ALTERNATIVE FUNDING ARRANGEMENTS FOR MAJOR CAPITAL PROJECTS

REPORT of the Committee on ALTERNATIVE FUNDING ARRANGEMENTS FOR MAJOR CAPITAL PROJECTS       May 2011

	Page
INTRODUCTION
Background	7
Terms of Reference	9
Team Composition	9
APPROACH TO ASSIGNMENT
Methodology Adopted	10
Procedures and Timelines	11
Number of meetings & Documents Reviewed and Stakeholders (groups/individuals) Contacted	13
Sources of data, etc.	13
REVIEW OF INFRASTRUCTURE POLICIES, PROGRAMMES & PROJECTS: 2004 – 2010
Brief Analysis on Key Areas of Infrastructure	14
Key Challenges	19
INFRASTRUCTURE DEVELOPMENT:POLICIES, PROGRAMMES & PROJECTS: 2011- 2015
Overview of Infrastructure Development in Nigeria	22
Proposed Key Policies, Programmes and Projects	24
Power	24
Housing	27
Communication	29
Niger Delta	33
Water Resources	34
FCT	36
Oil and Gas Infrastructure	37
Seaports & Inland Waterways	38
Rail Transport	40
Aviation	41
Road & Bridges	42
FUNDING OD INFRASTRUCTURE PROJECTS: 2011- 2015
Project Financing Options	45
Funding of Critical and Urgent Projects	55
Criteria for Assigning Funding Sources	55
Prioritization of Projects	56
Neither Critical nor Urgent Projects	58
Matching Projects with Funding Sources	58
Critical Infrastructure Delivery Framework	71
Infrastructure Delivery in other similar jurisdictions	71
Infrastructure Delivery in Nigeria	73
Proposed Infrastructure Delivery Framework	73
CONCLUSIONS & RECOMMENDATIONS	77
APPENDICIES
Assumptions
Criteria for Identifying Priority ProjectsCriteria for determining Bankability
List of Neither Critical nor Urgent Projects

LIST OF TABLES

Table 1	Procedures and Timelines adopted by the TWG	12
Table 2	Meeting with key MDAs	13
Table 3	Summary of Power Projects	24
Table 4	Summary of Housing Projects	27
Table 5	Summary of ICT Projects	29
Table 6	Summary of Niger Delta Projects	33
Table 7	Summary of Water Resources Projects	35
Table 8	Summary of FCT Projects	37
Table 9	Summary of Oil & Gas Projects	38
Table 10	Summary of Seaport & River port Projects	38
Table 11	Summary of Railway Projects	40
Table 12	Summary of Aviation Projects	42
Table 13	Summary of Roads & Bridges Projects	43
Table 14	Analysis of Projects	57
Table 15	Funding of Power Projects	59
Table 16	Small Hydropower Projects	60
Table 17	Funding of Roads & Bridges Projects	62
Table 18	Funding of Railways Projects	64
Table 19	Funding of Ports & Inland Waterways Projects	65
Table 20	Funding of Aviation Projects	66
Table 21	Funding of Housing Projects	68
Table 22	Funding of Oil & Gas Projects	69
Table 23	Funding of RBDA Projects	71

LIST OF FIGURES

Figure 1	GDP of Selected Countries	7
Figure 2	A bridge to the Future	8
Figure 3	Existing Oil & Gas Pipeline Projects	17
Figure 4	Average per capita electricity usage	19
Figure 5	Sources of Infrastructure funding	45
Figure 6	Nigeria’s debt profile	50
Figure 7	Analysis of Projects	56
Figure 8	Distribution of Critical Projects	57
Figure 9	Sectorial Funding Requirements	59
Figure 10	Nigerian Power Infrastructure	61
Figure 11	Nigerian Road Infrastructure	62
Figure 12	Planned Railways Network	64
Figure 13	Proposed Seaport and Waterways Projects	65
Figure 14	Major Airport Infrastructure	67
Figure 15	Power Sector Gas Demand	68
Figure 16	Nigeria’s Pipeline Infrastructure	68
Figure 17	Planned Oil & Gas Pipeline Development	69
Figure 18	River Basin Development Authorities	70
Figure 19	Estimated Infrastructure Spending for Next 3 Years	72
Figure 20	Critical Infrastructure Delivery  Framework	74
Figure 21	Process Flow and Timelines	80
Figure 22	Project Implementation  Framework	81

GLOSSARY OF TERMS

ADB	Asian Development Bank
AFD	Agence Française de Développement
AfDB	African Development Bank
Afrexim	African Export Import Bank
ATI	African Trade Insurance
Bbl	Crude oil Barrel
BOF	Budget Office of the Federation
Capex	Capital Expenditure
CBN	Central Bank of Nigeria
China Eximbank	Export Import Bank of China
COFACE	COFACE of France
CPC	Critical Projects Coordinator
DFID	UK Department for International Development
DFID	United Kingdom Department for International Development
DFIs	Development Finance Institutions
DMBs	Domestic Major Banks
DMO	Debt Management Office
EBA	Enhanced Budgetary Allocation (EBA)
EC	European Commission
ECA	Excess Crude Account
ECGC	Export Credit Guarantee Corporation of India
ECGD	Export Credit Guarantee Department of United Kingdom
EIA	Environmental Impact Assessment
EIB	European Investment Bank
EPC	Engineering, Procurement and Construction
Exim Bank	Export Import Bank of the United States
FGN	Federal Government of Nigeria
FMA	Federal Ministry of Aviation
FMF	Federal Ministry of Finance
FMP	Federal Ministry of Power
FMT	Federal Ministry of Transport
FMW	Federal Ministry of Works
GDP	Gross Domestic Product
HKECIC	Hong Kong Export Credit Insurance Corporation
ICRC	Infrastructure Concession Regulatory Commission
IDB	Islamic Development Bank
IPFA	International Project Finance Association
IPP	Independent Power Producer
ITWG	Infrastructure Technical Working Group
JBIC	Japan Bank for International Cooperation
JICA	Japan International Cooperation Agency
KBE	Knowledge-Based Economy
KEXIM	Export Import-Bank of Korea
LAMATA	Lagos Metropolitan Area Transport Authority
LNG	Liquefied Natural Gas
MDAs	Ministries, Departments and Agencies
MNDA	Ministry of the Niger Delta Affairs
NIAF	Nigerian Infrastructure Advisory Facility
NDDC	Niger Delta Development Commission
NEMT	National Economic Management Team
NNIP	Nigerian National Infrastructure Plan
NNPC	Nigerian National Petroleum Corporation
NPC	National Planning Commission
NSWF	Nigerian Sovereign Wealth Fund
O&M	Operations and Maintenance
OPIC	Overseas Private Investment Corporations
OPTS	Oil Producers’ Trade Section
PEF	Project Execution Framework
PENCOM	National Pension Commission
PTFP	Presidential Task Force on Power
RBDA	River Basin Development Authority
SHPP	Small Hydropower Projects
SIF	Special Intervention Fund
SINOSURE	China Export & Credit Insurance Corporation
TEBC	Taipei Export Import Bank of China
TPA	Tonnes per annum (LNG)
UNIDO	United Nations Industrial Development Organization
USAID	United States Agency for International Development
VGF	Viability Gap Fund (VGF)
WB	World Bank

SECTION ONE INTRODUCTION

 

1. INTRODUCTION

1. Background

FIGURE 1

Infrastructure forms the foundation of all development in a country.  The lack, or inadequacy, of infrastructure restricts productivity and limits competitiveness. Despite Nigeria’s position as a major oil producer and exporter for over four decades, its stock of basic infrastructure falls far short of the minimum required for meeting the demands of a 21st-century global economy. The country’s infrastructure has remained grossly inadequate, obsolete, dilapidated and poorly maintained. Water supply, sewerage, sanitation, drainage, roads, electricity, waste disposal and most urban infrastructure, have not kept pace with population growth and rapid urbanization. Periodic and routine maintenance, arguably the most cost-effective infrastructure spending, is largely lacking.

The impact of Nigeria’s infrastructure deficit has been enormous and quite devastating as shown in Figure 1 where Nigeria’s GDP lags behind the GDP of other countries in the group.

The country’s challenge with the delivery of critical infrastructure continues to impact negatively on the cost of doing business, investment and capital inflow into the country. According to the Debt Management Office (DM0), Nigeria requires capital investments of over US$100 billion, excluding routine maintenance and operating costs to close this yawning infrastructure gap. The country is currently investing about 7% of Gross Domestic Product (GDP) in infrastructure development. While this figure is clearly above the sub-Saharan Africa’s average, it however pales in comparison with such emerging economies as China with 12% of GDP investment in infrastructure and services.

FIGURE 2

Morgan Stanley predicts that emerging economies will spend $22 trillion (in today’s prices) on infrastructure over the next ten years, of which China will account for 43% (see Figure 2). Indeed, China has spent more (in real terms) in the past five years than in the whole of the 20th century. Last year Brazil launched a four-year plan to spend $300 billion to modernize its road network, power plants and ports. The Indian government’s latest five-year plan has ambitiously pencilled in nearly $500 billion in infrastructure projects. Russia, the Gulf States and other oil exporters are all pouring part of their high oil revenues into fixed investment.

Cognizant of these facts, Mr. President in August 2010 approved the constitution of a “Committee on Alternative Funding Arrangements for Major Capital Projects” under the distinguished Chairmanship of the Vice President, among other things:

• Examine how best to fund major projects without being limited to line budgeting to avoid project abandonment;
  • Define manner in which private sector should be engaged for funding support
  • Any other relevant matter.

Following the inauguration of the Committee, the Vice President, charged the ICRC with the responsibility of identifying infrastructure projects whose delivery is key to the attainment of the objectives of the National Vision 20:2020, establish their delivery status, determine their funding requirement, and propose optimal funding methods and project delivery framework likely to ensure an expedited and accelerated completion of the projects. This charge is in line with an earlier decision of the reconstituted Nigerian Economic Management Team (NEMT) to set up a Technical Working Group (TWG) of the NEMT to develop a Medium Term (3-4 years) Action Plan for critical infrastructure.^[1]With the setting up of a Thematic Group on Infrastructure, following the inauguration of the Committee on Prioritization of Policies, Programmes and Projects for implementation in the period FY 2011-2015, it was agreed that the output of the TWG on Critical Infrastructure be incorporated into the latter Committee’s report.

This report therefore derives from the work of the TWG and aims at establishing an optimal mix of resources and policy options to ensure an accelerated delivery of priority infrastructure projects in Nigeria within the next 5 years.

1. Terms of Reference

The terms of reference that derives from the objectives stated above are to:

1. Identify key priority infrastructure projects that will aid economic growth, productivity, create wealth, catalyze economic growth and increase competitiveness;
2. Determine the completion status and funding requirements for the identified priority infrastructure projects;
3. Identify possible methods and sources of funding/financing for the execution of the projects;
4. Develop a framework and criteria, which ensures a fit between the project funding needs and method of funding, generate a list of prioritized projects with funding sources likely to ensure an expedited and cost-effective completion of these projects;
5. Recommend an appropriate framework for the expedited execution of the priority projects.

1. Team Composition

The composition of the TWG with responsibility for the TOR in paragraph 1.2 above is as follows:

• Director General (ICRC) – Chair
• Ministry of Power
• Ministry of Transport
• Ministry of Works
• Ministry of Niger Delta
• Ministry of Aviation

SECTION TWO APPROACH TO ASSIGNMENT

• Methodology Adopted

Prioritizing Critical and Urgent Infrastructure Projects

In carrying out this assignment, the following methodology was adopted:

First, infrastructure projects were drawn from the National Implementation Plan (NIP) of the National Vision 20: 2020 and additional projects submitted by the MDAs. These were harmonized with the Federal Government’s Medium Term Sector Strategy (MTSS)[2], and subsequently screened against the following agreed criteria to produce a list of prioritized projects.

• Strategic fit with the National Vision 20: 2020
• Expected economic impact
• Interconnectivity of Projects
• Relationship with sector goals
• Status of projects (state of completion)
• Geographical spread for even development
• Clarity of justification; and
• Likelihood of completion before 2015.

Second, weights were assigned to these criteria in relationship with their perceived strengths in the decision model. Details of these criteria, which have been developed largely with the technical assistance of the NIAF of DFID, are provided in Appendix 2 to this Report.

Third, the list of projects prioritized in accordance with the above criteria, were further subjected to economic viability test to arrive at the following data sets:

• Critical and Urgent and commercially viable and bankable ( i.e. able to accommodate some level of debt financing)
• Critical and Urgent but not bankable viable
• Neither critical nor Urgent

The criteria employed in determining bankability are as follows:

• Existence of appropriate policy, legal, institutional framework;  
• Ability of project to establish revenue stream;   
• Ability of project to deliver positive ROR;              
• Sufficient economies of scale to justify transaction costs;              
• Ability to allocate project risks.

Details of these criteria are provided in Appendix 3 to this Report.

Funding for Infrastructure

The tasks that were undertaken with a view to determining the optimal funding sources and forms which meet the objective of speedy delivery of our critical infrastructure within the shortest possible timeframe include:

1. Review of all available forms and sources of funding, and their associated risks;
2. Agree on a set of criteria for identifying sources and forms of finance that satisfy our objective of accelerated implementation of infrastructure and services;
3. Against the criteria set in (b) above, produce a list of possible funding sources;
4. For each of the critical infrastructure projects identified, assign a funding source or group that best meets the objectives of accelerated infrastructure delivery.

For infrastructure delivery to be put on fast track, the source of funding must have the following characteristic:

1. Longer Maturity: Infrastructure finance must have maturities of between five and 40 years, to reflect both the length of the construction period and the life of the underlying asset that is created.

• Large Amounts: Any meaningful sized infrastructure project costs a great deal of money. The construction cost of a kilometer of road in Nigeria, for instance, could be as high as N56million[3]. Consequently very large amounts of money could be required to put any meaningful infrastructure asset in place;

• Low Interest Rate: It is desirable that the cost of funds for infrastructure should be low. High pricing of funds could have very devastating effects, more so, given that returns on investment in infrastructure are usually low.

