and improvement of thenation'sFederal Roadsnetwork.The
BOLDApproach, also animportant component of theSHIFT
paradigminvolvethefollowing:
Funding road infrastructure projects remains a major
constraint in the delivery of efficient road networks across
the country. Until recently, funding has been through
budgetary provisions. This method has proven to be
inadequate and most often unimplemented creating a
funding gap for execution of road projects.
Highway in Abuja
Funding road infrastructure projects remains a major
constraint in the delivery of efficient road networks across
the country. Until recently, funding has been through
budgetary provisions. This method has proven to be
inadequate and most often unimplemented creating a
funding gap for execution of road projects.
34 33
figure 13: BOLDApproach
Source: Pison HousingCompany
H o listic I m p ro ve m e n t &
E xp an sio n o f E xistin g
e co n o m ic ro u te s
Massive in te rve n tio n o n
faile d fe d e ral ro ad s acro ss
th e co u n try
Massive I n te g rity
asse ssm e n ts an d re p airs
o f b rid g e s/g u ard rails
S trate g ic I n cre ase o f
F e d e ral R o ad s N e two rk
BOLD
8.2
Funding road infrastructure projects remains a major constraint in the
deliveryof efficient and improved road networksacrossthecountry. Until
recently, the funding of road projects has been through the budgetary
provisions and executed by traditional method of direct contract award.
Thismethod hasprovento beinadequateand most oftenunimplemented
creating afunding gap for executionof road projects.
Onanaverage, theannual funding requirement isestimated at NGN500b
against an average budgetary allocation of NGN120bn with a deficit of
NGN380bn. In2012, out of theNGN143bnbudgetary allocationfor road
infrastructure development only NGN110bn was released with deficit of
NGN33bnunimplemented.
Road Infrastructure Finance Mechanism.
23%
77%
12
Against thisbackground,reports havefurther shownthat Nigeriahasthe
second highest road traffic accident fatalitiesamong 193countriesinthe
world. Thedataavailableshowsthat Nigeriarecords152deathsfor every
100,000 people, making road accidents the third highest killer in the
country. Thedatafurther revealsthat eightyper cent of injuriesinNigeria
aretrafficaccident related.Inthefirst half of 2012,theFederal Road Safety
13
Commissionput statisticsfor accidentsat 1,936fatalities and substantial
part of it isattributableto thepoor stateof our roads.
Furthermore, figure 15 shows the impact of decayed roads on the
economyof thenation.Nigeria'seconomylooseswhooping of NGN175bn
to deplorableroad conditionsacrossthecountry.
Deficit
Amount Released
figure 14 : Road Sector Budget
Abuja
Thedeficit isevident to havenegativeconsequencesonthedevelopment
of road infrastructureundermining national economicgrowthand causing
lossof livesand propertiesacrossthecountry.
12
AkintolaK., (2012)
13
OvuakporieE., (2012)
Marina Road, Lagos.
36 35
I.
PPP or Public-PrivatePartnership or P3describesagovernment serviceor
private business venture which is funded and operated through a
partnership of government and one or more private sector companies
(Obozuwa, 2011). Typically, oneor moreprivatesector companiesforma
consortiumand aregenerallydescribed asSpecial PurposeVehicle. The
consortiummay mainly consist of a project sponsor, Bank lender etc.
Moreso, theconsortiumwill bedeveloped inamanner as to account for
thetechnical, financial, legal, environmental and social aspectsof thePPP
transaction.
Considering the vast funding gap confronting the drive to deliver
necessary road infrastructure development which is the primary
ingredient for economicdevelopment,theGovernment isunableto meet
Conventional PPP finance for Road
Infrastructure.
14
Federal Ministry of Works, Abuja
C O N S E Q U E N C E S O F R O A D N E T WO R K S D E C AY
N88b loss dueto increased Vehicle Operating Costs
12b loss dueto delayed turn-around and increased
travel time
N75b loss dueto reductioninasset value
Total annual loss to theeconomy approx. N175billion.
Based onthediagramabove,onaccount of onlythreeroad usage-related
factors under consideration, the total annual loss to the economy is
figure 15: Consequenceof Road Network Decay
Source: Roads Vision 2000- Theloss calculated at 2.5%of GDP
Government has taken bold steps to embark upon
Public-Private Partnership initiatives geared towards
tackling the current and impending challenges facing the
development of the road infrastructure in the country.
I n order to demonstrate its commitment towards this
objective, the federal Government of Nigeria has further
established the I nfrastructure Concession Regulatory
Commission (I CRC) through the I CRC Act of 2005.
The I CRC is the agency of the Federal Government of
Nigeria responsible for catalyzing public private
partnerships for the development and implementation of
a world class PPP framework towards the development of
a world class Brown-field and Green-field infrastructure
projects for the benefit of Nigerians and the Nigerian
Economy.
38 37
up withthefinancial requirementsof road infrastructuredevelopment. In
this regard, Government has taken bold steps to embark upon Public-
Private Partnership initiatives geared towards tackling the current and
impending challenges facing thedevelopment of theroad infrastructure
inthecountry.
In order to demonstrate its commitment towards this objective, the
federal Government of Nigeriahas further established theInfrastructure
ConcessionRegulatoryCommission(ICRC) throughtheICRCAct of 2005.
TheICRCistheagencyof theFederal Government of Nigeriaresponsible
for catalyzing public private partnerships for the development and
implementationof aworld classPPP frameworktowardsthedevelopment
of aworld classBrown-field and Green-field infrastructureprojectsfor the
benefit of Nigeriansand theNigerianEconomy.
TheICRCwasenacted to serveasaregulatoryand monitoring institution
to provide an enabling environment for private sector players to
participateintheprovisionof infrastructurewhileministries,departments
and agencies concentrateattentiontowards planning and structuring of
projects.However theICRCisnot involved inthefollowing;
- Project Initiation&Approval
- DetermineOutput Requirements
- Contracting Authority
ICRCBOARD
DIRECTOR
GENERAL
MIXEDPUBLIC-
PRIVATE SECTOR
BOARDCOMMITTE
CONTRACT COMPLAINCE
CENTRE (PPP CONTRACT
COMPLIANCE)
PPP RESOURCE CENTRE
(PPP PROJ ECT DEVT.)
SUPPORT
SERVICES
PPP RESOURCE CENTRE
(PPP PROJ ECT DEVT.)
CONTRACT COMPLIANCE
CENTRE (PPP CONTRACT
COMPLIANCE)
Source: www.icrc.gov.ng
figure 16 : I CRC Values
The following provides a summary of the role of ICRC in PPP
arrangements.
- TheICRCand itsgoverning board will regulate, monitor and supervise
theconcessionand development projectsand ensurethat thetransfer
G o ve rn an ce S tru ctu re o f th e I C R C
Theorganogrambelow depicts thestructureof thecommission;
of responsibilityto privatesector followsbest practiceand isachieved
throughtransparent and opencompetition.
- The ICRC is responsible for establishing guidelines to promote,
facilitateand ensuretheimplementationof Public-PrivatePartnership
projects in Nigeria with the objective of achieving better value for
money(VFM) and risksharing betweenparties.
- ICRC empowered through the ICRC act 2005 seeks to provide the
participation of the private sector in financing, construction,
development, operation and maintenance of Federal Government
infrastructure or development project through concession and
contractual arrangements.
I C R C P rin cip le s A n d Valu e
The Key Principles and values being driven by ICRC for any PPP
arrangement aredepicted bythediagrambelow;
figure 17: I CRC Values
Source: www.icrc.gov.ng
Model: Pison Housing.
Valuefor
Money
Public Interest
Capacity to
Deliver
Competition
Output
Requirements
Risk
Allocation
Transparency
I C R C
40 39
Mo d e ls o f P rivate -P u b lic P artn e rsh ip
Thefollowing arethemodels availablefor PPP transactions inNigeria. Thesemodels havebeendeveloped using simpleterms to
provideclarity;
s/n PPP Model Description
Table 2: PPP Models Source: Obuzuwa, D. (2011).
Theprivatesector designs and builds infrastructuretomeet public sector performancespecifications, often for a
fixed price. Thecost of overruns is transferred totheprivatesector.
A privateoperator, under contract, operates a publicly owned asset for a specified period. Ownership of theasset
remains with thepublic entity.
A privateentity contracts tomanagea Government owned entity and manages themarketingand provision of a
service.
A privateoperator contracts toleaseand assumeall management and operation of Government owned facility and
associated services, and may invest further in developingtheserviceand providetheservicefor a fixed term.
Theprivatesector designs financeand constructs a new facility under a longtermleaseand operates thefacility
duringthetermof thelease. Theprivatepartner transfers thenew facility tothepublic sector at theend of the
leaseterm.
A privateentity receives a franchisetofinance, design, build and operatea facility (and tochargeuser fees) for a
specified period, after which ownership is transferred back tothepublic sector.
Thetransfer of a public asset toprivateor quasi-public entity usually under contract that theassets aretobe
upgraded and operated for a specified period of time. Public control is exercised through thecontract at thetimeof
transfer.
Theprivatesector finances, builds, owns and operates a facility or servicein perpetuity. Thepublic constraints are
stated in theoriginal agreement and through on-goingregulatory obligations.
This is an extended version of theBOT model wheretheprivatesector builds, owns and operates a facility for a
specified period as agreed in thecontract and then transfers tothepublic.
A privatesector receives a licenseor rights tobuild and operatea public service, usually for a specified period.
Similar toBBO arrangement.
A privateentity, usually a financial services company, funds a project directly or uses a mechanismsuch as long-
termleaseor bond issue.
Design-Build (DB) or
Turnkey Contract
ServiceProvision
Contract
Management Contract:
Leaseand Operate
Contract:
Design-Build-Operate-
Finance(DBFO):
Build-Operate-Transfer
(BOT):
Buy-Build-Operate
(BBO):
Build-Own-Operate
(BOO):
Build-Own-Operate-
Transfer (BOOT)
OperatingLicense
FinanceOnly
1
2
3
4
5
6
7
8
9
10
11
08
Abuja - Zuba Road
Preliminary Phase
Development Phase
Needs Analysis
PPP Options Appraisal
ValueFor Money
Affordability
Sustainability
PrelimRisk Matrix
Viability/bankability
VGF
OBC
OBC Approval By FEC
TransactionAdviser
EoI/RFQ PhaseAnd
RFP
Bidding
Bidders Conference
Bid Evaluation
ValueFor Money Test
Preferred Bidder
Full Business Case
FEC Approval
Technical Adviser
Monitor Design&
Construction
Commissioning Test
Verify Output
Requirements
Contract Management
Procurement Phase ImplementationPhase
Project Indentification
Project Prioritization
Project Selection
Preparing and Implementationof ViablePPP Transaction
42 41
Road Infrastructure Development in Nigeria Road Infrastructure Development in Nigeria
P P P L ife C ycle
Figure 18: PPP LifeCycle
Model: Pison HousingCompany.
PPP Transactionsinvolvethefollowing;
Mobilizing private sector's money, expertise and capacities for
infrastructuredevelopment;
Long-termrelationship between government and private sector
(usuallygreater than10 years);
Sharing of Risks and Rewards with no lop-sided agreements
(privatizing theprofitsor nationalizing theloses);
Privatesector performsto agreed KPIsi.e.output focused;
Lifecyclefocusonoperationsand maintenance;
Public Projects withPrivateInvestment not PrivateProjects with
PublicFacilitation;
Internal Rateof Return(IRR) greater thanWeighted Average
Cost of Capital;
ReturnonEquity (RoE) greater thanShareholders Requirement;
Debt ServiceCover Ratio greater thanBankers or Lenders
Requirements;
LoanLifeCover Ratio greater thanBankers or Lenders
Requirements;
Availability of Viability Gap Funding and FGNCapital Grant;
Financial Intermediary Loan;
SovereignWealthFund (SWF) InfrastructureEnabler
Investments;
Key Benefits of thePPP for PrivateInvestors
Private sector will have ready access to secure long-term
investment opportunitieswithrelativecertaintyand securityof
theFederal Government of Nigeriacontract.
Privatesector partnersinvolved inPPP transactionsinNigeriacan
achieve efficiency based on technical, financial and innovative
capability.
PPP facilitatesexpansionof business. Privatesector partnerscan
also expand their capacityand expertiseinaparticular sector.
This canbeleveraged onto createother business opportunities.
E.g.anycompanycanmarket itsexpertiseor serviceinother areas
of theeconomy, onceit hasestablished atrackrecord of working
successfullywiththepublicsector inNigeria.
KeyBenefitsto thePublicSector
Maintaining EconomicStability- Whiletheprivatesector focuses
investments in the infrastructure development, there is no need
for the government to take loans and pay interests. The
implication of this is that less pressure will be exerted on the
money market, thereby diminishing the upward pressure on
interest rateand inflation.
Gains fromPrivate Sector Innovation and Expertise - Since the
private sector is responsible for developing infrastructure, the
most cost-effective and innovative means and technologies is
employed without compromising value. This enables the best
sourceof valuefor moneygain.
Logical Estimateof Expenditureduring theLifecycleof the
The Diagram below provides a
summary of the public private
partnership life-cycleinlinewith
the National policy on Public-
PrivatePartnership ventures
VGF Viability Gap Funding;
EoI Expressionof Interest;
RFP Request for Proposal;
OBC OutlineBusiness Cases;
FEC Federal ExecutiveCouncil
K E Y D E F I N I T I O N S
08 08
44 43
Inorder for PPP road project to beeligiblefor this method of financing,
therearecertainrequirementsthat must besatisfied asbelow;
ThePPP project should beimplemented, i.e. developed, financed,
constructed, maintained and operated for the Project termby a
Private Sector Company to be selected by the Government or a
statutory entity through a transparent and open competitive
bidding process.
The criterion for bidding shall be the amount of viability gap
funding required bythePrivateSector Companyfor implementing
theproject whereall other parametersarecomparable.
III.
Annuity Scheme is another format of BOT scheme, in which when the
project cannot be implemented on BOT/ DBFOT basis (because of low
revenuedueto low trafficor highcost of Construction) but areimportant
to construct for security reasons or for the development of the areaare
being implemented onAnnuitybasis.
Intheannuitymodel theprivateconcessionairefinances and undertakes
the construction and maintenance of the highway and recovers its
investment plus a predetermined rate of return from the annuity
paymentsbythegovernment or granting authority.
The annuity-based contracts are granted through a tender process in
whichthelowest annuityrequested isused asabidding criterion.The
Adoption of Annuity contracts for key
arterial routes;
08 08
The Federal Government of Nigeria has established a
Viability Gap Fund to aid PPP infrastructure projects
which face a viability gap owing to peculiarity of certain
project e.g. For projects in which the traffic is expected to
be insufficient to recover the expected investment, the
government can provide a capital grant up to 40% of the
project cost to meet the funding gap.
The Viability Gap Funding Scheme provides financial
support in the form of grants, one time or deferred, to
infrastructure projects undertaken through public
private partnerships with a view to making them
commercially viable.
Oyo- OgbomoshoDual Carriageway (Under Construction)
The Federal Government of Nigeria has established a
Viability Gap Fund to aid PPP infrastructure projects
which face a viability gap owing to peculiarity of certain
project e.g. For projects in which the traffic is expected to
be insufficient to recover the expected investment, the
government can provide a capital grant up to 40% of the
project cost to meet the funding gap.
The Viability Gap Funding Scheme provides financial
support in the form of grants, one time or deferred, to
infrastructure projects undertaken through public
private partnerships with a view to making them
commercially viable.
46 45
S/N Multilateral Agencies Amount $US Mil.
Table 3: Fundingby Multi-lateral Agencies.
World Bank
J apaneseGrant
Federal Government of Nigeria
(Counterpart Funding)
Federal Government of Nigeria
(Counterpart Funding)
Africa Development Bank (AFDB)
1
2
3
4
5
330.00
3.00
32.00
17.82
162.00
544.82 Total
granting authorityretainsthetrafficrisk,sinceit collectsthetoll revenues.
IV.
TheFederal Government of Nigeriais currently exploring this method of
financing under the10-year prioritized Road Sector Development
Program(RSDP). TheFederal Road Development Programme(FRDP) is
thefirst step intheimplementationof theRSDP currently managed by
theRoad Sector Development Team(RSDT) onbehalf of theFederal
Ministry of Works.
Currently, thefunding for theFRDP is being supported by thefollowing
Borrowing from Multilateral Agencies and
Pension fund for key Highways infrastructure
Thecomponentsof theFRDP for whichthefund providessupport areas
follows;
i. Civil Works
Rehabilitation