• Procedure and Timelines

The procedure and timelines adopted by the TWG in carrying out this assignment are as shown in the table below:

TABLE 1

PROCEDURE AND TIMELINES ADOPTED BY

THE TWG

S/No.	Description	Objective	Deliverables	Timeline for Completion
1	Hold meetings of the TWG along thematic areas and fortnight briefing sessions of the TWGs	To collate documents needed for the respective thematic groupsTo address all aspects of the TOR and provide technical reports for main Committee	Sectorial zero draft reports in accordance with report outline	February 22 to March 31, 2011
2	Identification of key Federal MDA projects and programme and the associated funding requirements to be delivered within a period of 5 years, 2011 – 2015 by the various thematic TWGs	To produce a credible strategic development framework that will guide budgetary proposals in accordance with the aspiration of the 1st NIP for NV20:2020	Detailed compendium of projects to be financed within a period of 5 years framework; in accordance with the aspiration of MDG & NV20:2020	Mid-March 2011
3	Harmonization of the framework for monitoring projects and programmes by the TWG	To produce a credible framework that will facilitate effective monitoring of projects	Approved template for presentation of projects to the FEC	End March 2011
4	Production of zero draft report of the Committee by the TWG	To have a zero draft document which will form basis for discussion by members	Zero draft report	1st April 2011
5	Retreat for Committee and TWG members to finalize draft report	To undertake in-depth review of the draft report of the Committee with a view to attaining a credible report on prioritized projects for 2011 – 2015	Final draft report of the Committee	End April 2011

• Number of meetings/Documents Reviewed

The TWG set up a number of meetings with key MDA for purposes of providing insights and updates of the ongoing and planned programmes and projects for the FY2011-2015. The table below provides a synopsis of these meetings.

TABLE 2: MEETINGS WITH KEY MDAs 

S/No.	MDAs involved in Meeting	Purpose	Date/Time	Documents Received
1	Nigerian National Petroleum Corporation (NNPC)	Meeting to comply with Presidential Directives to the National Economic Management Team (NEMT) on Funding Critical Infrastructure in Nigeria	23rd February 2011 Started: 9.20am Ended: 12.45pm	Update on planned and ongoing Oil and Gas infrastructure.
3	Federal Ministries of Transport, Works and Niger Delta Development Commission (NDDC)	Meeting to comply with Presidential Directives to the National Economic Management Team (NEMT) on Funding Critical Infrastructure in Nigeria	1st March 2011 Started: 1.20pm Ended: 5.10
4	Federal Ministry of Aviation	Meeting to comply with Presidential Directives to the National Economic Management Team (NEMT) on Funding Critical Infrastructure in Nigeria	17th March 2011	Letter sent to State House confirming all the Ministry’s critical projects.

• Sources of Data and Information

The sources of data and information relied upon in this report are as follows:

• National Implementation Plan (NIP) of the National Vision 20: 2020;
• Additional projects submitted by the MDAs;
• The Federal Government’s Medium Term Sector Strategy (MTSS);
• Interviews with key infrastructure MDAs.
• Report of the African Development Corporation on “Financing Critical Infrastructure.
• The Report of the NIAF of DFID on Project Prioritization.
• Master plan for an Integrated Transportation Infrastructure.
• Road map for Nigeria Water Sector. Federal Ministry of Water Resources

SECTION THREEREVIEW OF INFRASTRUCTURE POLICIES, PROGRAMMES & PROJECTS: 2011- 2015

• BRIEF ANALYSIS ON KEY AREAS OF INFRASTRUCTUREPower

The broad vision for the power sector is to meet the demand for adequate and sustainable power in all sectors of the Nigerian economy and in all parts of the country at affordable costs. During the period, Government will invest in direct electricity generation as well as provision of appropriate legal and regulatory environment for private sector participation.

Of the estimated 140 million Nigerians, less than 40% have access to electricity power characterized by very frequent blackouts and brownouts. With an installed capacity of only 6,654 MW for Nigeria’s burgeoning population (compared to about 40 MW for South Africa’s 23 million people), it is not difficult to see why electricity power is the bane of Nigeria’s economy.

The thrust of the Federal Government’s current reform effort in the power sector is to reverse this trend, strengthening of the weak and inadequate transmission network, un-bundling and privatizing of the State’s electricity company, Power Holding Company of Nigeria (PHCN) increase of installed generation capacity to 10000 MW by 2011, introduction of an independent regulator and various tax and investment incentives to incentivize the private sector in the industry.

Efforts by the Nigerian government in this direction include commissioning independent power producers (IPPs) to generate electricity and sell it to PHCN. IPPs currently under construction include the 276-MW Siemens station in Afam, Agip’s 450-MW plant in Kwale, ExxonMobil’s 388-MW plant in Bonny and Eskom’s 388-MW plant in Enugu. The River State Government has contracted Shell to expand the 700-MW Afam station. Other power plants likely to come on stream are four thermal power plants with a combined capacity of 1,234 MW to meet its generating goal of 6,500 MW by 2006: Geregu, Alaoji, Papalanto, and Omotosho all recently came on stream. Fourteen other hydroelectric and natural gas plants are planned for completion by 2013.

Under a comprehensive electricity reform plan, encompassing short and long-term measures to resuscitate the crippled sector recently released by the Federal Government of Nigeria, government will gradually deregulate the power sector and attract private sector investment of $3.5 billion annually in a bid to move power generation from the current 3,500 megawatts to 40,000mw by the year 2020. In the interim, government hopes to attain the 7,000mw by April 2011, given recent moves to make the price of gas attractive to enable oil companies invest in gas processing and transmission projects. Government will also invest $3.5 billion in the construction of transmission lines that could evacuate 14,000mw of electricity to the national grid when independent power plants currently under construction come on stream by 2013.

This roadmap, recently unveiled by the FGN, would commence with the privatization of generation and distribution arms of the electricity supply chain. The transmission arm would still be in government hands but its management might have to be contracted out to private firms. The FGN does not intend to make any further investment in thermal power station. Investment in this area will be left to the private sector as IPPs. As regards hydro power plants, the FGN will fund the basic infrastructure and concession the plants to the private sector for O&M and further expansion. Government hopes that Nigeria might attain regular power supply by the end of 2013.

• Housing

The demand for housing in Nigeria is significant and growing at an alarming pace. The backlog of low and middle income groups is very high, reaching a crisis level in some cities in the country, which is exacerbated by the rapid urbanization of the population. The problem of housing shall become even more acute, as has been predicted by the World Bank, resulting in a housing crisis by 2020 if adequate ameliorative measures are not taken.

Housing is a key component of economic growth and development. It is significant in the calculation of the Human Development Index (HDI).In addition to other factors, such as access to basic infrastructure, which is used as the measure for current living standards; housing satisfies one of the basic human needs. It is a durable consumer item that significantly increases workers health and wellbeing.  Housing is also part of the critical infrastructure to accelerate economic development, and forms a substantial part of the Gross Domestic Product (GDP) of most developed countries.

Nigeria, with an estimated population of 150 million, requires at least additional 720,000 housing units per annum (based on an estimate of 9 dwelling units a year per 1,000 of population), not only to replenish decaying housing stock, but also to meet rising demand and avert a housing crisis by 2020. Successive efforts to meet this target have failed as housing deficit now stands at over 17 million units in Nigeria. Most urban dwellers in Nigeria today, according to studies, live in shanty-towns, dilapidated houses, and unsanitary conditions without basic amenities such as running water. Consequently, at least N60 trillion is required to provide 17 million housing units at N3.5 million per unit.

The dearth of affordable housing is further exacerbated by the rate of population growth and the rapid urbanization on Nigeria. The urban population over the past 3 decades has been growing at the rate of 5.8 per cent per annum. The urban population which currently stands at 48.2 percent is projected to rise to 60% of the population by 2025. Today, there are more than 840 urban centres, and ten cities, with their population at over one million. Clearly this trend poses a great challenge to policy makers.

Although private home ownership received a boost with the recent auctioning of Federal Government houses in Abuja and Lagos,  through a combination of individual savings and limited mortgage finance from FMBN, the exercise was a mere drop in the bucket, given the size of current demand.

The delivery of decent housing accommodation has been under-developed in Nigeria. In the same vein, the forward and backward linkages associated with housing had suffered the same fate. Public sector driven housing policy stance has created substantial challenges to the delivery of affordable housing programme in the country, resulting in substantial housing deficit.

• Information Communication Technology

ICT percolates every human endeavour from food security, commerce and industry, physical and social infrastructure to the entertainment industry among others. The increasing globalization driven by ICT makes it imperative for Nigeria as an emerging market to irreversibly consider the application and promotion of ICT strategy to facilitate rapid growth and development. This will involve the development of a vibrant ICT sector to drive and expand the national production frontiers in agriculture, manufacturing and service sectors. It would also require the application of new knowledge to drive the soft sectors such as governance, entertainment/ public services among others.

• Niger Delta

The Niger Delta region is of significant importance to the economy of Nigeria. It is the oil and gas base of Nigeria. Unfortunately, past development planning efforts had failed to adequately address the region’s needs due to lapses in their implementation. While various efforts are currently being made to address the problems in the region, there is a need to ensure sustainable development in the area. During the Plan period, Government will intensify action to ensure proper coordination of efforts of all stakeholders towards the realization of NV 20:2020 objectives of bringing peace and stability to the region.

FIGURE 3: EXISTING OIL & GAS PIPELINE PROJECTS

Source: World Facts Book 2008

Water Resources

Water, particularly clean, safe and potable water is too integral to human existence. The human body of 70 kilograms in weight, is made up of 42-60 percent of water.  In order to maintain this balance, an average human being needs about 2.5 litres of water every day. In spite of its indispensability to life, water in its clean, pure and safe state exists only briefly in nature. In Nigeria, such factors as environmental degradation, social infrastructural decay, poor maintenance culture and rural-urban migration, combine with population explosion to ensure that clean, safe and portable water remains scarce. Until the recent entrance of multinationals, blue chip local companies and the pharmaceutical companies in the industry, the gap in the supply of portable water was largely met by quacks by way of sachet water of dubious purity otherwise known as “pure water”.

Water remains one of the major primary drivers of public health. Agriculture and food security are also critically dependent on water availability as the planting time and crop yield are both determined by the onset, duration and the amount of rain that is recorded in a rainy season. Government recognizes the fact that potable water supply is indispensible for a sound and healthy living, improves infant and maternal mortality.

• FCT

Abuja, the capital city of Nigeria, is a well-planned city set down on 8000-square-kilometer of rolling hills, isolated highlands and a picturesque view with other endearing features that is the delight of a first time visitor. It is an ultra-modern city with a scenic landscape that can easily compare with any other modern city in the developed world.

Initially intended to house diplomatic missions, ministries, the headquarters of the civil service, and the three branches of the federation’s government namely executive, legislative, and judicial, all three rooted at the foot of the impressive Aso Rock. Its design provided for a four-phase development with the city divided into sectors and further subdivided into districts. It was projected that each sector would accommodate between 100,000 and 250,000 people. Thus the city would have a population of 1.60 million people and a total of 3.1 million people at the end of phases one and two.

• Oil and Gas

The oil industry dominates Nigeria’s economy and accounts for 95% of exports earnings. The country has the largest reserves in Sub-Sahara Africa, with a total of 36 billion bbls onshore and offshore, and total production output of approximately 2.3bn bbls per day.Once the two new LNG plants at the Bonny Island facility are completed, Nigeria’s LNG output is expected to quadruple to about 40milliontpa.

When the Bonny Island LNG plant came on stream in 1999, Nigeria became the third largest African LNG exporter, after Algeria and Egypt. Despite this, Nigeria remains one of the least exploitative gas-producing nations. Following a series of government-amended targets, current production, at approximately 615,000 bpd equivalent, remains lack-lustre given the 2010 target of 4.5mn bpd equivalent. With estimated untapped proven reserves of gas (260trncubic feet, or 3x the nation’s crude oil resources), domestic demand growth is effectively capped by production. We estimate domestic demand could grow at 2.5% per year if it could be met by supply.

• Transport

Investments in these subsectors are strategic to national development and economic growth. The development of a world class infrastructure that will support other sectors of the economy, particular the productive sector is a necessary pre­condition for achieving Nigeria’s quest to be one of the twenty largest economies in the world by the year 2020. There is no gainsaying that an efficient transport system facilitates the movement of people and goods, reduces the cost of production and thus, enhance global competitiveness.

• Agriculture Infrastructure

River Basin Development Authorities (RBDAs) across Nigeria came into existence following the promulgation of Decree 25 of 1976. There are 12 RBDAs nationwide but only 11 are known by law. This was as a result of the split of the old Niger Basin Authority into upper and lower RBDAs without a corresponding amendment of the law. There is also presently a bill before the National Assembly to correct this anomaly and to split the present Anambra-Imo RBDA into two, thus bringing the total to 13.

The RBDAs were conceived as a vehicle for attaining a pan Nigerian programme of water resources development vested with legal powers to undertake a comprehensive development of both surface and underground water. They are also to construct and maintain dams, irrigation and drainage systems; supply water to all users and to construct and maintain infrastructural services including roads and bridges across project sites. RBDAs are ideally public administrative bodies endowed with civil personality and financial independence. Their main objective is to promote activities related to the basin which are of public interest. It is therefore the role of the board to help management achieve stated goals through set policy directives and the realization of adequate financial resources from government and private investment.

The RBDAs spread across the country include: Anambra-Imo River Basin Development Authority, Benin-Owena River Basin Development Authority, Cross Rivers Basin Development Authority, Chad Basin Development Authority, Hadejia–Jama’are Basin Development Authority, Lower Benue Basin Development Authority. Others are Niger Basin Development Authority, Niger-Delta Basin Development Authority, Ogun-Osun Basin Development Authority, Upper-Niger Basin Development Authority, and Sokoto Rima Basin Development Authority.

River Basin Development Authorities are focused towards food security.

• Key Challenges

• Power

Only 40% of Nigerians have access to electricity^[4], while supply shortages are responsible for causing a three percentage point decrease in economic growth per year^[5]. Nigeria has vast reserves of petroleum and natural gas, and the potential to be one of Africa’s richest nations. However, reliable power supply remains a challenge. With a population of 154mn and estimated GDP of $206bn at 2010[6], installed capacity stands at only 7,000 MW, with only 37.4%[7] of it in operable condition. The average per capita electricity usage is 125 kWh. To put this into context, Kenya has a population of 34million, a GDP of $18.7bn, average per-capita usage of 5,866 kWh, and installed capacity of 17,000 MW. An even starker contrast is South Africa, with a population of 45 million and GDP of $235 billion, which has installed capacity of 40,000 MW.

FIGURE 4: AVERAGE PER CAPITA ELECTRICITY USAGE

• Housing

Housing requires huge capital outlay. Recognizing that sustainable housing finance cannot adequately be met by the epileptic funding through budgetary allocations at the federal, state and municipal levels, government’s policy efforts have shifted to the mobilization of private sector funds. The strengthening of the FMBN and establishment of such specialized institutions such as Primary Mortgage Institutions, Federal Mortgage Finance Limited, and National Housing Trust Fund (NHTF), was the result of this shift to the areas of finance, provision of infrastructure and research. According to records, as at April 2005, FMBN has delivered 13,672 housing units at various locations in the country through the NHTF. This pales in significance when compared with the estimated housing deficit of over 17 million units, and further accentuates the urgent need for a paradigm shift in the funding for the housing sector.

• Water Resources

Many factors inhibit growth and development in water resources in Nigeria, the major ones of which are lack of basic planning data, flood and erosion, manpower shortage and paucity of funds. One of the basic constraints to water resources development in this country is the lack of basic planning data.  It is always very difficult to assemble reliable and adequate technical and socio-economic data capable of assisting in the assessment, planning, design, construction and maintenance of various development projects.  The effect of flood has particularly been very devastating in the coastal areas of the country.  This has sometimes led to severe erosion and consequent loss of agricultural soils and lands and damage to engineering structures including those for water resources development. 

The proper planning, implementation and management of water resources programmes and projects depend principally on the availability of competent personnel. The professional and sub-professionals are very few in number and some of them inexperienced.  The few available ones have been spread too thin on the design, construction, operation and maintenance of the existing projects.  In order to cope with the challenges in the next decade, there is need to step up manpower training and development.

Finally, the non-availability of funds has always posed a major problem to the development of water resources programmes and projects. Most of the developments in this sector are government-financed.  The dwindling resources at government’s disposal have also adversely affected successive allocations of money to water resources projects.

• FCT

The Phase One area of the city is divided into five (5) districts:Central Area, Garki, Wuse, Maitama, and Asokoro. There are also five districts in Phase 2:Kado, Durumi, Gudu, Utako and Jabi; and the Phase 3 districts are Mabushi, Katampe, Wuye and Gwarimpa. There are also five suburban districts, which includeNyanya, Karu, Gwagwalada, Kubwa, and Jukwoyi. Along the Airport Road are clusters of satellite settlements, namely Lugbe, Chika, Kuchigworo and Pyakassa. Other satellite settlements are Idu (The Main Industrial Zone), Mpape, Karimu, Gwagwa, Dei-Dei (housing the International Livestock market and also International Building materials market).

Growth in social infrastructure in FCT through national programmes must be complemented with the development of physical and economic infrastructure because of its peculiarity as the administrative headquarters of Nigeria. Thus the development efforts in the Abuja Municipality must be complemented with the development of the satellite towns within the FCT in order to minimize the problems of urbanization and the emergence of urban slums

• Oil and Gas

There is no fiscal framework for natural gas in Nigeria. Gas supply remains a major issue, particularly with regard to the Nigerian power sector. Eleven of PHCN’s 14 generation units and 22 of the 23 licensed IPPs are gas-fired. Only approximately 30% of the required gas is effectively delivered.  In recent time, the generating capacity of the 10 principal power stations dropped drastically, such that on the average, they were operating at only 30% of installed capacity, with the exception being the Okpai plant in Delta State, built and run by Italy’s Agip, which was running at 90% capacity.

SECTION FOUR INFRASTRUCTURE DEVELOPMENT: POLICIES, PROGRAMMES & PROJECTS: 2011- 2015

 

• Overview

Infrastructure plays a critical role in promoting economic growth through enhancing productivity, improving competitiveness, reducing poverty, linking people and organizations together through telecommunications and contributing to environmental sustainability. Indeed, Nigeria’s lack of competitiveness could be directly attributable to the abysmal level of infrastructure development in the country. Despite her position as a major oil producer and exporter over four decades, and an expenditure of over 14 trillion naira[8], Nigeria’s stock of basic infrastructure remain obsolete, dilapidated and poorly maintained. Where they exist, they operate as monopolies with inadequate and limited coverage. Water supply, sewerage, sanitation, drainage, roads, electricity, waste disposal and most urban infrastructure, all suffer from years of serious neglect and under-funding. Periodic and routine maintenance, which ought to be the most cost-effective infrastructure spending, is almost zero. There is limited private sector participation due largely to weak or non-existent legal, institutional and regulatory framework.

Recent studies have located the challenges to infrastructure development to three critical areas:

• Project Preparation: The dearth of capacity by public authorities to carry out economic appraisal of projects, undertake development of a long-term investment strategy which will provide a planning tool for the development of infrastructure, irrespective of the financing source, significantly reduces the speed at which bankable projects are brought to the market.  
• Project Delivery: Faulty project execution framework, together with the dearth of project execution capacity and competencies has been identified as primarily responsible for the low project execution in Nigeria.
• Project Funding: Concessional funding by multilateral and bilateral development institutions provide, perhaps the most viable sources of funding for infrastructure development. Not only do they meet the requirements of fiscal responsibility, they do not exert undue fiscal pressure on the budget.

• Proposed key policies, programmes and critical projects

• Power

Projects and Programmes

The total proposed investment envisaged in the power sector during the FY 2011-2015 is about N2,550 billion. This will cover investments in four major areas of power generation, transmission, distribution and alternative energy, but do not include estimates for the rehabilitation of Kainji, Shirirro and Jebba Hydropower projects. Cost estimates for their was not readily available This expenditure will be with the object of increasing generation, transmission and distribution capacity in order to provide adequate and sustainable power; intensifying rural electrification efforts in a more efficient manner; achieving optimal energy mix using the most appropriate technology. There are the additional objectives of improving the billing and collection efficiency of power distribution companies in the power sector, promoting the effective utilization of coal to complement the nation’s power needs; and pursuing the development and exploitation of nuclear energy for peaceful purposes.

Details of these projects are contained in Table3 below.

TABLE 3

SUMMARY OF POWER PROJECTS

Unique ID	Comments	Status	Total Cost   (N b)
1	Rehabilitation and expansion of transmission/ Distribution Networks and Infrastructure	Ongoing	314.20
2	Abuja 1350 MW Thermal Power Plant	New	228.00
3	Construction of 10MW Katsina wind Project	New	0.80
4	Construction of 215MW Low Pour Fuel Oil (LPFO) Power Plant in Kaduna	New	15.00
5	Construction of 230 300MW Dual Power Plant using gas in Badagry	New	5.20
6	Construction of 2600MW Mambilla Hydroelectric Power  Project (HEPP)	New	390.00
7	Construction of coal-fired power plant in 3 States (Enugu, Benue and Gombe)	New	27.70
9	Dadin Kowa 34 MW Small Power Plant	New	4.00
10	Kaduna 900 MW Power Plant	New	165.00
11	Gurara II 350 MW Hydro Power Plant	New	53.50
12	Solar Rural Electrification Project in 4 Communities; Ogun, Bauchi and Katsina	New	16.70
13	Rehabilitation of Kaiji Dam	Existing	NA
14	Rehabilitation of Jebba Dam	Existing	NA
15	Rehabilitation of ShiroroDam	Existing	NA
16	Small and medium Hydro Power Plants (See List)	New	NA
17	National Supergrid Project	New	1,000.00
18	Zungeru 700 MW Hydro Electric power Project	New	330.00
	TOTAL		2,550.10

Three Hydro Dam Projects, with a total generating capacity of 30.275 MW of electricity have been completed and tested but not yet connected to the National Grid. These are Gurara 1 Hydro Dam Project (30 MW), Waya Hydro Dam Project (0.15 MW), and Mbowo Hydro Dam Project (0.125 MW). The transmission line to Gurara 1 is currently being addressed by the Presidential Task Force on Power (PTFP), and the cost has been accommodated in the 2010 Budget. However, the lines to Waya Hydro Dam Project and Mbowo Hydro Dam Project respectively requiring N17.1 million and N14.25 million respectively, are yet to be addressed.

Studies have been completed for the Zungeru (700 MW) Hydro Power Plant and an Engineering, Procurement and Construction (EPC) Contract awarded but the contract is yet to commence. The Environmental Impact Assessment (EIA) study is still outstanding and is currently in the process of being procured. The project is estimated to cost N115 billion. A provision of 10% of this amount has been made to cover future contract preparation costs.

Detailed studies are expected to commence shortly on the coal powered electric plants to be located at Enugu, Benue, Nasarawa and Gombe. The envisaged coal plants together have an estimated generating capacity of 3000MW. These coal projects are expected to attract pre-contract preparatory cost of about N3.5 billion. Studies are at various stages on the Mambilla, Gurara II, andItisi dam.

Implementation Strategies

The strategies to be adopted in achieving these objectives include:

• Creating a deregulated and competitive electric power sector to attract foreign and local investments.
•  Ensuring a viable commercial framework for the electric power sector, including a tariff regime that promotes transparency, guarantees security of investments and a reasonable rate of return on investments.
• Enhancing the transmission capacity and providing redundancies in the transmission system so as to ensure a fully integrated network that minimizes transmission losses while strengthening grid security.
• Intensifying rural electrification efforts in a more efficient manner.
• Increasing the utilization of alternative energy in the national energy mix; and
•  Introducing demand side management principles, embarking on public enlightenment campaigns, advocating for the use of energy saving equipment to reduce power demand at home and industry.

Other strategies to be adopted are:

• Providing incentives to encourage local manufacturing and production of consumables used in the power sector, initially for relatively low tech power equipment such as conductors, insulators, cables, transmission and distribution structures etc.
• Ensuring local manpower development by establishing effective training institutions and programmes as well as enforcing minimum local content components of power sector development and operational activities
• Completely privatizing distribution assets in order to provide efficient billing and collection infrastructure and ensure international best practices in electricity distribution.
• Promoting the production of coal for power generation by creating a favorable business environment for coal-to-power investors.
•  Intensifying the search for more coal reserves to make coal a sustainable and reliable alternative energy source.
• Establish unambiguous policy guidelines for the nuclear energy sector, clearly defining the role of relevant governmental organizations and the private sector as the main drivers of the nuclear power programme.
• Intensify manpower training and development and the provision of adequate infrastructure for nuclear science and technology. a Utilize mini and micro hydropower schemes to extend electricity to rural and remote areas.

Government, would in addition, strive to create enabling regulatory fiscal and administrative environment to attract private investment in hydropower plants, utilize wind power plants to extend electricity to rural and remote areas especially in the northern part of the country, aggressively drive the optimization of the components of wind water pumping and electricity generation and to de-emphasize diesel powered water pumps wherever the wind speed will allow wind water pumping. Other possible strategies include actively supporting research and development activities to cater for site specificity of designs for all parts of the country, creating an enabling environment to attract private investments in manufacturing, establishing and operating solar energy systems, supporting demonstration and pilot projects to ensure that the general public is aware of the potentials of solar energy technologies which will as well assist in creation of markets for solar energy systems, promoting R&D activities in biomass energy technology that will facilitate the realization of Biomass-to-Power target of 1000MW electricity in the long term, developing extension programmes and establishing pilot projects to facilitate the general use of new biomass energy technologies. Finally, there is need to create a sustainable institutional and commercial framework to encourage private sector investments in the sector.

Key Performance Indicators

The Key Performance Indicators set for the power sector during the period [2011 – 2015] are as follows:

• Achieve 16,000MW generation by 2015.
• Strengthen the transmission network to wheel 16,000MWby 2015.
• Increase electricity access to 50 per cent by 2015 from the current 40 per cent
• Achieve electricity generation mix of 11,800MW gas fired plants and 4.200MW renewable.
• Increase the utilization of alternate energy in the National Energy Mix.
• Increase the average load factor in the power sector from 31 per cent to 50 per cent in 2015.
• Produce one per cent of material inputs for the power sector locally by 2015.
• Achieve billing and collection efficiencies of 95 per cent and 80 per cent respectively for power consumed by 2015.
• Commence the development of coal to power plants by 2010.
• Commence the development of nuclear power plant.
• Achieve a 25 per cent contribution of hydroelectricity to the nation’s electricity generation mix by 2015.
• Achieve a 10MW contribution from wind energy to the nation’s electricity generation mix by 2015.

• Housing

Projects and Programmes

The proposed investment in the housing sector for the Plan period is N194.31 billion. Details are disclosed in Table 4 below

TABLE 4

SUMMARY OF  HOUSING PROJECTS

	Priority Projects
		Total N(bn)
1	Recapitalization of FMBN	17.23
2	Construction of 600,000 Housing Units under PPP arrangement	104.74
3	Construction of 240,000 affordable housing units by FHA	72.35
	TOTAL	194.31

Implementation Strategies

During the FY 2011-2015, the policy thrusts would focus on creating an enabling environment for private sector investments in housing development, providing adequate public building policy for effective service delivery, and establishment of National Housing Data Bank. The harmonization and standardization of land administration process nationwide through a national technical development forum, together with working with States and Local Governments to produce and implement a unified and integrated infrastructure development for housing with a view to opening up new layouts and provide site and service for private sector to develop affordable and decent mass housing, would add impetus to seamless housing delivery. This will be in addition to working with financial sector operators and regulators to develop an effective primary housing finance system and facilitate linkage of that market to the capital market with a view to providing long term affordable and sustainable liquidity for housing, and embarking on land reform to facilitate private sector investments in housing.

The objectives sought to be achieved by the FGN on the housing sector in Nigeria for the period 2011-2015 are to:

• Develop an efficient land administration system to make land ownership available/ accessible and easily transferable at affordable rate.
• Provide adequate and affordable housing finance to all Nigerians by developing an efficient primary and secondary mortgage markets.
• Establish an efficient legal and regulatory framework to enforce the control and monitoring of housing delivery.
• Develop professional and skilled manpower and build adequate capacity through training and skills acquisition to support the housing sector.
• Reduce the cost of production of houses by developing and promoting appropriate designs and production technologies in the housing sector.
• Add 10 million new homes to the current national housing stock.

Possible strategies to ensure attainment of the objectives include conferring secured registerable and marketable title on land, establishing efficient and transparent land title transfer system, simplifying existing land procedures for effective title and consent delivery, as well as developing efficient national land information system. Others are providing infrastructure for site and services to open up new urban layouts, providing funding for detailed empirical research for the establishment of a viable primary mortgage market, and enforcing the National Housing Fund [NHF] contributions as enshrined in the enabling Act.