Upgrading,Strengthening &PeriodicMaintenance
Consultancies
ii. Institutional Strengthening and PolicyReforms
iii. Road safetyComponent Improvements.
The Federal Government of Nigeria is open to interested multilateral
agencies who desire to tap into the opportunities within the road
infrastructure sector of the economy. The sector promises tremendous
rewards for investors who have the financial capacity, technical
wherewithal and the institutional framework to do business with the
Government of Nigeria.
V.
B asic C o n ce p ts o f R o ad B o n d s
FGN road bond may be described as a written promise issued by the
Federal Government of Nigeriato re-pay borrowed money onadefinite
schedule, usuallyat afixed rateover theperiod of thebond. Themoneys
received will be channeled towards the development of Road
infrastructureinthecountry.
Over thelast 20 years, therehas beenasignificant increaseintheuseof
highwaybondsasamechanismof financing highwayimprovement across
theworld.For instance,intheUnited Statesof America,Massachusetts
Floating of Road Bonds for Highway projects
The Federal Government of Nigeria is open to
interested multilateral agencies who desire to tap into
the opportunities within the road infrastructure sector
of the economy. The sector promises tremendous
rewards for investors who have the financial capacity,
technical wherewithal and the institutional framework
to do business with the Government of Nigeria.
Asokoro, Abuja
48 47
became the first state employ this method of financing for highway
15
purposesin1893 . Hitherto,all but two states-- Nebraskaand Wyoming -
- haveissued highwaybonds.
In Nigeria, with the urgent need for investment in road infrastructure
improvements -- a need that greatly exceeds available financing, the
Federal Government of Nigeria (FGN) has identified Road or Highway
Bonds as anemerging optionand awayforward for enhancing Highway
Financing. The Bonds which will be issued in formof FGN bonds will
assumesimilar characteristicsassuch. Theroad bondswill becomedebt
securities (liabilities) of theFederal Government of Nigeriaissued under
the authority of Debt Management Office (DMO) and listed on the
Nigerian Stock Exchange (NSE). The FGN is mandated to pay the
bondholder theprincipal and agreed interest astheyfall due.
Denomination:minimumsubscriptionof NGN10,000.00 +multipleof
NGN1,000.00 thereafter
Yield:- Interest payment
Fixed interest rates: Majority of the FGN bonds possess fixed
interest rates and paid bi-annually:
rd TH
Floating interest rates: SomeFGNbonds(e.g. 3 &4 tranchesof
st
the1 FGNbonds) havefloating ratesof interest whichfluctuates
around areferencerateonthebasisof specified parameters.
Availability of zero-coupon bonds whereby both interest and
principal arere-paid at thefinal maturitydateof thebond.
N atu re o f F G N b o n d s
Regulators/Agencies Description S/N
Debt Management Office(DMO)
Table 4: Regulator and Government Agencies in FGN Bond Operation.
Source: www.dmo.gov.ng/hifb.php
T h e R e g u lato rs an d G o ve rn m e n t A g e n cie s in th e F G N B o n d O p e ratio n
DMO is theAgency authorized by statutetoissueFGN Bonds on behalf of the
Federal Government. TheDMO alsoregulates theactivities of thebond market
and thePrimary Dealer/Market Makers.
Central Bank of Nigeria (CBN)
TheNigerian Stock Exchange(NSE)
Central Securities ClearingSystems
Ltd (CSCS)
Security and ExchangeCommission
(SEC):
TheCBN acts as theissuingHouseand theRegistrars for FGN Bonds.
FGN bonds arelisted and traded on theFloors of theNigerian Stock Exchange
Acts as thedepository of thebonds listed on theNigerian Stock Exchange.
I nvestors whoopted for physical certificates at theissuemust havetheir
certificates deposited in CSCS beforetransactions on themon thefloors of the
Nigerian Stock Exchange.
Theapex regulator in thecapital market; it regulates theactivities of all operators
as far as operations and their transactions in themarket is concerned.
1
2
3
4
5
08 08
15
Highway Bonds: AnEmerging Optionfor Increasing Highway Financing, by TomHoward
I n Nigeria, with the urgent need for investment in
road infrastructure improvements - a need that
greatly exceeds available financing, the Federal
Government of Nigeria (FGN) has identified Road or
Highway Bonds as an emerging option and a way
forward for enhancing Highway Financing. The
Bonds which will be issued in form of FGN bonds will
assume similar characteristics as such. The road
bonds will become debt securities (liabilities) of the
Federal Government of Nigeria issued under the
authority of Debt Management Office (DMO) and
listed on the Nigerian Stock Exchange (NSE). The
FGN is mandated to pay the bondholder the
principal and agreed interest as they fall due.
50 49
Tenor:FGNbondshaveaminimumof two (2) yearsinvestment period
and maturities between 2 and 20 years, in issue. There are plans to
havebondswithmaturitiesabove20 yearsinthefuture.
Default Risk:FGNbondsasasovereigndebt arethesafest investment
instrument.Default riskisnil.TheGovernment alwayspayswhat isdue
to subscribersontheagreed date.
F G N B o n d O p e ratio n A g e n cie s
Theagenciesinvolved intheoperationof FGNBondscomprisemainlyof
regulators and government agencies. Essentially, this will provide
potential investors with reliable information as regards agencies
responsible for transaction of FGN bonds in the bond market. These
agenciesand their statutoryresponsibilitiesinthebond market havebeen
outlined inthetable4;
I n ve sto r's A ttractio n to R o ad B o n d s
TheFGNbondsasasovereigndebt isconsidered thesafest of all
investments indomestic currency securities market becauseit is
backed by the Full Faith and Credit of the government. These
type of bonds have no default risk, the implication is that it is
virtuallycertaintheinterest and principal will bepaid asand when
due.
Theinterest incomeearned fromFGN(highway) bondsisexempt
fromstate and local taxes. The savings incurred through state &
local taxexemptionaffordsinvestorsto consider FGNbondsmore
thananyother bond.
Abuja - Lokoja Road.
52 51
The attractive prospects of FGN bonds for the year 2013 was
indicated byastrong runinsecond half (H2) of thepreviousyear.
16
Reports byanalystssuggeststhat thelargest singledriver inthe
year 2012was anannouncement of J P MorganinAugust 2012to
add threeFGNdebt issuesto itslocal currencygovernment bond
index in stages from01October 2013. Moreso, there are further
plans for FGN bonds to be included in the comparable Barclays
indexwitheffect fromMarch2013.
Automatically, both developments are targeted at attracting
foreign investors, most of whom would not otherwise accept
Nigerianrisk.
17
According to areport , theNigerianeconomiclandscaperemains
favorable to investment in high-yielding frontier markets. S&P
raised its long-termforeign and local currency sovereign credit
ratingsof Nigeriato 'BB-'from'B+', just 3pointsbelow investment
grade, Moreso, Moody'sexpanded itscoverageto includeNigeria,
assigning a'Ba3' rating and Fitch
Ratings affirmed Nigeria's Long-termforeign and local currency
Issuer Default Ratings(IDR) of 'BB-'and 'BB' respectively.
Noting some domestic positives. Inflation is set to fall, likely to
single digits Year on Year (Y/Y) this quarter 2013. The naira
exchange rate has stabilized. The monetary policy is
accommodativeacrossthedeveloped world,and theavoidanceof
the fiscal cliff in the US, if not definitive, means that risk is back
onfor traders.
As part of the road reform plan, the Federal Government of
Nigeria, in a bid to improve road infrastructure delivery through
alternativesources of highwayfinancing, havemadeattempts to
explore implementation of a five percent fuel surcharge of
petroleumproducts.
VI.
Following passageof thelaw since2007, theimplementationof thelaw is
yet to becarried out owing to bottlenecksinthebureaucraticprocess.The
proposed surchargewill go along wayto providetherequired resources
to fixexisting dilapidated roadsand construct new alignmentsacrossthe
nation.
Based on the proposed arrangement, forty percent (40%) of the
generated fund will be assigned to Federal Road Maintenance Agency
(FERMA), while state governments are to share the remaining sixty
percent (60%) for maintenance of state-owned alignments. However,
stategovernment who intend to benefit fromthechunk of sixty percent
(60%) will berequired to establishastateroad maintenanceagency.
The introduction of this method of financing is nearing its concluding
stages as final stages will involve disbursement of funds given that
legislativelawshavealreadybeenenacted.
Implementation of the 5% fuel surcharge
08 08
Onitsha - Owerri Dual Carraigeway
16
EgwatuP., (2013)
17
Stanbic IBTCAsset Management Limited Quarterly Economic ReviewQ4:2012
The attractive prospects of FGN bonds for the year 2013
was indicated by a strong run in second half (H2) of the
previous year. Reports by analysts suggests that the
largest single driver in the year 2012 was an
announcement of J P Morgan in August 2012 to add three
FGN debt issues to its local currency government bond
index in stages from 01 October 2013. Moreso, there are
further plans for FGN bonds to be included in the
comparable Barclays index with effect from March 2013.
53 54
08 08
The Nigerian economic landscape remains favorable to
investment in high-yielding frontier markets. S&P raised
its long-term foreign and local currency sovereign credit
ratings of Nigeria to 'BB-'from 'B+', just 3 points below
investment grade, Furthermore, Moody's expanded its
coverage to include Nigeria, assigning a 'Ba3' rating and
Fitch Ratings affirmed Nigeria's Long-term foreign and
local currency I ssuer Default Ratings (I DR) of 'BB-'and
'BB' respectively.
River Niger Bridge, Onitsha, Anambra
56
Abuja Kaduna-KanoRoute
SNC-LAVALI N I nternational I nc./Yaroson Partnership Ltd.
Federal Ministry of Works, Public PrivatePartnership Unit
378km(Abuja Kaduna Section;166km, Kaduna KanoSection; 212km) Four-laneDual Carriageway Separated
by ConcreteNew J ersy Barrier
Flexiblepavement with;
- 150 mmlateritic sub-base;
- 150 mmcrushed stonebase;
- 60 mmasphaltic concretebinder;
- 40 mmwearingcourse;
- 560mminimumradius of curvature;
- 5.5mvertical clearance;
- Lanewidth - 3.65 m;
- ExistingMedian width - Varies 10 20 mand New J ersey Barrier;
- Paved Shoulder - 2.75 mouter shoulder and 15 minner shoulder;
- Carriageway width - 7.3 mEach carriageway;
- Right of Way 90m
- Design flood frequency - 100 year return period;
- Design Speed - 110 Km/h;
- Posted Speed - 100Km/h;
- Level of Service B;
- Design Vehicle- I nterstateSemi Trailer (Wb20);
- Design flood frequency - 100 year return period;
Project Title
OBC Prepared by
Prepared for
Road Type
Design Specification
109 09
55
9.1
In line with the Federal Government's seven point agenda for the
provision, operationand maintenanceof infrastructureinthecountry, the
Federal Ministryof Workshasembarked ontheconcessionof hightraffic
roadsthroughthePublic PrivatePartnership arrangements. Accordingly,
the Government is taking steps for procurement of concessionaires to
finance,design,construct,maintainand operatetheroads.
Inthis context, theFMW throughthePublic PrivatePartnership unit has
sought theservices of reputableconsulting firms or consortiato provide
transaction advisory services throughout the PPP life cycle for these
roads. Essentially, these advisory services comprise of conducting
feasibility studies of some identified road alignments to ascertain
feasibility studies on technical, legal, social, environmental and financial
viabilityof theroad projectsfor government partnership withtheprivate
sector investments. Theresultsof theseassessmentshavebeencompiled
inadocument described asOutlineBusinessCases. TheFederal Ministry
of Works has developed OutlineBusiness Cases for viableand bankable
major highways in the nation to attract private sector and foreign
investmentsinto thesector.
Themethodologyadopted ingenerating theOutlineBusinessCasereport
is based on site investigation and data collection fromsocio-economic
profile analysis, traffic surveys &forecasts, financial viability and other
investigations inorder to enableanyinvestor makeinformed investment
decision.
Inlinewiththeobjectiveof this report, this sectionaims to showcaseto
investors the potential investment opportunities within some identified
In-depth Analysis of Selected Road Projects
Overview of Selected Road
Infrastructure Projects in Nigeria
9. Overview of Selected Road Infrastructure Projects in Nigeria
road infrastructureprojectswithexisting outlinebusinesscasereports.
This section of the report provides an overview using analytical
representation and brief discussions for reading convenience. However,
comprehensive details of the various road projects are available and
accessiblethroughtheindividual OutlineBusinessCase(OBC) reports.
A few of the road alignments that are being funded solely by the
government areasfollows;
1. Abuja-Kaduna-Kano
2. Shagamu-Benin-Asaba
Both roads are to be awarded in future for PPP under Operation &
Maintenance model. In view of that, we have shown in this report the
viabilityand feasibilityof bothalignments.
Other road projects which are available for private sector investment
includesbut not limited to;
1. Lagos-Iseyin-Kiishi-Kaiama
2. Kaiama-Bahama-Kaoje-Gwambu-Fokku-Sokoto
58
09 09
57
P ro je ct R atio n ale
Theproposal for improvement of theexisting 4-lanecarriagewayincludes
provisionof thefollowing components;
GeometricImprovements; Widening Proposal; ServiceRoads; Sidewalk:
Longitudinal Profileimprovement;Improvement of J unctions;Bridgeand
Cross Drainage Structures; Special Problems and; Traffic Control and
SafetyMeasures
S o cio -E co n o m ic P ro file A n alysis
The Abuja Kaduna - Kano road alignment is considered to be an
important highway and lifeline for trade and commerce. The Abuja
Kaduna section stretches fromthe interchange within the Western by-
passand endsat RigachukwuinKadunaState. WhiletheKaduna Kano
section starts fromRigachukwu in Kaduna State and terminating at the
first roundabout insideKano Township. Thealignment is apopular route
which traverses 12 localities fromNorth-west geo-political zone and 16
localitiesfromNorth-southgeo-political zoneconnecting to thenational
seat of government,thenation'scapital.
Apart fromthepolitical relevanceof theAbuja Kaduna- Kano route, it
further providesalinkfor transportationof agricultural producefromthe
agricultural belt of theNorth-West and North-south, wherebothrain-fed
and irrigated agriculturearemost developed and practiced,to theFederal
Capital Territory with its teeming population. The population of the
localities in the Niger and Kaduna and Kano States traversed by the
highwayisestimated at 151,300 and 2,265,749and 75918respectively.
Therefore, any effort aimed at improvement of the route will catalyze
growthand development of economic activitiesacrosstheregion. Citing
the real estate sector as case study, one of such growth of activities is
evident bythevalueto real estatedevelopment acrossthealignment.One
of thecritical factorsthat determinethevalueof anyreal estatepropertyis
theamenitiesavailableinproximity. Oneof suchamenitiesisprovisionof
road infrastructure. Typically, roads that provide access to communities
and businessesfor smart growthwill increasepropertyvalues. Roadsthat
serveasbarriers, or redirect traffic awayfromparticular areas, will cause
propertyvaluesto fall.
Traffic S u rvey A n alysis & F o re casts
Aninvestigationof thetrafficvolumealong theserouteswereconducted
inorder to establishthetraffic flow characteristics, travel pattern, users'
willingness to pay toll, economic and financial viability, junction
improvements, road safetycomponentsetc. Theprojected trafficvolume
ontheAbuja- Kaduna- Kano alignment playsacritical roleintheprivate
public partnership transaction as it determines to a large extent the
technical and financial viabilityof theproposed investment.
The traffic survey of the Abuja Kaduna - Kano route was carried out
using;
i. AutomaticTrafficCount (ATC)
ii. AxleLoad Surveys
iii. Origin-Destinationsurveys
iv. Collectionof Willingnessto payinformation.
A u to m atic C lassifie d Traffic C o u n t S u rvey
Automatic Classified Traffic Count Surveywas carried out
withtheuseof Metro VehicleClassificationSystemdevice-
MC5600. The MC5600 is a simple axle-based pneumatic
counter/classifier whichcollectsdataat a'Time-Stamping'.
Theprincipleof operationof thedeviceissuchthat every
axle hit by the vehicle moving at least 10km/hr is being
recorded at the time of hit by a pneumatic sensor. The
recorded dataistheninterpreted byspecialized computer
softwareto giveanoutput.
These studies were conducted at two selected regular
count stations for twenty-four hours over a 7day period
along thelengthof thebothsectionsof Abuja Kaduna&
Kaduna- Kano routes.
The table 5 represents the traffic volume data at two
different count stationsoneachsectionof theroutebased
oninformationontheannual averagedailytraffic (AADT)
for motorized vehicles.
Count
Station
2Axle- Cars,
light, buses
& pickups
2 - Axle 3 - Axle 4 - Axle 5 - Axle 6 - Axle
or more
1
2
11600
12271
879
927
1539
1830
372
436
436
360
1589
1552
Abuja KadunaSection
Count Station 1 Count Station 2
0 3000 6000 9000 12000 15000
6- Axle or more
5- Axle
4- Axle
3- Axle
2- Axle
2 Axle - Cars, light,
buses &pickups
Trafic Volume
C
a
t
e
g
o
r
y

o
f

V
e
h
ic
le
Figure 19: Traffic Volumeby VehicleCategory
Table 5: Vehicular Count.
Source: Federal Ministry of Works, Abuja
0 5000 10000 15000 20000 25000
60 59
Fromfigures19&20, it isthereforeevident that the2-Axle
Cars,Light Buses&Pickupsvehiclesarethemost prevalent
category of vehicle travelling across for both sections of
thealignment. Moreso, it canalso beseenthat thetraffic
volumefor theKaduna Kano sectionisthelowest of both
sections. Theimplicationof theresult obtained for Abuja
Kaduna section indicates that there are relatively more
passengersand light weight freight movement acrossthis
sectionthantheother Kaduna Kano section. Therefore,
there exists tremendous opportunities for real estate
development suchas motels, supermarkets etc giventhe
high traffic flow of passengers and light weight freight
movement.
Traffic F o re cast
Table 7 represents the traffic growth rates for different
categories of vehicles projected over a period till year
2030 based ontheeconomic analysis. Whiletheaverage
growth rate used in the financial analysis of the road
project wasconsidered to beanaverageof 6.5%.
Count
Station
2Axle- Cars,
light, buses
& pickups
2 - Axle 3 - Axle 4 - Axle 5 - Axle 6 - Axle
or more
1
2
20666
8307
966
624
3171
2127
868
584
1092
524
1502
926
Count Station 1 Count Station 2
6- Axle or more
5- Axle
4- Axle
3- Axle
2- Axle
2 Axle - Cars,
light, buses &pickups
Trafic Volume
C
a
t
e
g
o
r
y