Recapitalize the Primary Mortgage Institutions (PMIs) to a minimum of N100 billion, together with ensuring  that PENCOM invests sizable part of the pension fund in primary mortgage products, are possible strategies to ensure affordable housing in Nigeria. MDAs could be encouraged to place fund deposits with the capitalized PMIs, Government could establish a body to regulate the housing sector. Other possible strategies include:

• Design appropriate incentives to facilitate home ownership for lower income groups.
• Establish a mortgage and title insurance system that will mitigate credit risks.
• Establish an efficient foreclosure system that will give more guarantees to lenders in the cases of default.
• Design and implement measures to encourage investment in affordable rental housing.
• Review the Land Use Act to ease the process of acquiring and disposing landed property.
• Rehabilitate all existing technical and vocational training centres and also build new ones.
• Review the certification and registration of all skilled manpower through Trade Test.
• Appoint qualified building industry professionals to head housing institutions

Key Performance Indicators

The KPIs set for the housing sector during the period [2011 – 2015] are as follows:

• Develop an efficient land administration system to make land ownership available/ accessible and easily transferable at affordable rate.
• Provide adequate and affordable housing finance to all Nigerians by developing an efficient primary and secondary mortgage markets.
• Establish an efficient legal and regulatory framework to enforce the control and monitoring of housing delivery.
• Develop professional and skill manpower and build adequate capacity through training and skills acquisition to support the housing sector.
• Reduce the cost of production of houses by developing and promoting appropriate designs and production technologies in the housing sector.
• Add 10 million new homes to the current national housing stock.

• Communication

Projects and Programmes

The proposed investment for the Information and Communications sector during the period 2011-2015 is N48.39 billion.  Details are shown in Table 6 below.

TABLE 5: SUMMARY OF COMMUNICATIONS PROJECTS

S/No	Priority Projects	Total N(Billion)
1	ICT Infrastructure	11.39
2	Completion of abandoned Post Office buildings nationwide to make them internet compliant	5.7
3	Construction Of New ICT Compliant Post Offices (Neighborhood Pb4 Type)	3.5
4	National Street Address system	9.0
5	Rehabilitation of Existing Post Office Buildings Nation Wide to Become ICT Compliant.	19.3
	TOTAL (ICT)	48.89

Implementation Strategies

During this plan period, the policy thrusts of the FGN would be the development of a national Knowledge Based Economy [KBE] 10-year Strategic Plan, Sustained human capacity development in ICT, Creation of a favourable and friendly investment and enterprise environment through transparency in tax systems, anti-trust laws incentives and trade policies that would stimulate local and foreign investments in ICT, and development of infrastructure, particularly global connectivity as a prerequisite to leveraging the benefits of the global economy, improving domestic productivity and attracting foreign investments. Others are creation of an enabling environment through appropriate policies, legal, regulatory and institutional frameworks, and enhancing Public Private Partnership [PPP] in project funding, financing and management.

The objectives of Government’s ICT interventions are numerous and include:

• Developing sufficient, efficient and affordable ICT infrastructure to ameliorate and sustain economic growth and development.
• Engendering rapid ICT penetration and diffusion for efficient and affordable services across the socio-economic sectors of Nigeria.
• Developing globally competitive indigenous human capital and knowledge base products and services in targeted areas of ICT e.g. software, hardware, networks, and technologies/ security/biometrics, web and digital content development etc.
• Deploying ICT in Government for transparency and accountability as well as enhancement of efficiency, effectiveness and also increased government capacity to deliver citizen centered services to attain national competitiveness.
• Promoting Research and Development [R&D] activities to stimulate and sustain innovation in ICT solutions.
• Developing the ICT Industry for the production of software and hardware to global standards.
• Implementing the Strategic Action Plan [ICT 4D] to mainstream ICT policies, ICT based processes and ICT products and services into different sectors of the economy.
• Putting in place, a national fibre-optic backbone infrastructure that ensures high bandwidth availability, universal access, internet connectivity and telecommunications.

Strategies aimed at providing conducive policy and regulatory environment include to:

• Provide recognition for non-formal and distance e-Learning modes of education.
• Enact enabling legislation for e-Government, e.g. Digital Signature Act.
• Incentivize the commercial production and provision by the private sector of Nigerian digital content and online databases in English and Nigerian languages,
• Provide policies and fiscal incentives to encourage ICT hardware manufacturers to invest towards improving the amount of local content in their products and services.
• Promote local adaptations of foreign ICT systems and solutions that do not infringe patent rights through support and incentives.
• Enact enabling legislation for e-Government e.g. Digital Signature Act
• Undertake institutional reforms in the institutions in specialized and targeted research and development activities,
• Facilitate linkage between national research institutes and tertiary institutions with internationally recognized ICT based research institutions abroad.
• Facilitate the linkage between ICT based companies and research institutes in targeted areas of ICT solutions.
• Establish legal and institutional framework for the protection of copyright and other Intellectual Property Right Issues.
• Formulate and implement an appropriate enabling ICT local content policy.
• Provide legal, regulatory and institutional frameworks to create investment friendly and responsive environment for sustainable transition to KBE.
• Provide policies and fiscal incentives to encourage ICT Hardware manufacturers to invest towards improving the amount of local content in their products and services.

Capacity building strategies include:

• Put in place national standards for software, hardware and other ICT products and services and a framework to ensure compliance with the standards.
• Facilitate increased awareness of potential of ICT by literate people in rural and urban areas of the country.
• Put in place functional education curricula for ECCDE, primary, secondary and tertiary levels with appropriate ICT skills content philosophy by 2015,
• Carry out Skills Gaps Analysis to assess ICT skills deficiencies.
• Conduct intensive training programmes and workshops to develop relevant ICT skills for workers,
• Provide incentives for the workforce to acquire ICT skills, equipment and connectivity.
• Make use of basic and specialized work-related ICT skills a requirement for employment and advancement in MDAs by 2015.
• Create ICT cadre in the public service and ICT departments in all MDAs to be headed by a Director with ICT background.
• Strengthen the competencies and capabilities of researchers and research institutes and tertiary institutions to be globally competitive in targeted ICT areas.

Other strategies include:

• Promote citizens online access to Government information.
• Encourage private operators to roll out nationwide high speed broadband and data infrastructure.
• Promote the personal acquisition and ownership of computers by pupils, students, employees and households.
• Partner with local manufacturers to produce affordable and functional computer systems at subsidized rate.
• Promote the development of local software that interface with Nigerian languages in either voice-text or text-voice modes.
• Promote the development of local software that interface with Nigerian languages in either voice-text or text-voice modes.
• Create enterprises architecture documents at the different levels of Government to guide the acquisition, deployment, operation and maintenance of interoperable technology systems.
• Provide high tech equipment and internet connectivity for all institutions.

Key Performance Indicators

The following are the KPI set for the ICT sector during the period [2011 – 2015]:

• Attain 55 per cent coverage of the fibre optic backbone infrastructure of the country from the current coverage of 10 per cent by 2015.
• Achieve computer density of 1:30 [national], 1:10 [rural], 1:5 [urban primary and secondary schools], 1:3 [tertiary institutions],
•  Attain tele-density of 65 per cent from the present 47 per cent by 2015.
• Achieve a ratio of computer scientists, engineers and technologists to population of 1:10,000 by 2015.
• Achieve 30 per cent of Nigerian content in ICT hardware, software and services by 2015.
• Build the capacity of 40 per cent of the work-force to acquire basic and work relevant ICT skills by 2015.
• Achieve 1:5 ratios of personnel to computer for 40 per cent of the work force by 2015.
• Achieve a ratio of computer scientists, engineers and technologists to population of 1:10,000 by 2015.
• Achieve a ratio of researchers to population of 1:15,000 by 2015.
• Achieve the commercialization of 5 per cent of annual R&D output.
• Achieve 30 per cent of Nigerian content in ICT hardware, software and services by 2015,
• Achieve a 3 per cent contribution by the ICT sector to GDP by 2015.
• Achieve at least 0.1 per cent of GDP investment in ICT R&D annually to improve local software and hardware capacity.
• Attain 30 per cent transition to Knowledge Based Economy [KBE] input in Flagship subsectors such as Agriculture, Manufacturing, Industry and services by 2015.

• Niger Delta

Projects and Programmes

The proposed infrastructure investment in the Niger Delta region during the Plan period is N2, 050.50 billion. A breakdown of this figure is shown on Table 6 below.

TABLE 6

SUMMARY OF  NIGER DELTA PROJECTS

Unique ID	Project Title	Status	Total Cost   (N b)
1	Construction Of Bodo-Bonny Road With A Bridge Across The Opobo Channel. C/No. 5662	New	2.6
2	Construction of Modern Coastal Railway Line (from Benin – Calabar) 423km Cutting across Niger-Delta States-Studies	New	3.2
3	Construction of modern coastal railway line from Calabar across 6 Niger Delta States	New	690.00
4	Construction of river Ports in Degema	New	1.7
5	Construction of skills acquisition centers in the nine states of the Niger Delta region	New	6.2
6	Equipping and operations of skill acquisition centres	New	0.7
7	Land reclamation, shoreline protection and flood/erosion control for seven states: Azumni – abia States, IbakanNsit-AkwaIbom State, Odi -Bayelsa state, Essien town – Cross River State, Ijaghalla – Delta State, OkhelenAwo -Edo State and AmadiAma – Rivers State	New	2.8
8	Dualization of East-West Coastal road project	Ongoing	45.3
9	Feasibility Studies and design on land reclamation, shoreline protection and flood/erosion control for 10 sites in Niger Delta region	Ongoing	0.1
10	Construction of Niger delta coastal road connecting the Niger Delta through the coast linking Ibaka through Oron and ikotAbasi ail in (AkwaIbom) to Bonny in (Rivers), Brass (Bayelsa), Forcados and Escravos in (Delta), and Aiyetor and Atigere in (Ondo State) along the coastline		1,800.0
	TOTAL		2,050.5

Implementation Strategies

The main policy thrust during the Plan period is to entrench peace and stability to drive sustainable socio-economic development in the Niger Delta Region with the aim of overcoming the following issues and challenges:

• High incidence of poverty caused by oil extraction activities in the areas.
• High rate of unemployment.
• Deplorable physical and social infrastructure.
• Environmental degradation and pollution.
• Inter and infra ethnic/communal conflicts.
• Disruption of oil extracting activities.

The objectives of these intervention measures are to entrench social stability and accelerate the socio-economic development of the region, in addition to protecting and conserving the environment,

The strategies that the FGN will be adopting to ensure the attainment of its stated objectives are to:

• Ensure social justice and equity in the sharing of federal collected revenues.
• Registration and coordination of all persons dislodged by oil production activities.
• Job placement of all persons dislodged by oil production activities.
• Increase the private sector contribution to the region’s economic growth and development from the current average of 25 per cent to 75 per cent.
• Matching economic goals with environmental conditions.

Key Performance Indicators

For the Niger Delta the KPI set for the MDA during the period [2011 – 2015] include:

• 50 per cent reduction in poverty level in the region [relative to 2009 level] by 2015.
• Reduce social tension to the absolute minimum by 2012. [No more than other parts of the country].
• 50 per cent reduction in unemployment in the region [relative to 2009 level] by 2015.
• 50 per cent remediation and rehabilitation of the Niger Delta environment

• Water Resources

Projects and Programmes

The proposed investment for this sector during the Plan period is N34.10 billion. In making this intervention in the Water Resources sector, the objectives are to:

• Ensure provision of sufficient and equitable access to potable water to all Nigerians in an affordable and sustainable way.
• Create the enabling environment, build capacity and ensure effective and efficient deployment of human and material resources that would fast track the repositioning of the sector for accelerated attainment of the MDGs and Vision 20: 2020 targets.

A breakdown of this figure is shown on Table 7 below.

Table 7: SUMMARY OF WATER RESOURCES PROJECTS

Unique ID	Project Title	Status	Total Cost (N b)
	WATER & SANITATION
1	Dasin Hausa Dam in Adamawa State (Multi Purpose Dam)	New	0.2
2	Ishiagu Water Supply Scheme .	New	3.0
3	Yedsaram Dam in Adamawa (Earth Dam)	New	5.4
4	Zungeru/Wushishi Water Supply Project	New	3.6
5	Aba Water Supply Rehabilitation	Ongoing	2.4
6	ABU Zaria Water Supply Scheme	Ongoing	0.8
7	Biu Water Supply Scheme	Ongoing	7.2
8	Completion of Okpilla Water Supply Scheme	Ongoing	0.8
9	Dadin Kowa Irrigation in Gombe State (rehabilitation of existing Canal)	Ongoing	0.1
10	Greater Onitsha Water Supply Scheme	Ongoing	4.2
11	Port Harcourt Water Supply Project	Ongoing	6.4
	TOTAL		34.1

Implementation Strategies

The policy thrust for the Water Resources sector during the period FY 2011-2015 will be to increase the service level and coverage for water supply in urban and small towns as well as rural areas by 2013, establishment of legal and regulatory framework as well as institutional mechanism for quality standards of potable water.

• Promotion of capacity building, research and development of projects and programmes with respect to the outputs/results of investment and the impact on intended beneficiaries.
• Data and information management, assessment of water supply as well as monitoring and evaluation.
• Promotion of community participation and other stakeholders, especially water users and the private sector
• Strengthening of the institutions responsible for water supply. The water Research Institute in Kaduna should be properly positioned for capacity building as well as research and development.

The following strategies have been developed to assure the attainment of stated objectives.

• Ensure availability of baseline and recurrent data for proper planning and management in GIS platform.
• Expand the existing urban water supply in state capitals to double their production capacity.
• Construct new water schemes in the rural areas in each senatorial district.
• Ensure sustainable optimal performance of water supply schemes, facilities and services.
• Encourage community and private sector participation as well as Public Private Partnership [PPP] in the provision of water supply services.
• Ensure stable, reliable and affordable power source for small town water supply schemes and facilities.
• Ensure sustainable and optimal performance of water supply schemes, facilities and services.
• Promote the improvement of traditional sources of water supply and ensure sustainable optimal performance of water supply schemes and services.
• Promote the construction of Small Town Water Supply in all local government areas.
• Ensure adequate and sustained investments in the sector.
• Attract the Development Partners support for the sector.

Key Performance Indicators

The KPIs for Water Resources during the period 2011-2015 are:

• Increase national water supply coverage from the current47% to 50% by the year 2015.
• Increase urban water supply coverage and the minimum basic human water requirements from 65% to 70% and 60% to 80% respectively by the year 2015.
• Increase small town water supply coverage and basic human water requirement from 65% to 70% by the year 2011.
• Increase rural water supply coverage and minimum basic human requirement from 30% to 40% by the year 2015.
• Ensure adequate and sustained funding for the sector.

• Federal Capital Territory

Projects and Programmes

The proposed investment in the FCT during the Plan period is N162.90billion and the details are shown in Table 8 below.