o
f

V
e
h
ic
le
Kaduna Kano Section Traffic G ro wth R ate s % )
VehicleCategory 2010 - 2015 2016 - 2020 2012 - 2025 2026 - 2030
Passenger
Transport
8.0 7.5 7.0 7.0
Freight
Transport
Car, Taxies
Mini-, Light Buses
LargeBuses
Motor Cycles
2Axle
3Axle
4Axle
5Axle
6Axleand Above
7.5 7.0 6.5 6.5
6.0 5.5 5.0 5.0
A xle Lo ad S u rvey
Theaxleload surveywasconducted to determineVehicleDamageFactor
(VDF) / Equivalent Standard Axles fromthe axle load spectrumdata
which gives the damaging effect on pavements. The design and
performanceof thepavement is affected byanumber of factors suchas
gross load, tyre pressure, number of wheels, wheel configuration and
number of repetitions. Thestructural damageto theroadsisdetermined
bythetypeof vehicleexpected to makeuseof thealignment during the
lifespanof theroute.
O rig in D e stin atio n O -D ) S u rvey
TheO-Dsurveywas conducted using 10-15%samplesizeto determine
thetravel characteristicsof freight and passenger along therouteunder
study. Thesurveywasconducted for 16hoursat two different locations
along the alignment. The method of Roadside interview of randomly
selected vehicles was adopted in the study to collect the following
information;
- Originand destinationof trips, Trip time&purpose, Commodity type
and payload,and Frequencyof trips
09 09
Figure 20: Traffic Volumeby VehicleCategory
Table 7: Traffic Forecast.
Table 6: Vehicular Count.
N50
N20
N150- N200
N100
>N1500
N1500
N500- N1000
N300- N400
62 61
Toll RateSurvey: Abuja- KadunaSection
Toll Rate (NGN)
T
y
p
e
o
f
V
e
h
ic
le
T
y
p
e
o
f
V
e
h
ic
le
Trailers
Trucks
Pickups
Buses
Car/SUV
Toll RateSurvey: Kaduna - Kano Section
Total Rate (NGN)
Fromfigures21&22, it canbededuced that N100 toll feewasfound to be
the preferred toll fee by majority of the vehicle categories for both
sectionsof theAbuja Kaduna- Kano. A significant proportionof trucks
and trailers have indicated preference for N150 N200 toll rate. Clearly,
theN1500 and abovetoll rateisobserved to bethemost unacceptabletoll
ratesfor bothsectionsof theroute.
However, theseratesdo not indicatethefinal toll rateasit onlyprovidesa
guideline on the optimumrates for acceptability. The final toll rates are
determined bythefinancial analysisof theproject.
To ll R ate s B ase d o n F in an cial Mo d e lin g
The base toll rates are to be increased @3%per year. Based on the
financial analysisof theproject, table8below givesbasetoll ratesper km
in2010 and theprojected effectiverateper kmin2014 after increasing at
3%simplerate.Pleasenotethat theserateshavebeenrevised under a12%
inflationrate.
BaseToll Rates (N/Km)
Vehicles 2010 2014
Cars, Van, SUV 2.00 2.26
Light Truck & Mini Bus 3.23 3.65
LargeBus/Heavy Truck 6.77 7.65
4-6Axle 10.62 12.00
>6Axles 12.92 14.60
Figure 21: Toll Rates by VehicleType.
Figure 22: Toll Rates by VehicleType.
Table 4: BaseToll Rate
0 10 20 30 40 50 60 70
80
Trailers
Trucks
Pickups
Buses
Car/SUV
0 10 20 30 40 50
Willin g n e ss to P ay
Thetoll rateand thetrafficvolumeplayacritical toll ontheproposed road
giventhat therouteisto bebuilt under aPPP arrangement.Theanalysisof
the willingness of commuters to pay specific toll rate as they travel on
improved roads was therefore sampled alongside the O-Dsurveys. The
result fromthisanalysisisdepicted bythefigure21&22for bothsections
of theAbuja-Kaduna-Kano.
09 09
64 63
09 09
E co n o m ic A n alysis
The total construction cost of the Abuja Kaduna & Kaduna Kano
sections of theroad project based onthequantities generated fromthe
designdrawingsand unit ratesfor different itemsof worksareestimated
at NGN17,883,504,080.00k&NGN20,072,275,860.00krespectively.
The economic evaluation of the project was carried out under a Do
Nothing/Do Minimum and With Project conditions using HDM-4
software and projected over a period to year 2030. In conducting the
investigation. a sensitivity analysis was also carried out to examine the
likely impact of changing conditions on the results of the economic
feasibility.
Table 8 represents the results of the sensitivity analysis on motorized
traffic averageannual dailytraffic (MT AADT) and vehicleoperating cost
(VOC) for bothsectionsof thealignment.;
Bothsectionsof theroad project isconsidered to beeconomicallyviable
under theBaseCase scenario, returning substantial Net Present Value
(NPV) of NGN229,933.38&NGN57,865.27million,and EconomicInternal
Rateof Return(EIRRor IRR) of 70.1%&32.3%respectively. Thesevalues
arecomfortablyabovethethreshold of 12%discount and thereforecanbe
considered for implementation.
F in an cial Viab ility
According to table 10, the base cost for both sections of the road are
estimated to be N 19,047.720 million and NGN 21,579.70 million
calculated on2010 priceswhen2%toll equipment cost,0.01%
Road Network in F.C.T. Abuja
NPV at 12 %
Discount (N Millions)
66 65
Environment Management Programmescost, utilityshifting cost is0.5%,
supervision cost is 1%and physical contingency is considered 4%are
added.
The Estimated Project Costs (EPC) of NGN 19,047.720 million & NGN
21,579.70 millionrepresentstheTotal Project Cost (TPC) at current prices
when escalation is considered as 12%, interest rate for Interest during
Construction(IDC) istakenas18.0%and 18.78%for sections1&2
S/N Sensitivity Scenario
Kaduna - KanoSections
I RR
(%)
NPV at 12 %
Discount (N Millions)
I RR
(%)
1 BaseCase 70.1 229,933.38 32.3 57,865.27
2 15%decreaseMT AADT 63.2

188,873.83 26.6 36,955.37

3 15%reduction in traffic growth rate 67.9

201.655.12 30.0 44,266.81

4 15%increasein capital cost 65.4

227,607.89 29.5 55,230.66

5 15%reduction in MT VOC savings 65.8

201,923.04 30.0 49,852.75

6 15%decreasein MT timesavings 68.9 221,124.12 31.4 54,576.15
7 All factors together 52.4 137,336.02 19.6 17,288.59
Abuja - Kaduna Sections
respectively, financial chargesas2%and expenditurephasing considered
as30%, 40%, and 30%respectivelyin30 monthsof construction. TheIDC
hasbeenestimated considering loancomponent 70%and full interest rate
on current and past loan amounts taking cumulatively. The interest
amount estimated onanannual basis.
TheTPCestimationfor sections1&2 asshownbytable10.
Year 2010 2011 2012 2013 Total
Sections 1 2 1 2 1 2 1 2 1 2
Total EPC Cost at 2010 prices 19,047.70 21,579.70 - - - - - - - -
Distribution of EPC - - 5714 6474 7619 8632 5714 6474 19048 21580
EPC at current prices - - 6400 7251 9557 10828 8028 9095 23986 27174
Loan Amount @70% - - 4480 5076 6690 7579 5620 6367 16790 19022
I nterest @
for 1 & 2 respectively on
current year debt
18.0%& 18.78%

- - 806 914 1204 1364 1012 1146 3022 3424
I nterest on
& I nterest
previous year Loan -