TABLE 8: SUMMARY OF  FCT PROJECTS

Unique ID	Project Title	Status	Total Cost (N b)
1	Construction of inner southern expressway(ISEX) phase ll from the southern parkway	Ongoing	8.6
2	Development of Idu Industrial area IB Engineering Infrastructure	Ongoing	40.8
3	Extension of outer southern expressway from ring road 3 to Abuja A2 in Gwagwalada	Ongoing	6.0
4	Rehabilitation and expansion outer Northern Expressway Lot 11 (19km-39+400km)	Ongoing	60.8
5	Rehabilitation and expansion outer Northern Expressway lot II (Murtala Mohammed Expressway North Lot I)	Ongoing	46.7
	TOTAL		162.9

Implementation Strategies

The thrust of Governments intervention in FCT is to open up new districts in the FCT by constructing and completing access to new districts. The private sector will be incentivized to provide site and services within the districts.  Government’s emphasis will be to provide the policy, legal regulatory environment for seamless private sector participation in the development of the districts.

Key Performance Indicators

The Key performance Indicator for the FCT is open up at least 10 new districts by 2015.

• Oil and Gas

Projects and Programmes

The investment proposed for the development of Oil and Gas infrastructure during the Plan period is N797.49 billion. The does not include the estimated cost of GTS1 Cathorn Channel – Alakiri – Owarza Gas Pipeline due to incomplete information. Details of the investment are disclosed by Table 9.

TABLE 9: SUMMARY OF OIL & GAS PROJECTS

Unique ID	Project Title	Status	Total Cost (N b)
	OIL & GAS INFRASTRUCTURE
1	Abeokuta City Gate Oben	New	7.30
2	Calabar – Umuahia – Ajaokuta – Kaduna- Kano Gas Pipeline	New	465.00
3	ELPS Abeokuta – Ekiti Gas Spur Line	New	37.80
4	Expansion of Escravos – Lagos Pipeline (ELP)	New	90.90
5	Gas supply from Obigbo North-imo River	New	3.80
6	Gas Supply from Oso-QIT	New	29.0
7	GTS1 Cathorn Channel – Alakiri – Owarza Gas Pipeline	New	–
8	Obiafu – Obrikom Gas Pipeline	New	96.75
8	Trans-Sahara Gas Pipeline – studies	New	27.00
10	Gas Supply to PHCN Power Piant at Oiorunshogo formerly Papalanto.	Ongoing	4.70
11	Gas Supply to PHCN Power Plant at AlaoJi	Ongoing	4.30
12	Gas Supply to PHCN Power Plant at Geregu	Ongoing	29.50
13	Gas Supply to PHCN Power Plant at Omotosho	Ongoing	1.70
	TOTAL		797.5

The new Oil & Gas projects are in respect of the Obiafu/Obrikom Northern Option Gas pipeline, which is an 80km gas pipeline link between Obiafu/Obrikom Option Gas plant and the Northern option gas pipeline. It is designed to enable wet gas from new sources in the Eastern area to be processed to pipeline specification at the gas plant and then fed into the Eastern Network through the Northern Options Line.

Three Oil & Gas projects namely Escravos Lagos Pipeline Systems Expansion (N57.00billion) and Northern Options pipelines Link (N57.00 billion) are currently ongoing. The Northern Options pipelines Link is a 60km pipeline to provide a vital link between the numerous new gas supply sources in the East and the Eastern domestic network. There is currently no link in the Eastern Network sufficient to handle the increased gas supply development. This line is crucial to the full delivery of gas to Alaoji power plant and other Eastern demand centres.

• Seaports & Inland Waterways

The estimated total investment for seaports, and inland waterways and river ports during the period 2011-2015 is approximately N13.70 billion.  This investment would cover 4 projects in inland waterways and river ports, and 3 in seaports. A breakdown of this amount is shown IN Table 10 below:

TABLE 10: SUMMARY OF SEA AND RIVER PORT PROJECTS

Unique ID	Project Title	Status	Total Cost   (N b)
1	Construction Of River Ports At Oguta	New	2.70
2	Lekki Deep Seaport	New	–
3	AkwaIbom Deep seaport	New	–
4	Procurement And Installation Of 5 Self Recording Marine Buoys	New	1.50
5	Baro Inland River Port	Ongoing	3.60
6	Onitsha Inland River Port	Ongoing	4.20
7	Degema Inland River Port	Ongoing	1.70
	TOTAL		13.70

Implementation Strategy

The main policy thrust during the Plan period is to evolve a multimodal, integrated and sustainable transport system, with greater emphasis on rail and inland waterways transportation. An enabling environment for Public Private Partnership [PPP] has been created by designing new policies, legislation and institutional framework that would support the envisaged transformation of the sector.

In general, the objectives set for the transport sector during the period [2011 – 2015] are to provide adequate transport infrastructure and services for even economic development  of the country; ensure the provision of safe, efficient and cost effective transport services for the country; develop the capacity to sustain and continuously improve the quality of transport infrastructure and service delivery in the country; create an enabling environment for private sector participation in the provision of transport infrastructure; and develop a seamless intermodal transport system;

As regards inland Waterways, the strategies include rehabilitating the rail tracks at the seaports and completing the link to Onne Port. The Strategies to accomplish the objectives set for seaports are as follows:

• Development new deep seaports at Epe, Lekki Brass, Bonny and Badagry.
• Dredge the harbors in Lagos and Bonny to accommodate large ocean liners and provide standard facilities including RORO facilities in Bonny by 2011.
• Develop Calabar Port to support free trade zone.

Key Performance Indicators

The KPI for the transport sector are as follow::

Water ways

• Increase navigable routes on the inland waterways to 3,000kms.
• Increase inland waterways cargo and passenger traffic substantially.
• Introduce private sector participation in the provision of inland waterways services
• Rehabilitate and construct key river ports, jetties and wharfs at Baro, Lokoja, Onitsha, Oguta, Degema and Yenagoa by 2015.
• Dredge and reclaim River Niger and Benue.
• Concession routes to the private sector operators.

Seaports

• Reduce the turnaround time of ships at ports.
• Reduce tariffs to create competition at the ports.
• Improve safety and security at the ports.

• Rail Transport

Projects and Programmes

The investment expected in the rail transport subsector during the period 2011-2015 is approximatelyN1,613.70 billion.  This investment would cover 13 projects of which2 projects are for the rehabilitation of the existing narrow gauge line, while the remaining are in the main new standard gauge lines. A breakdown of this amount is shown below:

TABLE 11

SUMMARY OF RAILWAY PROJECTS

Unique ID	Project Title	Status	Total Cost   (N b)
	Existing Narrow Gauge
1	Lagos – Kano Narrow Gauge Rehabilitation	Ongoing	12.20
2	PH – Maiduguri Narrow Gauge Rehabilitation	Ongoing	67.30
	NewStandard Gauge
3	Construction of East – West railway from Calabar -Eket- Warri- Gelegele – Lagos	New	5.00
4	Aba-Enugu-Asaba-Agbor-Ajaokuta (323km)	New	225.00
5	Ajaokuta-Jakura-Baro-Abuja (360km)	New	48.00
6	Lagos – Ife-Ilesha-Owo-Benin-Onitsha-Enugu (650km) Standard Gauge	New	97.50
7	Lagos-Ibadan Standard Gauge Line	New	229.50
8	Construction standard gauge Abuja – Kaduna	Ongoing	243.00
9	Zaria-Kaura Namoda – Sokoto – Ilela (604km)	New	50.90
10	Abuja Rail Mass Transit LOT 1 And 3	Ongoing	85.70
11	Completion of the 22km standard gauge from Ovu to Warri	Ongoing	7.60
12	Construction of Abuja light Railway Project LOT 2	New	66.30
13	Construction of 6 stations between Itakpe and Warn	Ongoing	475.70
	TOTAL		1,613.70

Implementation Strategy

The objectives set for the transport sector during the period [2011 – 2015] are as stated in 4.2.8 above. The strategies envisaged in respect of rail transport are:

• Concession of the Lagos to Kano and Port Harcourt to Maiduguri rail lines.
• Construct rail lines to inland container depots.
• Construct mass transit rail lines in Lagos and Abuja.
• Rehabilitate the rail links at the ports.
• Construct rail lines to Lagos and Abuja airports.

Key Performance Indicators

The KPI for the rail transport sub-sector are as follow:

• Complete the rehabilitation of 3,500kms of the existing narrow gauge rail line.
• Complete the Itakpe-Ajaokuta-Warri standard gauge rail line
• Increase the tonnage of freight transported from 50,000 metric tonnes to 1 million metric tonnes.
• Transport 4 million passengers per year.
• Achieve 5000,000 daily trips via mass transit.
• Introduce private sector participation in the provision of rail services.
• Complete rail network that have reached 50 per cent completion as at December 2009.
• Commence Abuja/Idu to Kaduna standard gauge rail line.
• Link Abuja by rail to the seaport of Lagos, Warri and Port Harcourt as follows:
  • Minna to Abuja [for Lagos Port]
  • Kafanchan to Abuja [for Port Harcort Port]
  • Itakpe to Abuja [for Warri Port]

• Aviation

Projects and Programmes

The major ongoing expansion and remodeling projects in the Aviation Sector relate to:

• Murtala Mohammed International Airport, Lagos. (N20.848 billion),
  • Dr. Nnamdi Azikiwe International Airport, Abuja (N27.9 billion),
  • Aminu Kano International Airport, Kano (N13.50 billion),
  • Akanu Ibiam International Airport, Enugu (N10.52 billion)
  • Port Harcourt International Airport, Port Harcourt (N17.30 billion). 
  • Calabar International Airport, Port Harcourt (N14.20 billion). 

For these projects, adequate and timely capital flows will ensure air safety, security and passenger comfort as envisioned in the National Vision 20: 2020. Details of the projected infrastructure investment amounting to N125.52 is shown in Table 12 below.

TABLE 12: SUMMARY OF AVIATION PROJECTS

Unique ID	Project Title	Status	Total Cost (N b)
1	Construction 2nd runway Abuja International airport	New	5.30
2	Installation of 4 Doppler weather radar	New	1.10
3	Procurement and installation, maintenance of ALSIM, Thales radar and visual tower simulators	New	1.40
4	Remodelling of Abuja International Airport	New	27.90
5	Remodelling of Enugu International Airport	New	10.52
6	Remodelling of Kano International Airport	New	13.50
7	Remodelling of MMIA	New	20.85
8	Remodelling of Port Harcourt International Airport	New	17.30
10	Remodelling of Calabar International Airport	New	14.20
10	Construction of Bayelsa airport	Ongoing	1.96
11	Resurfacing of runway at Maiduguri, Benin, Calabar, Akure, and taxiway at Kano and MMIA	Ongoing	0.90
12	Fencing of all major airports	Ongoing	10.60
	TOTAL		125.52

Implementation Strategies

Upgrade and maintain the four major international airports located in Lagos, Kano, Abuja and Port Harcourt to ICAO standard and recommended practices.

Key Performance Indicators

The Key performance Indicators for the Aviation subsector are:

• Upgrade and expand the international airports to ICAO standards and recommended practices.
• Concession the five international airports.

• Roads & Bridges

Projects and Programmes

During the Plan period 2011-2015, Government plans to upscale the roads infrastructure in the country with an investment of N841.50 billion, the details of which are shown in Table 13 below.

TABLE 13: SUMMARY OF ROADS & BRIDGES PROJECTS

Unique ID	Project Title	Status	Total Cost
(N b)
1	Construction And Dualisation Of Owerri – Eiele Road Merelu Section)	New	14.50
2	Construction Of 2nd Niger Bridge Across River Niger At Onitsha/Asaba	New	80.00
3	Dualisation Of Ibadan – Ilorin Section 1	New	17.60
4	Dualisation Of Obajana Junction – Benin	New	2.90
5	Dualisation Of Onitsha – Owerri And Onitsha Eastern Bypass C/No 5660	New	7.00
6	Kano -Kazaure-Daura-Mai Adua Road In Katsina State, C/No. 5997	New	87.00
7	Kano Western Bypass C/No 5960	New	10.00
8	Loko-Oweto Bridge	New	54.00
9	Panyam – BokkosWamba C/No5944	New	60.00
10	Abuja-Lokoja Road	Ongoing	68.30
11	Borom-Nasarawa Abaji Road	Ongoing	0.80
12	Construction Of Kano Western By Pass	Ongoing	7.00
13	Construction Of Main Carriage Way Of FCT HW 106 From KusakiYanga(OSEX) To Kuje	Ongoing	6.00
14	Construction Of Panyam – BokkosWamba Road	Ongoing	2.90
15	Dualization Of Onitsha – Owerri Road And Onitsha Eastern By Pass	Ongoing	5.60
16	Jakuru Access Road	Ongoing	0.20
17	Kaduna – Kano (140km)	Ongoing	66.30
18	Kano-Maiduguri Road	Ongoing	139.90
19	Rehabilitation Of Maiduguri-Dikwa-Gamboru Road Section Ii: Dikwa-Gamboru In Borno State	On-going	47.50
20	Rehab Of Okene -Ajaokuta Road	Ongoing	1.50
21	Rehabilitation Of Apapa – Oshodi Express Way In Lagos	Ongoing	5.60
22	Rehabilitation Of Enugu-Port Harcourt Road Section Ii (Umuahia-Aba-Port Harcourt)	Ongoing	24.00
23	Rehabilitation Of Funtua – Yashi – Dayi – Kano State Border Road. C/No. 5264	Ongoing	11.20
24	Rehabilitation Of Lafia-Obi-Awe-Tunga Road In Nasarawa State	Ongoing	80.00
25	Shagamu-Benin Expressway	Ongoing	41.70
	TOTAL		841.50

Implementation Strategies

The thrust of Governments intervention in Roads and Bridges is to complete roads that have reached 50 per cent completion as at December 2011, rehabilitate and reconstruct the major trunk roads, and concession major and viable routes. In addition, Government will secure funding from both the private and public sectors for the remaining 40 per cent of the bad roads, and introduce private sector participation in the upgrade and maintenance of roads.

Key Performance Indicators

The Road transport subsector Key performance Indicator is the recovery of 30 per cent of the existing bad federal roads [7/677kms] by 2015. Currently about 70 per cent of the existing roads are in a deplorable condition.