-

-

952

1078

2373

2688 3324 3766
Total I DC
- - 806 914 2156 2442 3384 3834 6346 7190
FinancingCharges @2%on Debt - - 90 102 134 152 112 127 336 380
Total Project Cost - - 7296 8266 11847 13422 11525 13057 30668 34744
09 09
Table 10: Total Project Cost (TCP) Estimation.
Table 4: SensitivityAnalysis.
09
68 67
K ey A ssu m p tio n s
The assumptions that have been considered in financial analysis of this
project areasfollows:
Project costs, toll rates and Operation &Management costs have
beenadjusted to current pricesbeyond 2010 pricesat therateof 12%
discount per annum.
Medical Aid post constructionincluded intoll plazacosts
Straight Line Method (SLM) and Written Down Value (WDV)
depreciation methods have been used on book value of asset for
incomeand taxestimation.
10% Written Down Allowance (WDA) depreciation has been
considered.
SLM rate (4.55%) estimated on the total period excluding
constructionperiod.
100%of bookvalueof asset isconsidered for depreciation
30%taxratehasbeenconsidered.
7yearstaxholidayhasbeenconsidered.
10 years repayment period has been considered excluding 3 years
constructionperiod.
Therateof interest hasbeenconsidered as18.0%per annum.Interest
during constructionhasbeencapitalized.
Thedebt-equityratio hasbeentakenas70:30.
One-time 2% enhancement of debt amount has been made to
accommodateup-front and debt syndicationcharge.
For the purpose of financial analysis 2-wheelers, auto, agriculture
trailer and NMT havebeenexcluded.
Theconstructionphasesare30%,40%and 30%
12%hasbeentakeasaverageinflationrate
Toll rate indexed @7.8 %[threshold 3%+40%of Wholesale Price
Index(WPI) ( 12%) eachyear]
Thediscount ratefor Net Present Value(NPV) hasbeentakenas12%.
Concessionperiod is25yearsincluding 3yearsconstructionspell.
Routinemaintenancecost hasbeentakenasN0.5millionper km
Theperiodicmaintenanceincaseof flexiblepavement isconsidered
N40 million/km
The cost of insurance is considered 0.01%of project cost at 2014
pricesper section.
No concessionfeeisconsidered
It has beenassumed that financial closurewill becompleted within
stipulated timeperiod.
No revenueshortfall loanhasbeenconsidered
No constructionof additional toll-wayhasbeenconsidered
It hasbeenassumed that therewill beno changeof law loaded with
cost hikeimplications.
30%of project cost asEquitysupport hasbeenconsidered
Toll efficienciesfor car 80%,bus85%,LCV 85%and truck85%
Toll chargefor overloaded and evasivetrafficnot considered
Project IRR has been estimated taking project cost without the
equity support of the Government. This equity support as
contributionfromgovernment isnot acost to theconcessionaire.
Project IRRhas beenestimated against NET OPERATINGINCOME
Equity IRRhas beenestimated against NET CASHFLOW
Maximumgovernsupport is 40%informof grant during
construction/maintenance
Thevalueof Debt-Service-CoverageRatio (DSCR) ideal valueis
1.3:1.5
09
KanoBy-pass
70 69
Options Govt.
(%)
Support Percentage
fromBasic Toll rate
(N2/km)
change Percent
fromother sources
ageincome Project
I RR (%)
Equity
I RR (%)
NPV (N'Million) DSCR
Options 1 0 0 0 13.5 12.74 3196.57 1.01
Options 2 0 0 5 14.55 14.15 6717.67 1.14
Options 3 5 0 5 15.02 14.67 7676.36 1.2
Options 4 25 0 5 17.26 17.78 12583.71 1.52
Options 5 0 0 40 17.31 17.65 16384.18 1.36
Options 6 30 0 0 16.75 17.08 10340.52 1.44
Options 7 0 35 0 16.88 17.1 14789.04 1.34
Options 8 0 25 10 17.1 17.38 15586.61 1.36
Options 9 5 20 10 17.12 17.44 14986.03 1.38
Options 10 5 20 5 16.58 16.74 13071.88 1.36
Options 11 0 25 5 16.56 16.69 13592.7 1.33
A b u ja K ad u n a S e ctio n
09 09
OngoingConstruction of TwoBridges AlongAuchi - AgebebodeRoad in EdoState.
Table 11: Option Analysis.
72 71
F in an cial E valu atio n R e su lts
However, eventhoughtheproject isgood for implementation, theresults
of the financial analysis for 25 years indicate that both sections of the
project isunviablewithout augmentationfromgovernment /toll ratehike/
incomefromother sources.
Inview of this,thepublicprivatepartnership unit of theFederal Ministryof
Works would make recommendations based on the feasibility studies
(OBC) conducted by transactionadvisers for thegovernment to provide
viability gap funding (VGF) to secure the interest of private sector
investors. These supports are required to make the project financially
K ad u n a K an o S e ctio n
Options Govt.
(%)
Support Percentage
fromBasic Toll rate
(N2/km)
change Percent
fromother sources
ageincome Project
I RR (%)
Equity
I RR (%)
NPV (N'Million) DSCR
Options 1 0 0 0 16.35 16.43 14586.29 1.33
Options 2 0 0 5 16.93 17.16 16961.88 1.35
Options 3 5 0 0 16.85 17.09 15893.76 1.37
Options 4 0 5 0 16.93 17.16 16961.88 1.35
09 09
Obiozara Uburu Road, Enugu State
Table 12: Option Analysis.
viable on PPP basis Project could be made viable by Viability gap fund
method
F in d in g s o f F in an cial A n alysis
Based on the financial analysis in the table 12above, the project road is
financiallyviableunder options8&4 respectively.
Shagamu Benin - Asaba
Roughton I nternational/ Allot Nigeria
384km(Shagamu Benin Section; km, Benin - Asaba Section; km) Four-lanedual carriageway separated by
barrier
Overlay design on existingflexiblepavement with;
- 300 mmhardcore/sub-base;
- 200 - 300 mmcrushed stonebase;
- 60mm- 100mmbituminous binder;
- 40 mmbituminous wearingcourse;
- 200mmof filter stone
- Twolayers of bituminous macadam100mm 200mm
Project Title
OBC Prepared by
Prepared for
Road Type
74 73
The ShagamuBenin-Asaba with an existing dual carriageway of
approximately 384km stretches from the west, the main junction in
Shagamutown, OgunStatethroughthesouthand terminatesat thestart
of Niger Bridge, southof Asaba. Theroute traverses four states namely
Ogun,Ondo,Edo and Deltastatesasproject influenceareas.According to
18
anestimated 2009census ,thefour statesmadeup of apopulationof 15.4
millionpeoplewhichaccountsfor about 10%of theentirecountry. Along
this route, there are approximately four major interchanges (Lagos-
Ibadan, Beninbypass entry, Auchi road Beninbypass, and Beninbypass
exit), 30 minor intersections and considerable number of informal and
trackaccessroutes.
19
The 2007income assessment data available as at the time the Outline
Business Cases for theShagamu-Benin-Asabaalignment wereprepared
suggeststhat theGDP per capitafor thefour project statesis50%higher
than the national average (US$1670). According to this report, amongst
the project states, Delta state has the largest GDP per capita of over
US$5,000 with values approximately twice the national average. This is
best explained bytheoil explorationand productionactivitieswithinthe
state.
Thekeyactivitiesoccurring withintheproject stateshelp to reinforcethe
significanceof thealignment to theeconomicwellbeing of thecountry. In
delta state, oil exploration and production is pre-dominant, timber
extraction, milling and processing is pre-dominant in Edo and Ondo
states, gold and some minerals deposits are abundant in the former.
Widespread amongst the four project states are the following; building
materialsmanufacturing (i.e.aggregatesquarryand winning),light
industrial activities such agro-processing and chemicals. The pre-
dominant activity across themajority of theeconomically activeproject
areasisfarming. Therefore, thealignment will serveasanimportant route
for transportationof theseagricultural goodsand servicesfromanyof the
statesto other locationsaccommodated withintheroute.
Moreso, theShagamu-Benin-Asabaalignment isconsidered asoneof the
most significant highway and lifeline for trade and commerce between
westernand easternpart of Nigeria. Therouteis very popular for heavy
trafficflowsparticularlyduring festiveperiods.Thelackof maintenanceof
the route has resulted in its decay transforming the road into a major
destinationfor road-user casualty.
Thetrafficsurveyisavital tool for assessment of incomepredictionsand
hence financial viability of the PPP transactions. For the purpose of
analysis, thetotal lengthof theroad wasdivided into two sectionsduring
studiesto investigatevarying featuresalong thealignment suchastraffic
level, cross section, surface conditions and rehabilitation requirement
peculiar to eachsectionof thealignment.
Section1- Shagamujunction Beninbypassand
Section2- Beninbypass Asababridge
Aninvestigationof thetrafficvolumealong theserouteswereconducted
in order to determine traffic flow characteristics, travel pattern, users'
willingnessto paytoll for improved travel conditions, incomepredictions
etc.Thetrafficsurveyof theShagamu-Benin-Asabaroad wascarried out
18
National PopulationCommission
19
CanbackGlobal IncomeDistributionDatabaseand National Bureauof Statistics
09 09
76 75
using the methods of Roadside Interview (RI), Manual Classified Counts
(MCC),HighwayInventory,Stated Preference(SP),
R o ad sid e I n te rv iew R I ) & Man u al C lassifie d C o u n ts MC C )
TheRSI and MCCmethodswereemployed to examinetheexisting travel
patternfor bothsectionsof thealignment for a12-hour period. Detailsof
these methods have been discussed earlier in the report except for the
slight changes in measuring conditions. The road side interviews were
conducted at 15 locations throughout the study area. The results of this
trafficcountsarepresented infigure23below inthereport.
Trafic Volume
S
e
c
t
io
n
s
O b se rve d C o u n t
Theresults fromtheobserved traffic count showed anaverageof
5,045 and 5,845 for cars and Buses & Goods vehicle category
across thethreedefinesections of theShagamu Benin Asaba
alignment for 12hours. Extrapolations to theaverageannual daily
traffic against the optimumtoll rate for each category of vehicle
fromthefinancial analysiswill provideonly aguideasto theincome
predictionsalong thealignment. Thefinancial viability of theroute
is discussed intheoutlinebusiness case(OBC) for theroute. This
OBC isavailablefor interested investors.
H ig h way I n ve n to ry H I )
TheHI survey was employed to acquiredatarequired to build the
road network. The results obtained were used to determine
characteristics of a link connecting any two junctions along the
alignment. The characteristics includes route descriptions (one-
way or two-way route),averagespeed of traffic ontheeachlink etc.
the results were used to build a highway network which was
checked and corrected using the global positioning system,
detailed digitized map of theroad network and inventory data.
S tate d P re fe re n ce S P )
TheSP survey was employed to determinethetraveler's valuefor
time, an important parameter to measure the willingness of road
usersto pay toll for improved travel conditions. Thedataobtained
fromthissurvey wasinputted to SP analyzer to giveco-efficient of
09 09
0 1000 2000 3000 4000 5000 6000 7000 8000
Buses+ Goods Cars
Average
Bypass - Asaba
Benin - Bypass
Shagamu - Benin
Abakiliki-AfikpoRoad, Ebonyi State
The results from the observed traffic count showed an
average of 5,045 and 5,845 for cars and Buses & Goods
vehicle category across the three defined sections of the
Shagamu Benin Asaba alignment for 12 hours. The
financial viability of the route is discussed in the outline
business case (OBC) for the route. This OBC is available
and only applicable for interested investors under the
future operations and maintenance PPP model.
The results from the observed traffic count showed an
average of 5,045 and 5,845 for cars and Buses & Goods
vehicle category across the three defined sections of the
Shagamu Benin Asaba alignment for 12 hours. The
financial viability of the route is discussed in the outline
business case (OBC) for the route. This OBC is available
and only applicable for interested investors under the
future operations and maintenance PPP model.
Figure 23: Traffic Volumeby Section.
78 77
toll perception,in-vehicletimeand cost.
The results show that the value of time saved is N8.9 per minute
whichiscomparablehigher thanvaluesobtained fromother route.
The value of time save is approximately four times that of Lokoja
and Makurdi bridges (N2.1per minute) and twice that of Port
Harcourt (N4.9 per minute). The overall analysis reveals that the
high quality toll road is perceived by drivers to be attractive and
worththeequivalent of saving 27.5minutesof their travel time.
Traffic Mo d e l C o m p ariso n
Theresultsof all theinvestigationsconducted wereused to build a
traffic model using convergenceanalysis. Theresults of thetraffic
model werefound to comparewell withthedataobtained fromthe
observed count for a2-way trip.
Traffic D e m an d F o re cast
Themodel wasfurther applied to analyzetheappropriatetoll rateto
beapplied to thetoll road and found to beN25per kmoptimumtoll
rate. Thistoll ratewasalso verified incomparisonwiththeoutcome
of thetoll ratebased oneconomic analysis.
Moreso, themodel wasalso used to determinethegrowthintraffic
on the toll road under the low (3%), medium(5%) and high (8%)
scenarios. These assumptions were made for gross domestic
Annual Growth Rate Growth Factors
GDP
Growth
(%)
Population
Growth
(%)
2012 2019 2026 2036
3 2.2 1.1081 1.5871 2.2731 3.7974
5 2.2 1.1515 1.887 3.092 6.261
8 2.2 1.2183 2.4315 4.8528 13.0239
Figure 24 presents demand daily (24hrs) traffic forecasts and
expected revenue along the Shagamu Benin &Benin Asaba
sections of the alignment for all vehicles including cars, buses &
goodsat interval withintheperiod under study.
09 09
product growthratesbased onaconstant 2.2%populationgrowth
at intervalsthroughout theconcessionperiod fromtheyear 2012to
year 2036.
The table 13below presents the growth domestic product growth
rateassumptions.
Table 13: Growth Domestic Product (GDP) Growth Rate.
80 79
Based ontheanalysisasshownabove(figure25),it canbeseenthat under
the3%,5%&8%scenario,themodel predicted 27,000,39,000 and 31,000
vehicleswhichgeneratesanincomeof N6.9million, N7.2millionand N7.6
millionrespectivelyat thestart of theconcession.
At the end of the concession, the income expected to be generated are
N31.2million, N53.1millionand N112.6millionby120,000 and 211,000, and
112,600 vehiclesrespectivelyunder therespectivescenarios.
09 09
Trafic Volume
S
e
c
t
io
n
s
2012 2019 2026 2036
Revenue 8%
Revenue 5%
Revenue 3%
0
20
40
60
80
100
120
0
50
100
150
200
250
300
350
400
Based on the analysis as shown above (figure 24), it can be seen that
under the3%,5%&8%scenario,themodel predicted 45,000,46,000 and
49,000 vehicleswhichgeneratesanincomeof N25.8million,N26.8million
and 28.3millionrespectivelyat thestart of theconcession.
At the end of the concession, the income expected to be generated are
N91.9 million, N149.9 million and 357.8 million by 161,000 and 265,000,
and 609,000 vehiclesrespectivelyunder therespectivescenarios.
Trafic Volume
S
e
c
t
io
n
s
2012 2019 2026 2036
A n n u al D aily Traffic F o re casts fo r S h ag am u - B e n in R o ad Road Maintenanceby FERMA
Figure 24: Traffic Forecast
Figure 25: Traffic Forecast
Lagos - Badagry - Kaiama
Sanol EngineeringConsultingLtd/Voyants Solutions PVT. Ltd.
Proposed 11 sections with a total of 631km2 & 4-lanecarriageway separated by median
I mprovement Proposal;
New construction @ Sections1 & 3 7 for 4-lanecarriageway;
Rehabilitation With WearingCourseAnd Binder Course@Sections 2 & 8-11 for 2-lanecarriageway
Proposed pavement composition;
- 230 mmsub-basecourse;
- 150 mmthickness basecoursebase;
- 60 mmthickness binder pavement;
- 40 mmthickness wearingcourse;
- Paved Shoulder 1.5m 2.0m;
- Carriageway width 6.0m- 7.3m;
- Right of Way 100mi.e. 50mon either side
Project Title
OBC Prepared by
Prepared for
Road Type
82 81
09 09
E co n o m ic A n alysis
The economic analysis was restricted to appraisal of private costs and
benefit in economic terms. The primary objective of the analysis is to
providejustificationfor theeconomiccost of trafficusing theroad under
threedifferent toll regimesincomparisonwiththecost of using theroad
before re-construction. As before, the HDM-4 software was used to
investigatetheroad user costswithinaparticular period.
Theresult of theeconomicappraisal for bothsectionsof theroad project
indicates that the N5 per kmtoll appear to be the most favorable toll
regimeand henceyieldstheoptimumeconomicresults.
F in an cial A n alysis
The financial analysis for the Shagamu Benin Asaba alignment was
conducted based onthetrafficgenerated for the3%, 5%, and 8%growth
ratesfor growthdomesticproduct and thefollowing basicassumptions;
Government will provide5%&50%of thetotal constructioncost
as grant for Shagamu - Benin and Benin Asaba sections
respectivelyto betreated aszero returnequityto SPV;
The private shareholders will provide investment of 10%of the
total cost of construction as equity on each section of the
alignment;
Fromabove, theoutstanding 85%&40%for Shagamu Benin&
Benin Asabasectionsintheformof USdollar denominated debt;
Concessionperiod of 25years;
8%interest on long termdebt with 2 year repayment holiday
period;
20%minimumreturnonequity;
30%corporatetaxrate;
5%VAT rate;
st
Upgrading and constructionperiod:2yearswithspending plan:1
nd
year 55%and 2 year 45%;
98%toll collectionefficiency;
Local trafficdoesnot paytoll.
Based ontheOutlineBusinessCases(availablefromthePPP officeof the
Federal Ministryof Works) for Shagamu Benin&Benin Asabasections
of the Shagamu Benin Asaba alignment, the results of the financial
analysis indicatethat theproject would yield therequired returns under
the5%and 8%growthscenarios(asshowninthetrafficdemand forecast)
with government contributions of 5%&50%of the total upgrading and
constructioncostsaszero returnequityto theSPV for Shagamu Benin&
Benin Asabasectionsrespectively.
Theensuing sectionof thereport will discussavailableroad alignmentsfor
PPP.
Count Station 3
Count Station 4
Count Station 5
Kaiama-Babana-Kaoje-Gwambu-Fokku-SokotoRoad
Sanol EngineeringConsultingLtd/Voyants Solutions PVT. Ltd.
Proposed 11 sections with a total of 631km2 & 4-lanecarriageway separated by median
I mprovement Proposal;
New construction @ Sections1 & 3 7 for 4-lanecarriageway;
Rehabilitation With WearingCourseAnd Binder Course@Sections 2 & 8-11 for 2-lanecarriageway
Proposed pavement composition;
- 230 mmsub-basecourse;
- 150 mmthickness basecoursebase;
- 60 mmthickness binder pavement;
- 40 mmthickness wearingcourse;
- Paved Shoulder 1.5m 2.0m;
- Carriageway width 6.0m- 7.3m;
- Right of Way 100mi.e. 50mon either side
Project Title
OBC Prepared by
Prepared for
Road Type
84 83
The Kaiama-Babana-Kaoje-Gwambu-Fokku-Sokoto road with a
proposed lengthof 631kmstartsfromtheKaiamaroundabout and ended
at theroundabout at theentranceof Sokoto town. Along thisrouteisone
of themajor terminals for international business routebetweenShaki in
Oyo stateof Nigeriaand ParakouinBeninRepublic.
An approximate 337.4kmof the existing road is a bush track without
pavement. Theroutecompriseof 11sectionsof individual alignment from
beginning to the end. The alignment traverses 14 major junctions
connecting federal and state arterial roads and 50 minor junctions
earmarked under aseparateimprovement plan.
The road project under study have been ear-marked for widening and
strengthening of the single / intermediate / two /four-lane road to be
carried out inPPP scheme.
The traffic survey of the Kaiama-Babana-Kaoje-Gwambu-Fokku-Sokoto
routewascarried out using thesamemethodsadopted intheanalysisof
previousroad projects.Thesemethodshavebeendiscussed extensivelyin
prior sectionsof thisreport.However,differencesinmeasuring conditions
areoutlined inpresenting resultsof theanalysis.
The results fromthe investigation into the average annual daily traffic
volumearedepicted byfigure26for botheast and west bound sectionsof
thealignment under study.
Traffic Volume
C
a
t
e
g
o
r
y

o
f

V
e
h
ic
le
Traffic S u rvey A n alysis B y C o u n t S tatio n s
09 09
0 1000 2000 3000 4000 5000 6000 7000 8000
Count Station 1
Count Station 2
Motorcycles
3 or More Axles
- Heavy Weight
2 axles -
MediumWeight
2 axles - Light Weight
Figure 26: Traffic Volumeby VehicleCategory.
86 85
0 1000 2000 3000 4000 5000 6000 7000 8000
Section 8
Section 7
Section 5 &6
Section 3 &4
Section 1&2
Motorcycles
3 or More Axles -
Heavy Weight
2 axles -
MediumWeight
2 axles -
Light Weight
Traffic Volume
C
a
t
e
g
o
r
y

o
f

V
e
h
ic
le
Traffic S u rvey A n alysis B y C o u n t S tatio n s
Traffic F o re cast
The projected Average Annual Daily Traffic growth rates for the
different categories of vehicles examined under three different
scenariosarerepresented by figure28;
R
e
a
lis
t
ic