SECTION FIVE FUNDING OF INFRASTRUCTURE PROJECTS: 2011- 2015

 

• Project Financing Options

A range of competitive constraints align with significant political risk to diminish Nigeria’s potential for economic growth and development. A 2008 Infrastructure Consortium for Africa (ICA) study identified the dearth of infrastructure, amongst many other constraints, as responsible for low levels of performance of Nigeria in all key economic performance variables. Accordingly, Nigeria requires significant funding if it is to put in place the level of infrastructure necessary for sustainable economic growth and development.

The funding options identified as having the potential to provide adequate, reliable and timely financing for priority infrastructure projects, fall into three broad categories namely:

• On-budget Public Funding;
• Off-budget Public Funding; and
• Private Sector Resources.

Figure 5 below summarizes these funding sources and the funding mechanism associated with them.

FIGURE 5: SOURCES OF INFRASTRUCTURE FUNDING

• On-Budget FundingStatutory Allocation

A major instrument of development is the Statutory Allocation or national budget that is prepared yearly as a guide to the revenue and expenditure profile of the government. This option has been the traditional method of funding infrastructure in Nigeria, but its efficacy has been quite limited. Indeed, this manner of financing infrastructure development is perhaps the precursor or necessary concomitant to our current infrastructure deficit.  Funding infrastructure through regular budgetary allocation has been known to be volatile and rarely meet crucial infrastructure expenditure requirements in a timely and adequate manner. Besides receiving a larger brunt of fiscal retrenchment in times of financial crises, funding infrastructure development through regular budgetary allocation also has a greater potential for unwholesome practices.

For instance, a priority road project designed for completion within three years, often takes more than 10 years to be completed and cost multiples of the original estimate, as a result of the drip-fed funding from the annual budget. This is exacerbated by the current budget constraints being experienced by government, which means that a lot of the critical infrastructure will be only partially funded or not at all. With the current rate of funding, it will take an unacceptably long period of time, with significant hike in cost, before some of the ongoing construction and rehabilitation projects are completed, thus depriving the nation of the corresponding expected economic and social benefits.

At present, the volume of Government recurrent expenditure has drastically reduced the amount available for capital projects. This is further exacerbated by the dwindling fiscal resources, which together with competing requirements for social and other needs, have constrained Government’s spending space for infrastructure.

• Enhanced Statutory Allocation

This mode of funding presupposes the front-loading of the regular budgetary allocation of an identified priority project for  2-3 years (depending on the expected construction period of the asset) on the basis of the expected statutory budgetary allocation for that project for the next 5-7 years. That way, there will be sufficient resources within the expected construction period of the asset to ensure its timely completion

• Viability Gap Funding

Projects, classified and justifiable as public goods, frequently fail the commercial viability test, even where strong economic and technical reasons exist for the private sector engagement. Very often, the upfront capital costs of infrastructure development can exceed the capacity of private investors and discourage private financing. The Viability Gap Funding (VGF) is one of the instruments that the FGN could deploy to address this constraint. 

The Viability Gap Fund provides public capital to fill funding gaps required to make infrastructure projects commercially viable and bankable, thus increasing the appetite for private sector investment. A VGF can provide up-front funding to cover a certain amount of a project’s capital cost (capital subsidies or grants). The viability fund can also provide government payments over the life of the project (operational subsidies). This is particularly relevant for PPP projects in sectors where user-fee contributions are likely to be insufficient to cover total project costs.

As with the Indian model, pre-conditions for projects to be eligible for VGF, could include:

• The concession is awarded in favour of a private company in which 51 percent or more of the subscribed and paid up equity is controlled or owned by a private sector party or entity;
• The private sector concessionaire has been selected through open competitive bidding;
• Proper due diligence as detailed in the National Policy on Public Private Partnerships has been completed prior to submission for VGF funding;
• Amount of VGF funding requested cannot exceed 20 percent of total project cost with up to an additional amount of 20 percent fundable by State level budget.

The VGF can facilitate the delivery of priority infrastructure services in a socially and financially sustainable manner. As an official instrument of the federal budget, it can provide a level of transparency and predictability to government PPP programming and financing that will increase market confidence in PPP investments.  It is an instrument that has been vital to the Government of India’s infrastructure programme success since 2005.

• Off-Budget FundingExcess Crude Account

The Excess Crude Account[9](ECA)is for revenue derived from Crude Oil Sales, Petroleum Profit Tax (PPT) and Royalties over and above the budgeted benchmark of the Federal Government of Nigeria for each year.

The rationale behind the ECA is to act as a stabilization fund, mitigating the effect of boom-bust cycle of crude oil revenue on the budget, and to potentially fund domestic infrastructure investments. Arrangements are currently underway to replace the ECA with a National Sovereign Wealth Fund (NSWF), as the ECA has no real legal backing. The NSWF will manage Nigeria’s excess earnings from crude oil henceforth.

While the ECA provides a viable option for funding critical projects that would impact on the generality of the citizenry across the country it has been dwindling in the recent past, from as high as USD20 Billion in May 2007 to about USD4 Billion in July 2010. Besides, it requires the buy-in of all stakeholders, particularly the State Government, for its deployment especially in an election year.

• Special Intervention Funds

The FGN, through the CBN has already taken a number of steps to provide access to funding at concessional rates and to galvanize private sector interest in the Power and Agriculture sectors.

Under the N500 billion Real Sector Intervention Fund, the CBN has invested N500 billion in debentures issued by the Bank of Industry (BOI), the proceeds of which are for on-lending through Deposit Money Banks (DMBs) to qualified borrowers at concessional interest rate of not more than 7%, and for tenors of 10-15 years. The target borrowers are those from the Power, small-scale Manufacturing and Airline sectors that meet well-defined eligibility criteria, Power projects of the State and Federal Governments are covered under this facility subject to their being structured as commercially viable projects on which banks are willing to take credit risk.

There is also the N200 billion Agriculture Fund established for promoting commercial agricultural enterprises. The scheme, established between the CBN and the Federal Ministry of Agriculture created the Commercial Agriculture Credit Scheme (CACS) to be financed from the proceeds of N200 billion in 7-year bonds raised by the DMO which are being lent to DMBs for on-lending to agricultural project.

In line with the above intervention measures, the FGN could set up a special intervention fund for infrastructure development.

• FGN Bonds (through the DMO)

As an additional source of short term and medium term response to the infrastructure challenge in Nigeria, the Federal Government through DMO could raise funds in the domestic capital market through the issuance of FGN bonds, and immediately applying the associated proceeds to fund critical economic infrastructure projects. The potential limitation of FGN bonds is that of relying solely on the Federal Government for funding.

The following are various options through which the Federal/State Governments can finance infrastructure development as well as eligibility criteria for pension fund investments in infrastructure projects through debt instruments: 

Structure of Infrastructure Bonds (Options)

• DFIs issue bonds on behalf of FGN and DFIs can directly on-lend to banks to finance projects.
• FGN takes credit risk while banks bear the project risks
• Bondholders do not take credit or project risks

• DFIs issue bond with FGN or CBN guarantee and lend directly to project executors.
• FGN or CBN takes credit risk
• DFIs bear project/performance risk

• Consortium of Banks issue bond with CBN guarantee and lend directly to project executors:
• FGN or CBN takes credit risk
• Consortium of banks bear project/performance risks

• State Government or Project SPV issue bond backed by ISPOs or IGRs
• Already being used by most State Governments
• State Governments that have reached their limits on utilizing ISPOs or have limited IGRs should be encouraged to look for other forms of credit enhancements

The Federal Government’s policy on borrowing and the Fiscal Responsibility Act 2007, provide only for concessional borrowing by all tiers of government (Section 4.1(1) (a), except in special cases where approval would need to be sought from the National Assembly (Section 4.1(2). The Act also stipulates that the level of public debt must be sustainable.

However, in a recent presentation, the Honourable Minister of Finance stated that Nigeria’s total debt of N4.104 trillion (about $27.36 billion) is approximately 15% of gross domestic product (GDP) versus a recommended 40% of GDP for developing countries like Nigeria. According to the Minister of Finance, Nigeria’s total debt is still within the internationally accepted benchmark for measuring debt sustainability. The challenge to address, therefore, is that the chosen option has a limited impact on the budget deficit, a verifiable and feasible means of repayment, and no administrative bottlenecks.

FIGURE 6: NIGERIA’S DEBT PROFILE

Apart from the limited absorptive capacity of the domestic capital market, and the FGN Yield Curve, that serves as a reference benchmark for domestic borrowing, the rising profile of domestic debt as is depicted in Figure 7 indicates the increasing non-viability of this option.

• Low-Interest Concessional Loans

These are funding sources, which could be accessed by the public and private sectors for infrastructure development. These are usually provided by bilateral/multilateral development institutions such as the World Bank Group, African Development Bank (AfDB), Islamic Development Bank and Agence Française de Développement (AFD), the French Development Agency, and the European Investment Bank. These funds are long tenured and have both concessionary and market determined terms, depending on the sponsors and projects meeting certain eligibility criteria.

A number of private and government-supported development finance institutions (DFIs) have in various fora, offered to help raise the requisite special supplemental funding in the international markets at concessionary interest rates of between 1-3%, inclusive of agency fees. In support of this option, the DFIs will require the CBN or FMF to provide a Sovereign Guarantee that will permit these institutions source and provide the funds at competitive terms.

Under this option, the DFIs will take project risks that will ensure that the proposed projects are completed and on time, while the Federal Government will only take the credit risk of the DFIs and foreign exchange risk for the duration of the loan.

• Monetary and non-Monetary Grants

Financing for preparing feasibility studies, business plans and in some cases pilot projects, have largely been provided through loans and grants directly from government or bilateral and multilateral agencies. Agencies such as USAID, DFID, EC, JICA and the World Bank have been in the forefront of these types of assistance.

On the other hand, a project could receive non-monetary finance through the FGN, as is in the case of a highway or railway. These come as tax breaks, pioneer status and other incentives for private sector participation. A land grant could be used to incentivize the private sector in the building of a rail line.

• Private Sector Resources

• Pension Fund

Infrastructure finance is attractive to pension funds due to long maturity, stable earnings and diversification. At present, investment can only be in structured and regulated instruments that are rated and possibly listed on a recognized exchange to mitigate risks. In addition, the securities should have clear maturity, and periodic/terminal payout.

The National Pension Commission (PenCom) is currently reviewing its regulations with a view to making infrastructure a separate asset class with specific asset allocation. However, the instruments should be inflation protected where the tenors exceed 7years in order to make them attractive, in view of the inflationary trend in Nigeria.

This is a viable source or infrastructure funding.

• Long-term Corporate/Commercial Bonds

Corporate entity issues bond in its name and apply proceeds to fund infrastructure. The issue could be by a local entity for the local market (denominated in Naira) or USD denominated bond for offshore markets. It could also be a Naira denominated bond listed offshore with Principal plus Interest serviced in naira. As will be expected, these instruments require credit enhancements like risk rating, FGN guarantee, insurance, FDI backing, etc.

Commercial banking groups have been expressing their desire to raise long-term (10-15 year) commercial bonds in the domestic or foreign market on commercial terms to provide relatively longer term financing for infrastructure development. In support of this option, the commercial banks will require the CBN to provide credit enhancement in the form of credit guarantees that will permit the banks to issue long-term infrastructure bonds at competitive interest rates for the benefit of the FGN, similar to the United Kingdom Government’s 2008 Credit Guarantee Scheme.

Under this option, the commercial banks will take project risks that will ensure that the proposed project are completed and on time, while the Federal Government will only take the credit risk of the commercial banks.

As with local bond issue, there is very limited local absorptive capacity. However, this option is usually very attractive to foreign investors who have unlimited absorptive capacity, and should be pursued.

• Export Credit Finance

Export Credit Agencies (ECAs) or Investment Insurance Agenciesare perhaps the world’s largest financers of big infrastructure projects in developing countries. All industrialized nations have these national agencies that provide financing for projects and programmes in poorer developing countries. They are public institutions, operating mostly in secret, that subsidize the foreign exports and investments of wealthy nations by providing government backed loans, guarantees and insurance to their oil companies, engineering firms and other domestic corporations that  want to do business in developing countries.

ECAs currently finance or underwrite about $430 billion of business activity abroad – about $55 billion of which goes towards project finance in developing countries – and provide $14 billion of insurance for new foreign direct investment, dwarfing all other official sources combined (such as the World Bank and Regional Development Banks, bilateral and multilateral aid, etc.). As a result of the claims against developing countries that have resulted from ECA transactions, ECAs hold over 25% of these developing countries’ US$2.2 trillion debt.

Export credit is typically provided by ECAs either:

• directly, as a loan, with repayment terms generally from 2 to 10 years, subject to Chapter II, Paragraph 10 of the OECD Arrangement, or
• Indirectly, as insurance or a guarantee provided by an ECA to support a commercial loan.

Direct export credit usually comes in the form of a buyer credit, whereby credit is provided directly to the importer or buyer to allow it to fund the purchase of exported goods or services primarily from the country in which the ECA is located.

Export credit can also be extended through a supplier credit, whereby a supplier makes a sale based on deferred payment terms, with export credit insurance protecting the supplier or its commercial bank against the buyer’s failing to make payments when they become due.

Export credit is often part of a project finance package put together by a structured trade or project finance unit of a commercial bank. The mandate of most ECAs is to fill a financing gap and cover the risks that the commercial market is not willing to take.

Major ECAs providing export credit finance include African Export Import Bank (Afrexim), African Trade Insurance, Export Import Bank of the United States (Exim Bank), Overseas Private Investment Corporations (OPIC), Hong Kong Export Credit Insurance Corporation (HKECIC), Taipei Export Import Bank of China (TEBC), and China Exim Bank. Others are China Export & Credit Insurance Corporation (SINOSURE), COFACE of France, Export Credit Guarantee Corporation of India (ECGC), Export-Import Bank of India, Japan Bank for International Cooperation (JBIC), Export Import-Bank of Korea (KEXIM) and Export Credit Guarantee Department (ECGD) of United Kingdom.

• Oil for Infrastructure Scheme

Oil for Infrastructure Scheme has been used successfully in Angola to develop infrastructure. The schemes do, however, generate serious challenges of governance, failures in due process, transparency and accountability, which must be confronted. A well thought-out framework which mitigates these risks must therefore be put in place.

• Private Equity and Infrastructure Funds

Start-up funds are usually available from venture capital (VC) groups and special purpose international investment funds. Venture capital companies such as Actis and African Capital Alliance specialize in providing funding for new enterprises and infrastructure projects.

Financing from traditional VCs for new projects is not usually available for international infrastructure projects, due to the high cost of due diligence and limited exit options for these firms. Typically high rates of return, often 25-50%, are also required.