S
c
e
n
a
r
io
V
e
h
ic
le

C
a
t
e
g
o
r
y
/
S
c
e
n
a
r
io
P
e
s
s
im
is
t
ic

S
c
e
n
a
r
io
O
p
t
im
is
t
ic

S
c
e
n
a
r
io
09 09
0 2 4 6 8 10
Beyond 2021
2017- 2021
2012- 2016
Trucks
Buses
Motor Cycles
Cars
Trucks
Buses
Motor Cycles
Cars
Trucks
Buses
Motor Cycles
Cars
over 10 hoursdueto thebad road conditions.A reconstructionof theroad
will enhance travel time between the two locations to an average of 5
hours. Driving distancefromExpressway, Port Harcourt to Independence
21
Ave,Enuguisapproximately232kmor 144.2 miles.Special lanescanalso
bebuilt for trucksso theyarefocused onparticular paths.
Theroad takesestimated 12,000 30,000 vehicles,bothways,daily.If the
road isfixed, thistraffichasthepotential of increasing to 70,000 vehicles
daily. For returnsof investment, sustainabilityand maintenance, atoll will
be introduced. This will divert some vehicles to alternative competing
routes,but thevehiclesthat will divert will beapproximately60%,and this
still leavesasizablenumber that will utilizethetoll.
Project Strategy
Analyzing therenovationof theEnugu Port-Harcourt dual carriageway
examines the technical, economic and financial feasibility of renovating
and managing the route through a PPP method. Port- Harcourt has the
second largest port inNigeria, and Enugu Port-Harcourt road is avery
significant highway inthecountry. It was built inthe1980s and it passes
through several states and connects to the main road that goes on to
Maiduguri whichisinthenorthernpart of thecountry.
Thesouthis mainly apetroleumprocessing areaand themiddle-belt to
northernareais essentially thefood processing part of thecountry. The
road connects these areas, facilitating business in raw materials, food,
petroleumproducts, goods and people. Renovationand maintenanceof
thisroad will enhanceeconomic activitiesalong therouteand ultimately
boost thenation'seconomy.
Financial Evaluation
The financial analysis of the road project under study was investigated
using all potential sources of income. The primary purpose was to
determine the possibility of sustainable returns through the life-span of
transaction period in order to satisfy the requirements of potential
investors.
E n u g u -P o rt H arco u rt R o ad
Description:
Nigeriahasastrategiclocationand sizewhichhasresulted infour routes
of theTrans-AfricanHighwaynetworkusing thenational road system,and
theEnugu-Port Harcourt road ispart of thesefour routes.
TheEnugu-Port Harcourt expressway is fromtheNNPCMegaFuel Plaza
outsidethecityof Enuguand endsat Elemejunction, 10Kmafter theImo
River at the boundary of the city of Port Harcourt. The Port Harcourt-
Enuguexpresswayis part of theA3Federal Road that serves theEast as
well astheNorthEast of NigeriathroughBenueStatecrossing theBenue
River at Makurdi.It passesthroughRivers,Abiaand EnuguStates.
TheEnugu-Port Harcourt road isamajor road intheSouth-Southzoneof
20
Nigeria .Theroad isamajor onefor businesspeopleand traders,whichis
themost operativeoccupationinthesouth-southregionof thecountry. It
isthekeyroutefor over 80%of trucks.Currently,trucktravel timetakes
S YN O P S I S O F O T H E R R O A D I N F R A S T R U C T U R E P R O J E C T S A L S O
AVA I L A B L E F O R I N VE S T ME N T S
Figure 27: Traffic Volumeby VehicleCategory.
Figure 28: Vehicular Traffic Growth Rateby Scenarios
Traffic Growth Rate (%)
20
http://thenationonlineng.net/new/editorial/letters/insult-called-enugu-port-harcourt-expressway/
21
http://www.gomapper.com/travel/what-is-the-driving-distance-from/port-harcourt-to-enugu-enugu.html
88 87
Category 2
V
e
h
ic
le
C
a
t
e
g
o
r
y
Table14 showstheaverageof trafficfor theroutessurveyed.Thestatistics
takesaccount of boththeleft-hand-sideand right-hand-sideof theroads.
Daytimecount wasdonefor 7dayswhilenight timewasfor 3days.
It was observed that trucks and heavy equipment vehicles ply more at
night.Fromgathered statistics,almost 70%of thetrafficat Route1wascar
passengers. A toll gateand operations will generatesubstantial revenue
asshownintrafficcount.
The traffic count data (table 15) shows revenue to be generated with
current traffic flow on each of the Route 1to Route 5 as described. As
shown, noneof thetolls is likely to generateless than1millionnairaina
day, while some of the routes can generate as high as NGN 6 million to
NGN7millioninaday. Evenif thereareprovisions of alternativeroutes,
approximately80%of commuterswill prefer to go along good roadsand
significant revenuewill still begenerated.
09 09
0 10 20 30 40 50 60 70 80
Category 4
Category 3
Route Traffic (%)
Category 1 PolicyFramework
A PPP structurefor therenovationof theEnugu Port-Harcourt road can
easily be facilitated and implemented as backed by Nigeria's Vision
20:20:20. The private sector is authorized to instill and manage the
development of infrastructureinthepower and transport sectors.
The Federal Ministry of Works currently manages Federal Government
roads. Intervention, partnership and management by the private sector
will enhancemaintenanceof theroads.
TrafficForecast
TrafficCount 1(Route1):Km5positionfromEnugutown
Traffic Count 2(Route 2): Km85 position fromEnugu before
Okigwetown
TrafficCount 3(Route3): Km116PositionfromEnuguinUmuahia
town
TrafficCount 4(Route4):Km145PositionfromEnuguinAbatown
Traffic Count 5(Route 5): Km195 Position fromEnugu in Port
Harcourt town
As anaverageonall sections, thetraffic along therouteis distributed as
follows:
10%category1(pedal cycle,tricycleand motor cycle)
71%category2(car,stationwagon,pick-up,jeep,minibus)
5%category3(lorry,truck,petro tanker)
14%category4 (tractor trailer,tractor tanker,bus)
Abuja - Lokoja Dualization Road Project
Figure 29: RouteTraffic by VehicleCategory.
Route 5
Route 4
Route 3
Route 2
Route 1
15%
12%
6%
31%
36%
15%
37%
48%
DAYTI ME COUNT NI GHTTI ME COUNT
Right Hand
Side
Left Hand
Side
Total 2 - Way
7 Day Count
Right Hand
Side
Left Hand
Side
Total 2 - Way
3 Day Count
Rout e2 4,639 4,644 64,981 1,375 1,336 8,133
Route3 2,650 2,552 36,414 550 564 3,342
Route4 11,307 13,302 172,263 1,781 1,754 10,605
Route5 13,261 15,747 203,056
Route1 5,943 6,289 85,624
7- Days Daytime Count of
Route 1- Route 5
Route 4
Route 3
Route 2
3- Days Nighttime Count of
Route 2 - Route 4
90 89
09 09
Location Vehicle
Type

Day Time
(Average)
Night
(Average)
Time

Amount
per
(NGN)
Vehicle
Total
Vehicles
Daily Total
Amount (NGN)
Remark
Route1 Car 8,564 200 12,232 1,712,800
Heavy Vehicle 3,668 300 1,100,400
2,813,200 Only Daytime
Route2 Car 6,034 1,084 200 11,994 1,423,600
Heavy Vehicle 3,249 1,627 300 1,462,800
2,886,400
Route3 Car 3,381 557 200 6,316 787,600
Heavy Vehicle 1,821 557 300 713,400
1,501,000
Route4 Car 19,687 2475 200 28,144 4,432,400
Heavy Vehicle 4,922 1060 300 1,794,600
6,227,000
Route5 Car 18,855 200 29,008 3,771,000
Heavy Vehicle 10,153 300 3,045,900 Only night
65:35 for vehicletype
time. Estimate
6,816,900