Large pensions and insurance firms have created a number of special purpose international investment funds for infrastructure projects. Quite a number operate in Africa. The Africa Infrastructure Investment Fund (AIIF), Actis Infrastructure Fund (AIF), AIG Africa Infrastructure Fund (AAIF), and Emerging Africa Infrastructure Fund (EAIF). Others are Pan-African Infrastructure Development Fund (PAIDF) and EU-Africa Infrastructure Partnership Trust Fund. Discussions have been ongoing for the activation of Gulf of Guinea Infrastructure Fund (GoGiFund). Pension Funds from the 23 nations of the Gulf of Guinea, including PENCOM, will be investing in this fund. Indications are that these institutions collectively hold in excess of US$12 billion.

• Public Private Partnerships

Partnerships between the public sector and private companies for the financing, design, build, maintenance of infrastructure and delivery of associated services are the preferred means by this present administration, of meeting the need for modern, efficient infrastructure and for reliable cost effective delivery of public services as envisioned in its National Vision 20: 2020.

The private sector, both locally and internationally, has a large pool of resources from which they can seek funding, which governments may not have access to, or the capacity to access. For this reason, there has been a marked increase in cooperation between the public and private sectors (often referred to as Public Private Partnership – PPP) in the development and operation of infrastructure in a wide range of economic activities in recent times. Besides filling the resource gap in infrastructure delivery and operation, governments all over the world have come to recognize that the collaboration between public and private sectors is crucial to securing dependable and sustainable funding for infrastructure and reducing the pressure on fiscal budgets. PPP arrangements have engendered acceleration of infrastructure provision, faster implementation of projects, and reduced whole life costs project. Besides, it offers better risk allocation between public and private sectors, better and sustainable incentive to perform, engender accountability in fund utilization, and improve the overall quality of service. Evidence also abound that it leads to the generation of additional revenue and overall value for money for the entire economy.

An appropriate framework for Public Private Partnerships (PPP) in Nigeria is already in place and activated, and is expected it to contribute to addressing the infrastructure deficit and operational constrains. However, the immediacy of the need to rebuild some critical but rapidly deteriorating infrastructure makes PPP inappropriate, at least in the near term. While advocacy for the use of PPP mechanisms as part of the solution for funding of commercially viable infrastructure continues, there is an immediate need to develop other sources particularly of short and medium term funding to respond to the challenge, as the PPP mechanism can only augment FGN’s resources.

In determining a project’s suitability for PPP funding, the following criteria were used:

• Existence of appropriate policy, legal, and institutional frameworks for PPP in the sector;
• Ability to establish captive revenue stream from the project;
• Ability to deliver a positive rate of return for investors;
• The scale of the project is sufficient to justify the additional transaction costs of procuring as a PPP project;
• Ability to appropriately allocate project risks.

• Financial Intermediary Loan Scheme

Under a PPP support programme for Nigeria, the World Bank has agreed to provide funds about US$ 200 million as seed money to set up a Financial Intermediary Loan Scheme for purposes of providing long-term funding for infrastructure development in Nigeria. Under this Fund, into which a number of DFIs have agreed to contribute, eligible participating financial intermediaries (FIs) particularly the commercial banks with AFC as the lead, will on-lend to qualifying private sector partners in a PPP project at the FI’s risk. 

Projects that will be eligible for the funds are priority public investment programmes/projects of the FGN, which accord with the Federal Government’s National Policy on PPP and captured in the FGN’s Medium Term Sector Strategies and the NIP of the National Vision 20: 2020.     

• FUNDING OF CRITICAL AND URGENT PROJECTS

• Criteria for assigning funding source(s) to Projects

Based on the criteria and methodology adopted in prioritizing infrastructure projects, which are outline in Paragraph 2.1 of this report, all infrastructure projects have be categorized into two main grouping as follows:

• Critical and urgent;
• Neither critical nor urgent.

Within each of these groups are ongoing as well as new projects. For purposes of assigning funding sources or group that best meets the objectives of accelerated infrastructure delivery to identified projects, infrastructure projects were further classified as:

• Bankable;
• Not Bankable.

A project is considered bankable if preliminary financial analysis confirms the ability to establish revenue streams, deliver positive NPV, allocate risks and have sufficient scale for transaction costs. In addition, there is a high probability of success, and be acceptable to institutional lenders or financiers.  Where sustainable cash flow stream cannot be established for a project, neither is  the project is capable of delivering positive NPV, nor  risks e allocable, and  does not have sufficient scale for transaction costs, such a project is considered “not bankable”. The probability of commercial success for the project will be low and as such will not attract the interest of institutional lenders or financiers.

Each of the groups and sub-groups has significant funding implications which will be discussed below. Figure 7 below demonstrate this categorization and their matching with appropriate funding sources.

FIGURE 7: ANALYSIS OF PROJECTS

• Prioritization of Projects

A total of 139 infrastructure projects spread across 11 economic sectors were drawn from the National Implementation Plan (NIP) of the National Vision 20: 2020 and additional projects submitted by the MDAs, harmonized with the Federal Government’s MTSS, and subsequently screened and prioritized against an agreed set of criteria to produce a list of prioritized projects. From this data set, about 51 or 37% of these infrastructure projects were determined to be Critical and Urgent. The rest were classified as neither Critical nor Urgent.

Projects are classified as Critical and Urgent Infrastructure if they:

• are currently existing capital projects under the NIP (2011-2013) of the NV2020 Blueprint;
• would make significant economic impact;
• are already ongoing or under development;
• essential to the attainment of sector goals; and
• could achieve significant progress within the next four years.

The 51 Critical and Urgent projects, requiring an outlay of N8,582.24 billion during the FY 2011-2015,  comprise Aviation (8), Housing (3), Power (11), Roads (11), Railways (9), and Ports & Inland Waterways (6). Of this figure, a total of 21projects are currently ongoing. These projects require an outlay of N1,664.25 billion. The new projects are 30 in number, and require a projected outlay of N6, 917.99 billion.

FIGURE 8

A bankability analysis undertaken on these 51 critical and urgent projects, reveal that 36 or 71% 0f these projects are indeed bankable. About 20 of these 36 projects are new, while 16 are either ongoing or undergoing development. Of the 15 projects are considered “not bankable”, 10 are new while five are currently ongoing.  Table 14 below provides a summary of the bankability analysis.

TABLE 14: ANALYSIS OF PROJECTS

CATEGORY	No. of Projects	%	Amount (N b)	%
BANKABLE
New	20	39.22	3,644.85	42.47
Ongoing	16	31.37	1,281.6	14.93
Sub Total	36	70.59	4,926.45	57.40
NOT BANKABLE
New	10	19.61	3,273.14	38.14
Ongoing	5	9.801	382.65	4.46
Sub Total	17	29.41	3,655.79	42.60
TOTAL	51	100.00	8,582.24	100.00

The funding options identified as having the potential of providing adequate, reliable and timely financing for each of the categories of priority infrastructure projects identified in Table 22 below are discussed in paragraphs 5.2.2 and 5.2.3 below.

• Neither Critical or Urgent Projects

The 81 projects that are classified as neither Critical nor Urgent are made up of 41 Ongoing projects requiring an outlay of N907.72 billion,  and 40 new projects that require financial outlay of N827.40 billion during the Plan period. A list of these projects is provided as Appendix 4 of this Report.

It is the recommendation of the TWG that all ongoing projects classified as neither Critical Nor Urgent, be accommodated within the Regular Annual Budget, while entirely new projects that is considered as neither Critical Nor Urgent be deferred to a future Plan Period. In the light of this, no further consideration has been given to these projects for the remainder of this Report.

• Matching Projects With Funding Sources

Based on the above premise, funding sources have been assigned to identify priority projects in such a manner as is likely to meet the objective of accelerated infrastructure delivery.

• Total Financial Requirement

Over the next five years, all 51 projects selected as critical and urgent will require a total financial outlay of N8,582.24.This amount does not include the cost of the following projects which could not be determined at the time of this report:

• Rail extensions from the 10 Inland Container Terminals (ICD) to the existing Lagos – Kano and PH to Maiduguri Narrow Gauge lines
• Construction of the 10 ICDs
• Rehabilitation of Jebba, Shiroro & Kainji Hydro Power Projects
• 17 Small Hydro Power Projects. Pre-feasibility studies to upgrade these dams into Small Hydropower Projects are currently ongoing
• Lekki Deep Seaport
• AkwaIbom Deep Seaport
• 12 RBDA projects

Figure 9 disclosed the sectorial funding requirements for the 51 critical and urgent projects

• Power

A total of 11 critical Power projects requiring a capital outlay of N2,480.50 billion are envisaged in the period 2011-2015. The cost of rehabilitating Kainji, Jebba and Shirroro dams could not be readily established and do not form part of this projected financial outlay. Only seven of these power projects are considered bankable. For these projects, a combination of possible funding sources including Enhanced budget, Export Credit and Concessional funding, is likely to provide suitable funding for accelerated development.  The Chinese and Brazilian ECA have commenced discussions on Mambilla and Zungeru HPP. The Kaduna and Abuja Thermal Power plants will be developed in collaboration with the private sector as IPPs. Together, these plants will add a total of 2250 to the nation’s power pool, in addition to providing commercial justification to the development of the Calabar-Umuahia-Ajaokuta-Abuja-Kaduna-Kano gas pipeline currently under development by the NNPC. Kainji, Jebba and Shirroro dams are currently being prepared for concession to the private sector.

The Super Grid project, estimated to cost about N1,000 billion over the next four years, is designed to ensure that all power generated via private sector participation is effectively and efficiently wheeled. 

TABLE 15: FUNDING OF POWER PROJECTS

ID	Comments	Bankable/ Un-bankable	Estimated Cost   (N  b)	Funding Source
1	Mambilla (2600 MW)	Bankable	390.00	Enhanced Budgeting + Export Credit  (China/Brazil)
2	Zungeru (700MW)	Bankable	330.00	Enhanced Budgeting + Export Credit  (China)
3	Gurara (350 MW)	Bankable	52.50	Enhanced Budgeting + Export Credit
4	Kaduna (900 MW) Power Plant	IPP	165.00	IPP
5	Abuja (1350 MW)	IPP	228.00	IPP
6	Rehabilitation of Kainji Dam	Bankable	0.00	PPP
7	Rehabilitation of Jebba	Bankable	0.00	PPP
8	Rehabilitation of Shiroro	Bankable	0.00	PPP
9	Rehabilitation  and Expansion of Transmission lines	Not Bankable	315.00	Enhanced Budgeting + Concessional Loan
10	Super Grid Project	Not Bankable	1000.00	Enhanced Budgeting + Concessional Loan
11	Small hydro power plants	Not Bankable	0.00	Enhanced Budgeting + Concessional Loan
	TOTAL		2480.50

With the exception of Kashimbilla (22 MW) and Ogwasiku (1 MW) dams, whose construction are currently in progress, the other 15 dams projects all have their dams in place. Pre-feasibility studies for upgrading these dams into Small Hydropower Projects (SHPP) are currently ongoing.  Table 16 below contains a listing of these small dams.

TABLE 16: SMALL HYDROPOWER PROJECTS

ID	Project Title	Location	Total Cost (N b)
1	Waya Small Hydro Power Plant (0.15 MW)	Bauchi State	NA
2	Mbowo Small Hydro Power Plant (0.125 MW)	Enugu State	NA
3	Ikere Gorge Small Hydro Power Dam (9 MW)	Oyo State	NA
4	Oyan Small Hydro Power Dam (9 MW)	Ogun State	NA
5	Bokolori Small Hydro Power Dam (3 MW)	Sokoto State	NA
6	Itisi Small Hydro Power Dam	Kaduna State	NA
7	Tiga Dam (6 MW Potential)	Kano State	NA
8	Challawa Dam (6 MW Potential)	Kano State	NA
9	Jabiya Dam  (3 MW Potential)	Katsina State	NA
10	Doma  Dam	Nasarawa State	NA
11	Owena Dam  (3 MW Potential)	Ondo State	NA
12	Goronyo Dam	Sokoto State	NA
13	Kampe Dam  (2 MW Potential)	Kogi State	NA
14	Zobe Dam  (3 MW Potential)	Katsina State	NA
15	Dadin Kowa Small power Plant  (34 MW Potential)	Gombe State	NA

Figure 10 is a pictorial depictions of the Nigerian Power Infrastructure and the Super Grid.

FIGURE 10: NIGERIAN POWER INFRASTRUCTURE

• Road & Bridges

A total of 11 road projects, estimated to cost about N2,343.45 billion,  scheduled for execution during the plan period 2011-2015, were considered as critical and urgent. Five of these road and bridge projects namely Shagamu-Benin-Asaba Expressway, Abuja-Kaduna-Kano, 2nd Niger bridge, Abuja-Lokoja,  Ibadan-Ilorin-Jebba and Lagos-Ibadan are considered bankable, and will require a financial outlay of N2,060.70 billion during the plan period. As such, there are likely to attract some form of private sector participation in their development and maintenance. The Shagamu-Benin-Asaba Expressway, Abuja-Kaduna-Kano, Ibadan-Ilorin-Jebba and Abuja-Lokoja projects PPP proposals, whose rehabilitation are currently ongoing, could be restructure for PPP procurement through an arrangement that takes cognizance of existing contractual obligation. The initial traffic estimates for the 2nd Niger bridge indicates that it could be developed purely as a PPP. For the other non-bankable projects that are currently ongoing such as Apapa-Oshodi Expressway would require Enhanced Budgetary Allocation amounting to N282.75 billion to ensure their speedy completion. The TWG is of the view that except for Apapa-Oshodi Expressway  and Ajoakuta Project Access Roads, all critical and urgent roads developed should be given out on concession to the private sector for Operation and Maintenance.

Figure 11 shows the location of these projects and their potential for significant economic impact.

FIGURE 11: NIGERIAN ROADS INFRASTRUCTURE

Details of the critical and urgent Roads and Bridges projects are shown in Table 17 below.