Figure 30: RouteDay & Night TimeCount.
Table 15: Traffic Count Generated Revenue
Table 14: AverageTraffic Count by Routes.
92 91
09 09
Lafenwa Bridge, Ogun State. K atsin a A la R ive rB rid g e
Overview and Background
Unlike the name may indicate, the Katsina-Ala river is not located in
Katsinastatebut inBurukuinBenueState, Nigeria. Theriver serves as a
major arm of the River Benue; the source is found in northwestern
22
Cameroon, ontheBamendahighlands . It isalso knownasRiver Buruku.
Theriver separates Burukulocal government fromLogo and Katsina-Ala
BenueState. Theareaisknownfor productionof largequantitiesof yam.
Another local government that shares a boundary with Katsina-Ala and
Logo is Ukum, whichalso produces yams inlargequantity. Ugbahis the
23
headquartersof Logo local government .
Byroad, it will takelessthan20-minutesdriveto get to Ugbah, and about
30 minutes to get to Ukumand Katsina-Ala respectively, starting from
24
Buruku .
Thereishowever achallengeasthereisno bridgeat theriver. Evensome
parts of the major villages of Buruku local government are across the
25
other sideof theriver .Thereforevehiclescarrying yamsand other goods
travel far, often over approximately 150km, from Anyiin, Ugba, Ukum
(Zaki-Biam) throughKatsina-Alaand to Gboko local government. They
then decide on proceeding to the southern or northern parts of the
26
country .
Inaneffort to devisemeansof easing their challenges, theBurukulocals
usecanoesto ferryhumansand vehiclesacrosstheriver. Thisishowever
very risky as the tools for the transportation are not appropriate heavy
equipment or sophisticated. They go across some distance, Gboko,
Ugbema, Katsina-Alabeforeaccessing Zaki-Biam,Ugbaor Anyiinand the
paddlershaveadmitted it isriskyto ferryvehiclesacross. Commutersstill
taketheriskthoughastheyhavelittleor no option. BurukuRiver crossing
isregarded asthefastest wayto Anyiin, Gbanyamvillageand Ugbatown,
27
theheadquartersof Logo .
Currently, not less than 200 vehicles are ferried across the river at the
crossing point onadailybasis.Theriskishigher during therainyseasonas
averagelyabout 3to 4 carsget submerged intheprocess.Evenprominent
28
statesmenhavelost their vehiclesinthisfeat .
It was approved recently that the engineering designs for the Buruku
Bridgebedone, theHouseof Representativesasked theFederal Ministry
of Works to use the engineering designs for the construction of the
29
bridge .
The bridge would link points between Benue state and Taraba state,
passing through Makurdi and Katsina-Ala in Benue to Wukari in Taraba.
This will significantly reduce travel time for those who try to maneuver
throughpossibleroutes, and travel riskfor bothwater and road travelers.
Returnoninvestment will bethroughtolls. Thereisabridgefurther to the
project point,towardsthebordersof Cameroon.
TrafficAnalysis
Benuestatewasapproximately5millioninpopulationin2009and hasan
30
annual growth rate of 2.8% . The traffic on the routes that traverse
through the water circuits and available roads can be estimated at 800
22
http://en.wikipedia.org/wiki/Katsina_Ala_River
23
http://blueprintng.com/2012/03/buruku-river-where-boats-ferry-loaded-lorries
24
Ibid
25
http://www.leadership.ng/nga/articles/28601/2012/07/01/benue_riverine_community_seeks_bridge_over_river_buruku.html
26
http://blueprintng.com/2012/03/buruku-river-where-boats-ferry-loaded-lorries/
27
http://www.leadership.ng/nga/articles/28601/2012/07/01/benue_riverine_community_seeks_bridge_over_river_buruku.html
28
http://blueprintng.com/2012/03/buruku-river-where-boats-ferry-loaded-lorries/
29
Ibid
30
http://www.benuestate.gov.ng/index.php/aboutus
94 93
09 09
vehiclesdailyassurveyed.
A toll introduced will attract higher flow of traffic.Toll feesof N300 will be
adapted and with annual growth of traffic, revenue from fees will
significantlyincreaseonanannual basis.
Analysisof thetrafficto determinepossibleoriginand final destinationof
vehicles was done. The bridge is very strategic with traffic fromareas
including Onitsha and Kano. Some models of the traffic routes involve
interstatetrafficor travel withinthestateand nearbysurroundings.
BurukuBridgeasacost-effectivetool for commuters
Analyzing the status of the bridge as a cost effective tool took into
account thecurrent meansof transport intermsof bothtimeand money.
Ferriesthat transport bothpassengersand vehiclesareoneof themeans
of transport for commuterswho wishto go across. Thosewho do not go
throughtheferry, either bychoiceor dueto thesizeof their vehicles, take
analternativerouteto thenearest bridgeroute. Thebridgewill thuscater
for thesesetsof people.Thebridgewill saveonthefollowing:
a. Cost of ferriesfor transporting passengersacrosstheriver
b. Cost of ferriesfor transporting vehiclesacrosstheriver
c. Timetakento maneuver throughthealternativerouteto get across
theriver.Thisroutetakesmoretimethangoing directlyacross.
d. Valueof timefor thepassengersthat usetheferries.
0 3000 6000 9000 12000 15000
Overhead
Direct Fixed
Crew
Engine
Hull
The total monetary value of acquiring and operating a small ferry for a
year is about USD 38,940 divided into various costs as shown in chart
above (figure 31). Average time spent on crossing a vehicle is
approximately48minutes.
The construction of the bridge will save time for both passenger and
vehiclecrossing. It also presents asafer routeof travel; most commuters
now carryonasthereislittleor no option. It isassumed that if theorigin
and destination of the current crossings is within Yende and Zaki Biam
respectively,thenatravel distanceof approximately40kmwill besaved.
C o st o f fe rry u se p e r an n u m in U S D
Third Mainland - CMS Link Bridge
I n furtherance of the transformation
agenda in the road sector and in its urgent
bid to meet the yearnings of the public, the
Federal Ministry of Works has also embraced
some institutional reforms which will pave
way for private sector financing of road
infrastructure in Nigeria.
I n furtherance of the transformation
agenda in the road sector and in its urgent
bid to meet the yearnings of the public, the
Federal Ministry of Works has also embraced
some institutional reforms which will pave
way for private sector financing of road
infrastructure in Nigeria.
Figure 31: Cost of Ferry UsePer Annum.
Cost US$
96 95
09 09
9.2
Inlinewiththetransformational agendaof thepresent administration,the
Federal Ministryof Works, throughitsBOLDapproach, hasembarked on
development of acritical road infrastructureproject described as green-
field projects. Thegreen-field project is being developed as apragmatic
approach towards tackling the burgeoning infrastructure deficit within
theroad sector.
Furthermore, theprivatesector will besolely responsiblefor driving the
green-field project whiletheprimaryroleof government will focusonits
statutory responsibilities suchas to createtheenabling climate, provide
the Right of Way (ROW) and offer guarantees in formof Viability Gap
Funding (VGF) asthecasemaybe.
In view of this, the green-field project has been identified to comprise
mainlyof two primaryalignmentsasbelow;
i. TheGoldenTriangleSuper-Highway
ii. The2nd LagosOuter Ring Road
i. GoldenTriangleSuper-Highway
TheGoldenTriangleSuper-Highwaywasadapted fromIndia'sblueprint of
the golden quadrilateral. The golden quadrilateral provides connection
betweenfour major metros of Indiawithatotal lengthof approximately
6,000km.
In Nigeria, the golden triangle of approximately 5,000 km provides
Future Key Pipeline Road Infrastructure
Project also available for investments
Proposed Golden (Economic)
Triangle Super-Highway
Super-Highway Links to Major
Cities
LEGEND
GOLDEN (ECONOMIC) TRIANGLE SUPER - HIGHWAY
NIGERIA
connectionbetweenkeyhubsof commercial activitiesacrossthecountry
namely;
(i) Lagos Port Harcourt segment approx.560km,
(ii) Port Harcourt Kano segment approx.800km,and
(iii) Lagos Kano segment approx.870km.
Thekeyfeaturesof theGoldenTriangleSuper-Highwayareasfollows:
4 to 6lanesentirelynew super-highway
Within1hour of 30 citiesand statecapitals
Crossesor withinreachof 20 statesof theFederation
It will ensure the provision of world leading services on public
highwayfacilitiesaswell asattract Real Estatedevelopment along
theROW
Privatesector financed and tolled
Enginefor economicgrowth
EconomicSpine/Corridor
Support existing keyeconomichubs
New economieswill becreated along thecorridor (e.g. tourismin
thecoastal alignment)
Largescaleemployment generation,astheproject will createover
three(3) millionjobs.
Decongests our National road network due to expected large
increaseinvehicleownership
Providesrevenueto Government
Off Balance sheet of the Federal Government where VGF is not
required
Enhancesinter-modal connectivity
Enhancesnetworkconnectionto Ports
Promotesprivatesector development.
Figure 32: Golden (Economic) TriangleSuper Highway.
98 97
09 09
Theproject isestimated to cost thesumof NGN960 billionand detailed
identificationof therouteison-going.
2 n d L ag o s O u te rR in g R o ad
The 2nd Lagos Outer Ring Road is being developed with the aimof
decongesting heavy traffic volume currently experienced within the
Lagosmetropolitanarea. For instance, theheavydutytrailersand tankers
fromthe ports and Apapa petroleumdepots will utilize this alternative
route thereby decongesting traffic along the Apapa Oshodi highway.
Under theproposed transactionarrangement, theroad project isplanned
to be implemented in collaboration with the governments of Lagos and
Ogunstate. Thedesignof thealignment hasbeencompleted and Outline
BusinessCasesavailableat thePPP officeof theFederal Ministryof Works.
Theroad project withatotal lengthof approximately99kmiscomprised
of two phases
Phase1:
Tin Can Island Igando Lagos/Otta road Interchange Lagos/Ibadan
expressway(74km);
Phase2:
Lekki Ikorodu IjebuOdeonShagamu/Beninexpressway(25km).
O th e rp ro p o se d P P P h ig h way p ro je cts availab le fo rI n ve sto rs;
I LORI N-J EBBA-MOKWA-KADUNA ROAD
458
Theroad traverses a rollingterrain. Theterrain is predominantly sloppy on short grades with noticeable
undulations. Deposits of coarsesand arenoticed at thevalleys resultingfromtheshort grades.
Carriageway width - 7.3mwide, 2.75 surfacedressed shoulders on either side; Lateritefill: 200mmlateritesub-
base, 200mmcrushed stonebase, 60mmasphalt binder coursewith bitumen content of 4.5-6%, 40mmwearing
coursewith bitumen content of 5.5-6.5%.
I lorin-Kaduna Roadis a section of thearterial North-South RouteA1/A125andforms part of theTrans-Saharan
Africaroute,
TheTrans-Saharan HighwaylinksLagos, thecommercial nervecenter of NigeriatoNiger RepublicandAlgiersin
Algeria.
Thereareabout 35 bridges alongtheroad alignment with several culverts and other hydraulic structures.
0 0
The section of the road under consideration is 458kmlong and lies between Longitude 07 30'E & 04 30'E and
0 0
Latitude10 30'N & 08 30'N.
6,855
221.2
25
Project Title
Length (KM)
Terrain
Design Specifications
Project Description
EstimatedAnnual
Daily Traffic in 2012
Estimated Project Cost
(NGN ' Billion)
Concession Period
(years)
100 99
09 09
ENUGU - 9TH MI LE - MAKURDI ROAD
251
Rollingwith gentleslopes
ExistingCarriageway width - 7.3mwide, 2.75 surfacedressed shoulders on either side; Lateritefill: 200mm
lateritesub-base, 200mmcrushed stonebase, 60mmasphalt binder coursewith bitumen content of 4.5-6%, 40mm
wearingcoursewith bitumen content of 5.5-6.5%.
I lorin-Kaduna Roadis a section of thearterial North-South RouteA1/A125andforms part of theTrans-Saharan
Africaroute,
TheTrans-Saharan HighwaylinksLagos, thecommercial nervecenter of NigeriatoNiger RepublicandAlgiersin
Algeria.
Thereareabout 35 bridges alongtheroad alignment with several culverts and other hydraulic structures.
0 0
The section of the road under consideration is 458kmlong and lies between Longitude 07 30'E & 04 30'E and
0 0
Latitude10 30'N & 08 30'N.
7,723
110
25
Project Title
Length (KM)
Terrain
Project Description
EstimatedAnnual
(NGN ' Billion)
Concession Period
(years)
Marina Bridge, Lagos.
102 101
09 09 Overview of Selected Road
J OS-AKWANGA-MAKURDI ROAD WI TH LI NK TO KEFFI FROM AKWANGA
251
Rollingtohilly, with occasional flat stretches
ExistingCarriageway width - 7.3mwide, 2.75 surfacedressed shoulders on either side; Lateritefill: 200mm
lateritesub-base, 200mmcrushed stonebase, 60mmasphalt binder coursewith bitumen content of 4.5-6%, 40mm
wearingcoursewith bitumen content of 5.5-6.5%.
J os Akwanga- Makurdi Roadislocatedin North Central Zoneof Nigeria
Theroadliesbetween longitude0830'E and0900'E andlatitude0830'N and1000'N
TheRoadalignment ispart of RouteA3which isoneof themajor North-South Highwaysin Nigeria.
TheNorthern part of therouteextendsuptoN'Djamenain Chad Republicthrough BornoStatein Nigeriawhile
theSouthern part terminates at Port Harcourt in Rivers Stateoneof theeconomicnervecenters of Nigeriawith
crudeoil facilitiesandSeaPorts.
Theroadis395kmlongandlinksfour (4)Statesof Nassarawa, Kaduna, Plateau andBenue.
Thereare19 bridges alongtheroad alignment with several culverts and other hydraulic structures.
Theroad alsolinks Keffi (RouteA234) fromAkwanga and connects theNigeria capital Abuja.
181.13
25
Project Title
Length (KM)
Terrain
Project Description
EstimatedAnnual
(NGN ' Billion)
Concession Period
(years)
6,547
Newly Rehabilitated Apapa-Oshodi Expressway.
104 103
09 09
BODO-BONNY ROAD
39
Rollingwith gentleslopes
Theroutetraversesthroughthick forests, swampsandcreeks.
It isavirginroutewithnohistoryof anydevelopment.
TheProject areaiscriss-crossedbynumerouscreeksandrivers, whichemptyintotheAtlanticOcean.
Theroadwayfromkm6+400-km30+700traverseswampyterrainwhichisinundatedbythedailytidal flow
aroundthearea.
Theroad lies between longitude07 30'E and 07 00'E and latitude05 00'N and 04 30'N
Theroad links Bodoon themainland totheindustrial I sland of Bonny that houses theLiquefied
Natural Gas (LNG) factory in Rivers State.
Therearethreebridges tobeconstructed across creeks and rivers alongthis route: Afa creek (507m);
Opobocreek (1000m); Nanabiecreek (507m)
---
24(I nitial Contract Sum)
25
Project Title
Length (KM)
Terrain
Project Description
EstimatedAnnual
(NGN ' Billion)
Concession Period
(years)
Federal Road Safety Corps patrol van funded by the
Federal Ministry of Works, Abuja
106 105
NUPEKO BRI DGE
286
Construction of a new bridge at Nupeko, located halfway between Koton Karifi Bridge and J ebba
Bridge, acrossriver Niger. Theproposedbridgewill providecontinuityof theBida-Nupeko- Pategi road
connectingState/PrimaryRoads.
Nupekoislocatedin foodproducingareaof Niger Stateof Nigeriaproducingriceandother cereals, and
fish. TheproposedNupekoBridgewill link thefoodproducingareas tolarger markets in urban areas.
Thebridgewill bethemain link totheSouth of theRiver Niger. Theproject bridgewill thereforebea
major link toSouth of River Niger, andit isexpectedtoboost economicactivitiesin thearea.
Theproposedbridgeison theFederal roadfromBidain Niger statethrough NupekotoPatigi in Kwara
state. Therefore, Kwara and Niger States can be considered as the project influence areas. Bida is
located on Latitude 9 05'5N and longititude 06 00'E, while Patiki is located on Latitude 9 00'N and
Longitude734'E.
Project Title
Length (KM)
Project Description
EstimatedAverageDaily Traffic
AverageCrossingTime(Hours)
Total Capital I nvestment Cost
(US Millions)
Economic I nternal Rateof Return
(%)
Net Present Value@12%discount
rate(US Million)
Concession Period (years)

2989
4
20.2
33.0
8.18
20
River Niger Bridge.
108 107
I BI BI RDGE
Theproposed I bi bridgelocated in Taraba stateis a critically important commercial link for thenorth and
south of river benueandenhancethemovement of people, agricultural produceandservices.
I bi is an administrativetown located approximately 154KmNorth-East (Upstream) fromMarkurdi where
thenearest roadcrossingexists, thenext upstreambridgeacross thebenueriver is at Numan in Adamawa
State.
Project Title
Project Description
Traffic generated per day @4%,
6%& 8%for 2015
Crossings/year
Total Cost of Construction
(NGN' Million)
Total Project Cost (NGN '
Million)
Government Grant NGN million
Economic I nternal Rateof
Return (%)
Net Present Value@12%
discounted rate(US ' Million)
1000/1000/1100 respectively
225,901
34.9

5405.4

270.3
37.5
95.74
25
BeforetheInterventionof FMW After
Z aria - K an o R o ad
110 109
LAGOS-I SEYI N-KI SHI -KAI AMA ROAD Project Title
Length (KM)
Terrain
Project Description
AverageDaily Traffic Volume
Cost of Civil Works (NGN'
millions) @5%VAT
Total Cost of theProject (NGN
Million)
35,406
112,303.84
156,095.89
22
414.4
Theterrain varies frommoderately plain tohighly rolling. Theproject alignment has steep gradients at
someplaces.
TheThickness of theWearingCourse: 40mm
TheThicknessof theBinder Course: 60mm
TheThicknessof theBaseCourse: 250mm
TheThicknessof theSubBaseCourse:230mm
Theproject road is an alignment which comprises of existing2-lanealignments starts fromKm33.000 of
Badagry-Lagos expressway and ends at a roundabout at Kaiama town. Theroad traverses through Lagos,
Ogun, Oyoand Kwara states.
Thereare20major junctionsin theinfluencearea/ rural areasof theproject road
Thereare12existingbridgesalongtheproject roadsection. Their total length measuredis465m.
Thereare93culvertsin theproject roadsection, of which 85%arein goodcondition but requirean extension.
Ozumba MbadiweRoad, Lagos.
112 111
Project Title
Length (Km)
Project Description
AverageDaily Traffic
Economic I nternal Rateof Return
(%)
Net Present Value@12%
discounted rate(US Million)
65,388
334
36.8
639.18

25

ONI TSHA - ENUGU ROAD
108.6
200mmaggregatesubbasehardcore
250mmaggregatebasecourse(CrushedStone)
225mm aggregateroadbase(filter stone)
60mmbinder course
40mmwearingcourse
Theproject road is a critically important commercial link between Onitsha, thelargest market in West
AfricaandEnugu.
Theproject roadisoneof themain linksbetween theeast andwest of thecountry.
Theproject roadremainsthedominant meanstofacilitatecollection anddistribution of productsfromthe
popular market andnearbyfarmlandstoother partsof thecountryalongthisalignment.
Total Cost of theProject
(US ' Million)
BeforetheInterventionof FMW After
O n itsh a H e ad B rid g e - U p p e r I we ka
114 113
09 09
9.3
Based on empirical evidence, it has been established that funding road
infrastructurethroughtheannual budgetary allocationhas provento be
unsustainable. Moreso, the economic implication of the absence and/or
decay of existing road infrastructure has also been highlighted into
perspective. Consequently, the Federal government of Nigeria has
embarked on securing alternative mechanism of financing road
infrastructure development other than the usual meager annual
budgetaryallocation.
With this innovative approach, the present administration through the
Federal Ministry of Works haverecorded tremendous success intackling
theenormouschallengesfacing deliveryof enhanced qualityand capacity
road networkof highwaynetworkinNigeria.
In view of this, there have been a considerable number of road
infrastructure projects/programfunded by alternative means that have
recorded aremarkably highsuccess rate. Thefollowing areonly afew of
theseprojects/programsidentified to fall under thiscategory;
F e d e ral R o ad S e cto rD eve lo p m e n t P ro g ram F R D P )
The FRDP is a first phase of the implementation process of the Road
Sector Development Management Program(RSDMP). Moreso, theFRDP
isoneof thebiggest road infrastructuredevelopment projectsinNigeria.
Infact,oncecompleted,it will represent oneof themost visiblesymbolsof
Case Studies of Successful
Projects/ Program Funded by Alternative
Sources
moderndevelopment acrossthecountry.FRDP isanenormouschallenge,
assuchtheFederal Government of Nigeriahasentrusted theexecutionof
thisproject to theRoad Sector Development Team(RSDT). Asdiscussed
previously, RSDT is a self-accounting, performance-based semi-
independent unit within the institutional framework of the Federal
Ministryof Works.
Furthermore, the mandate of the RSDT is to initially manage the
implementationof RSDMP onbehalf of theFederal Ministryof worksover
a10-year period withtheassistanceof funds availablefrommulti-lateral
agencies. The funding includes USD330million credit from the
International Development Association- IDA (i.e.World Bank- WB),and a
USD162millionloanfromtheAfricanDevelopment Bank(AfDB) etc.
Thefollowing highlights thebeforeand afterscenarios of construction
worksonsomeof theseselected road projects.
WO R L D B A N K P R O J E C T S
SECTION OF RUMUKRUSHI-CHOKOCHO ROADIN RIVERS STATE
Before After
116 115
SECTION OF J EBBA-LAFIAJ I ROADIN NIGER STATE
Before After
SECTION OF ENUGU-ABAKALIKI ROADIN NIGER STATE
Enugu-Abakaliki Road awarded inDecember 2011and flagged-off inFebruary 2012. Contract Sumof US$57.8million
Grading of Shoulder Scarificationof Shoulder
118 117
A F D B P R O J E C T S
SECTIONOF ABAKALIKI-MBOK (OGOJ A J UNCTION) ROAD
Abakaliki - OgojaJ unctionawarded inNovember 2009and completed inJ une2012(AfDBfunded). Contract Sumof approximatelyUS$68.3million.
Moreso,OgojaJ unction-IkomRoad also awarded inDecember 2011and flagged-off inFebruary2012.Contract Sumof US$39.8million
Before After
IKOM MFUMROADASAT COMPLETIONINJ UNE 2012
Ikom- Mfum, awarded inNovember 2009and completed inJ uly2011(AfDBfunded). Bothcontractsarewithcombined contract sumof approximately
US$18.6m.
Before After
120 119
These two road projects funded by Africa Development Bank have been
earmarked under the emerging concept of Output-based Performance
RateContract (OPRC). TheOPRCinitiativeis described as astep towards
sustainability of road infrastructure projects embarked upon by
Government and multilateral agencies. The initiative is employed in
developed countries as standard industry best practice for the award of
international contract.
The Federal Ministry of Works (FMW) represented by Road Sector
These two road projects funded by Africa Development Bank have been
earmarked under the emerging concept of Output-based Performance
Rate Contract (OPRC). The OPRC initiative is described as a step towards
sustainability of road infrastructure projects embarked upon by
Government and multilateral agencies. The initiative is employed in
developed countries as standard industry best practice for the award of
international contract.
Development Team(RSDT) embarked on invitation of sealed bids from
eligible bidders for the Output and performance-Based Road Contract
(OPRC) for theabovealignments.
TheOPRCroad maintenanceservicesshall comprisebut not limited to the
following services: Maintenance of pavement structure; maintenance of
road shoulders; maintenance of roadside areas (removing obstructions
and vegetation control; maintenance of bridges, culverts and drains;
maintenanceof trafficsigns,guardrails,etc.
ThreeNewly Constructed Lanes - Upper I weka, Onitsha.
122 121
10 10 Conclusion Conclusion
10. Conclusion
The Federal Government of Nigeria has identified private sector
participationinthedevelopment of theroad sector asasustainable
approach towards tackling the road infrastructure deficit in the
country. Furthermore, the government of Nigeria through the
Federal Ministry of Workshastakenbold initiativesinthisdirection
by developing OutlineBusiness Casesthroughnotabletransaction
advisory services for viable and bankable major highways in the
nation to attract private sector and foreign investments into the
sector.
Following anexpanding population, increased economic activities
and the pressing need to connect, there has been a massive road
infrastructure deficit hampering progress and failure to support
thereby stunting growth and development in many areas. For
instance, citing thereal estatesector, oneof thecritical factorsthat
determine the value of any real estate property is the amenities
available in proximity. One of such amenities is provision of road
infrastructure. Typically, access roads that provide access to
communities and businesses for smart growth will increase
property valueswhileroadsthat serveasbarriers, or redirect traffic
away fromparticular areas,will causeadeclineinproperty values.
This report provides anoverview of theroad sector inNigeriaand
also identified selected road infrastructure projects through a
review of outline business cases (OBC) developed by the public-
private partnership of the Federal Ministry of Works. The
informationcontained inthisreport havehighlighted thebasic
indicatorsof viableand bankableroad infrastructureprojectsinthe
road sector namely Capital costs, traffic volume, user fees and
concessionary period for eachof theselected projectsindetails.
However, in-depth details confirming the revenue streams,
allocationof risks, net present valueanalysis (NPV), and sufficient
scale for absorbing transaction costs as well as high transaction
success rate are available in the Outline Business Cases that have
beendeveloped for eachof thealignment. Moreso, theirresistible
offer interms of informationthat has beenprovided by this report
will securetheinterest of most financiersapproached for funding.In
addition,theother partsof thereport havealso identified key future
pipeline road projects like the Super Golden Triangle and Lagos
Outer Ring Roadsfor privatesector participation.
To achieve scale and a friendly business environment, the
government of Nigeria has put in place adequate mechanisms to
ensureafavourableclimatefor businessesto thrive.
Finally, wewelcomeall prospectiveinvestorswho areinterested in
building not just road infrastructurebut economic corridors within
thelargest Africannationintheworld.
I koyi - Dolphin - Marina - Sangross I nterchange
124 123
11 11
Additional References
Reference
Invigorating Investment InitiativethroughPublic PrivatePartnership, Ministry of Finance, Republic of Bangladesh, J une2009.

http://cell.upppc.org/index.php?option=com_content&task=view&id=14&Itemid=26
Vanguard Newspaper; N1.4 TrillionAppropriated for Roads in12-Years, by EmmanOvuakporie, 11December 2012.
Public ParticipationinInfrastructureDatabase, World BankGroup &Public-PrivateInfrastructureAdvisory Facility,
http://ppi.worldbank.org/features/October2009/didyouknowOctober2009.pdf October 2009.
Highway Bonds: AnEmerging Optionfor Increasing Highway Financing, by TomHoward.
Vanguard Newspaper; TheAttractiveprospects for FGNBonds in2013 FBNCapital, by Peter Egwatu, 7J anuary 2013.
Officeof theDebt Management Office; http://www.dmo.gov.ng/fbm.php.
TheNation; FERMA seeks 5%fuel taxto fixroadsby GbadeOgunwale, Asst. Editor, Abuja, J anuary 25, 2013
Businessday; FECapproves useof N3trillionpensionfund for infrastructuredevelopment, by KehindeAkintola, 11December 2012.
OsunDefender; Lagos-Badagry Expressway: A 'Boko-Haram' intheWestby DansuPeter, October 25, 2012.
TheEffects of Road InfrastructureonProperty Value: http://www.ehow.com/facts_5526410_effects-road-infrastructure-property-
value.html#ixzz2Lv4NIDnG
OutlineBusiness Case: Abuja Kaduna-Kano Roadby SNC-LAVALINInternational Inc./YarosonPartnership Ltd.
OutlineBusiness Case: Lagos Badagry Semeborder Roadby SNC-LAVALINInternational Inc./YarosonPartnership Ltd.
OutlineBusiness Case: Kaiama-Babana-Kaoje-Gwambu-Fokku-Sokoto Roadby Sanol Engineering Consulting Ltd/Voyants Solutions PVT. Ltd.
OutlineBusiness Case: Shagamu Benin- AsabaRoadby RoughtonInternational/ Allot Nigeria
Businessday Newspaper; PPP as atool for InfrastructureDevelopment inNigeria, by Dominic Obuzuwa, 20 October, 2011.

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