TABLE 17 – FUNDING OF ROADS & BRIDGES PROJECTS

ID	Project Title	Bankable/ Un-bankable	Estimated Cost (N  b)	Remarks
1	Shagamu-Benin-Asaba Expressway	Existing/Ongoing rehab. & upgrade	92.85	PPP
2	Abuja-Kaduna-Kano	Upgrade and Concession	45.00	PPP
3	2nd Niger bridge	New	37.95	PPP
4	Loko-Oweto	New	54.00	Enhanced Budgeting + O & M  PPP
5	Abuja-Lokoja	Ongoing	58.65	Enhanced Budgeting + O & M  PPP
6	Niger Delta Coastal Road	New	1800.00	Enhanced Budgeting + Various Institutions
7	Ibadan-Ilorin-Jebba	Ongoing	18.00	Enhanced Budgeting + O & M  PPP
8	Kano-Maiduguri	New	139.95	Enhanced Budgeting
9	Lagos-Ibadan	On concession	88.95	PPP
10	Apapa-Oshodi	Ongoing	5.55	Enhanced Budgeting
11	Ajaokuta Access Roads	Ongoing	2.55	Enhanced Budgeting
	TOTAL		2,343.45

• Railways

The TWG identified a total of nine railway projects whose development is likely to have very significant impact on economic activities in the country. Not only with the network enable a speedy and economic evacuation of agricultural products and raw materials from the hinterlands to the urban and industrial centres, it will also engender a seamless distribution of manufactured goods, whether imported or locally manufactured. Besides providing a cheap alternative for the movement of passengers and goods, it will also relieve the axial pressure on our roads.

Nine projects, projected to cost about N2,799.00 billion over the next five years, have been identified as critical to the development of this network. All the projects have the potential to attract and repay Export Credit financing and concessional loans. Enhanced budgetary allocation will, however, to provide funding for the following projects whose completion is necessary to ensure the commercial viability of the rail lines:

• The rehabilitation of the Lagos-Kano and PH – Maiduguri Narrow Gauge lines currently under rehabilitation;
  • The construction of rail extensions from the 6 Inland Container Terminals (ICDs) located in the six geo-political zones, namely Ibadan, Kano, Isiala-Ngwa in Abia, Jos, Maiduguri and Funtua in Katsina State, to the existing Lagos – Kano and PH to Maiduguri Narrow Gauge lines;
  • Construct the 6 ICDs.

Figure 12 is a pictorial depiction of the planned rail network.

FIGURE 12: PLANNED RAIL NETWORK

Details of the railway projects are shown on Table 18

TABLE 18 -FUNDING OF RAILWAY PROJECTS

ID	Project Title	Bankable/ Un-bankable	Estimated Cost (N  b)	Funding Source
1	Lagos-Kano Narrow Gauge	Bankable	12.20	Enhanced Budgeting + Export Credit  + Concessional Loan
2	PH – Maiduguri Narrow Gauge Rehabilitation	Bankable	67.30	Enhanced Budgeting + Export Credit  + Concessional Loan
3	Lagos-Ibadan Standard Gauge Line	Bankable	229.50	Enhanced Budgeting + Export Credit  + Concessional Loan
4	Abuja –Kadunastandard gauge line	Bankable	240.00	Enhanced Budgeting + Export Credit  + Concessional Loan
5	Lagos – Ife-Ilesha-Owo-Benin-Onitsha-Enugu (650km) Standard Gauge	Bankable	900.00	Enhanced Budgeting + Export Credit  + Concessional Loan
6	Ajaokuta-Jakura-Baro-Abuja Standard Gauge	Bankable	435.00	Enhanced Budgeting + Export Credit  + Concessional Loan
7	Abuja Rail Mass Transit LOT 1 And 3	Bankable	150.00	Enhanced Budgeting + Export Credit  + Concessional Loan
8	Abuja light Railway Project LOT 2	Bankable	75.00	Enhanced Budgeting + Export Credit  + Concessional Loan
9	Benin-Calabar through 6 Niger Delta States	Bankable	690.00	Enhanced Budgeting + Export Credit  + Concessional Loan
	TOTAL		2799.00

• Ports & Inland Waterways

The major items of investment in the six projects identified as critical and urgent ports and inland waterway infrastructure are the Lekki  and Akwa Ibom Deep Sea Ports. Unfortunately, the cost of these projects could not be ascertained at the time of this report. As mutually exclusive projects, each project is bankable and is shown by the level of private sector interest in their development. The bankability of the projects become doubtful as the volume of shipping traffic in the West African subject may not justify two deep seaports within 1000 km of each other.

TABLE 19 – FUNDING OF PORTS & INLAND WATERWAY PROJECTS

ID	Project Title	Bankable/ Un-bankable	Estimated  Cost (N  b)	Funding Source
1	Lekki Deep Sea Port	Bankable	NA	PPP
2	AkwaIbom Deep Sea Port	Bankable	NA	PPP
3	Onitsha Inland River Port	Bankable	4.20	Enhanced Budgeting + O&M
4	Baro Inland River Port	Bankable	3.60	Enhanced Budgeting + O&M
5	Oguta River Ports	Bankable	2.70	Enhanced Budgeting + O&M
6	Degema River Port	Bankable	1.70	Enhanced Budgeting + O&M
	TOTAL		12.20

FIGURE   13

A map of the seaport and inland waterway infrastructure after the proposed development, is shown as Figure 13 below.

Other investments considered critical and urgent are the inland river ports at Onitsha, Baro, Oguta and Degema. These are expected to cost about N12.20 billion and are currently under construction. Enhanced budgeting will ensure expedited project delivery, after which Operations and Maintenance will be given out on concession to the private sector.

• Aviation

The major projects in the aviation subsector considered to be urgent and critical are six ongoing expansion and remodeling projects designed not only to ensure air safety, security and passenger comfort as envisioned in the National Vision 20: 020, but also meet ICAO standards and recommended practices.  These projects which are considered bankable are:

• Murtala Mohammed International Airport, Lagos. (N20.848 billion),
• Dr. Nnamdi Azikiwe International Airport, Abuja (N27.9 billion),
• Aminu Kano International Airport, Kano (N13.50 billion),
• Akanu Ibiam International Airport, Enugu (N10.52 billion)
• Port Harcourt International Airport, Port Harcourt (N17.30 billion), and   
• Margret Ekpo International Airport, Calabar (N14.20 billion).

The suggested method of funding for these aviation projects is Enhanced Budgetary Allocation for airside investments relating to operational efficiency, safety and security and compliance with international standards. These are indeed critical and urgent. The remodelling and development of terminals, etc could be funded through PPP, after proper OBC studies have been carried out. The ongoing airport in Bayelsa State, together with other aviation work could be accommodated in the regular budgets. Table 20 below shows the breakdown of the proposed airport projects.

TABLE 20 – FUNDING OF AVIATION PROJECTS

ID	Project Title	Bankable/ Un-bankable	Estimated Cost	Funding Source
1	MMIA International airport (Terminal Remodelling)	Bankable	N21 b	Enhanced Budgeting for Airside and PPP for Terminals
2	Abuja International airport (Terminal Remodelling)	Bankable	N20.8 b	Enhanced Budgeting for Airside and PPP for Terminals
3	Kano International Airport(Terminal Remodelling)	Bankable	N13.5 b	Enhanced Budgeting for Airside and PPP for Terminals
4	Enugu International Airport(Terminal Remodelling)	Bankable	N10.5 b	Enhanced Budgeting for Airside and PPP for Terminals
5	Port Harcourt International Airport(Terminal Remodelling)	Bankable	N17.3 b	Enhanced Budgeting for Airside and PPP for Terminals
6	Bayelsa airport	Un-Bankable	N1.96 b	Regular Budgeting
7	Maiduguri, Benin, Calabar, Akure, and taxiway at Kano and MMIA	Un-Bankable	N0.9 b	Regular Budgeting
8	Other Aviation work (Fencing of all major airports etc)	Un-Bankable	N10.6 b	Regular Budgeting
9	Calabar  International Airport (Terminal Remodelling)	Bankable	N14.2 b	Enhanced Budgeting for Airside and PPP for Terminals

A map of the showing the location major airport infrastructure is shown as Figure 14 below.

FIGURE   14

• Housing

In line with the objective of creating an enabling environment for private sector investments in housing development, it will be necessary to  recapitalize the Federal Mortgage Bank of Nigeria (FMBN) to a minimum of N100 billion. This will leave the actually development to the private sector. In consideration of this, as well as the criteria used in prioritizing projects, two projects have been selected critical and urgent in the housing sector. These are the development of 600,000 housing units in the six geopolitical zones under a PPP arrangement, and the recapitalization of Federal Mortgage Bank of Nigeria (FMBN).  Table 21 below shows the breakdown of the proposed housing projects.

TABLE 21 – FUNDING OF HOUSING PROJECTS

ID	Project Title	Bankable/ Un-bankable	Estimated  Cost	Funding Sources
1	600,000 Housing Units under PPP arrangement	Bankable	104.74	PPP
2	Recapitalization of FMBN	Un-Bankable	100.00	FMBN to be fully capitalized to at least N100 billion

Oil and Gas Infrastructure

FIGURE   15

The upgrading of the Power Sector appears to be the most critical of Nigeria’s infrastructure challenge. The FG’s effort at improving performance in this sector has been hampered by the non-availability of Gas to power the numerous thermal power stations. As a response to this challenge, the FG developed the Gas Master Plan (GMP) with the object of improving the existing Commercial Framework for Gas, improving the existing Legal Framework, address insufficiency of existing Infrastructure, ensuring domestic utilization of Gas and promoting Industrial growth.

FIGURE   16NIGERIA’S PIPELINE INFRASTRUCTURE

Other objectives include identification of sources of Gas and linkage to demand centres, provide a backbone of Gas Pipelines that will cover the whole Nation, creating and anchoring major investment from off takers such as power plants and petrochemical plants, and ensuring flexibility and fluidity in making gas available to areas where it is most needed. 

Cognizant of the above sector objectives and in line with the prioritization and bankability criteria, three projects namely Calabar –  Ajaokuta-Kano Gas Pipeline, Obiafu – Obrikom Gas Pipeline, Expansion of Escravos – Lagos Pipeline (ELP) Phase 1& 2 as critical to the attainment of the above objectives. While the Calabar –  Ajaokuta-Kano Gas Pipeline appears bankable in view possible off-take by the two proposed Thermal Power Plants at Abuja (1350 MW) and Kaduna (900 MW), the other selected projects are not bankable. Details of cost and possible funding sources for these projects are disclosed in Table 22 below.

TABLE 22 – FUNDING OF OIL & GAS PROJECTS

ID	Project Title	Bankable/ Un-bankable	Estimated Cost	Funding Source
1	Calabar –  Ajaokuta-Kano Gas Pipeline	Bankable	465.00	Enhanced Budgeting + PPP, provided it is tied to off-take IPPs in Abuja & Kaduna
2	Obiafu – Obrikom Gas Pipeline	Un-Bankable	96.75	Enhanced Budgeting + NNPC
3	Expansion of Escravos – Lagos Pipeline (ELP) Phase 1& 2	Un-Bankable	90.90	Enhanced Budgeting + NNPC
	TOTAL		652.65

Prefeasibility studies and Environmental Impact Assessment (EIA) have already been carried out for these projects.   A map of the showing major gas pipelines infrastructure after the proposed development is shown as Figure 17 below.

FIGURE   17

• Agriculture Infrastructure

The major identifiable agriculture infrastructures are the 12 River Basin Development Authorities located at the six geopolitical zones as disclosed by Figure 18 below.

FIGURE 18

The thrust of government’s effort at revitalizing the RBDAs that have been comatiose for a very long time, and hardly able to perform even the most basic of their mission are:

1. Rehabilitate the RBDA
2. to revitalize the RBDAs through re-capitalization
3. Initiate prudent management of water and other resources
4. Transfer the Operations and maintenance of the RBDAs to the private sector.

This would involve a redefinition of the role of the RBDAs in national development in relation to potable water supply, agriculture, livestock and fisheries as well as transportation; determine the strategic policies for commercialization of the RBDAs for the purpose of generating revenue to meet operation and maintenance requirements; make the RBDAs more efficient and effective by strengthening their internal management structure through organizational development and accelerated training; design, develop and install systems and procedures in order to commercialize  their operations.

It was not possible to obtain a precise estimate of the planned expenditure on these key agriculture infrastructure (See Table 22), as advisory studies are currently ongoing to determine the possible next steps.  The expected rehabilitation also includes the development and expansion of the irrigations schemes associated to the 17 small hydropower dams earlier listed in Table 16 above.

TABLE 23 – FUNDING OF RBDAs & SMALL HYDRO DAMS

• Critical Infrastructure Delivery Framework

• Infrastructure Delivery in other Jurisdictions

In order to sustain economic growth, increases of infrastructure spending are critical for the emerging economies as their populations continue to expand and urbanize.

The developed world has a population of approximately 1 billion versus the developing world’s 5.5 billion people. As the emerging economies and the developing world keeps pushing to catch up, the continued economic growth in emerging markets (EM) have prompted a boom in infrastructure building.

In the past few years EM countries have benefited significantly from strong global growth and the impressive rise in commodity prices. Consequently, many countries that had been running large current account and balance of payments deficits in the 1990s, are now running surpluses and have become significant creditors to the rest of the world. This transformation to profitability has allowed for the funding of infrastructure spending to deal with future needs as well as in some cases decades of accumulated backlogs.

Despite some current signs of a slowdown in emerging markets[10], growth prospects – particularly for the BRICs[11], remain inevitable and solid. If anything, most if not all BRIC countries currently seem to be at risk of overheating, but nothing more than that.

That’s why the governments and particularly, private sector players with increased accessibility in these markets, are deploying unprecedented amounts of capital to upgrade the emerging world. According to a research conducted by Morgan Stanley (MS), a total of US$21.7 trillion in infrastructure spending is projected to be spent across emerging markets over the next decade, with Asia representing 67% of this total. China is expected to make up the majority of the spending, claiming 43%, followed by India’s 13%. Other key EM countries and their share of spending are Russia with 10% and Brazil with 5%.

Private funding supporting one or more general subject area projects as well as innovative dedicated infrastructure funds – are heavily engaged. A surge in market listings of owners, operators and contractors to build emerging markets infrastructure assets, is also underway. According to estimates, the number of listed EM infrastructure-related entities, notes MS – has risen from 230 to 354 (54% increase) over the last five years—with total market cap increasing from $146 billion to $1.1 trillion.

Merrill Lynch (MER) also came out with a report, recently – where it raised its annual infrastructure-spending estimate for emerging markets by 80%, “with an implied run rate of $6.6 trillion over the next three years”.

FIGURE 19

Interestingly, the economic output of the developing world will at least, equal if not surpass that of the developed world by the end of fiscal 2010. This is based on available statistics.

• Infrastructure Delivery in Nigeria

A study, conducted 2009, in collaboration with the DFID and World Bank, revealed that the late passage of the annual budget, release of funds per project rather than bulk releases, delays in cash-backing, and procurement challenges, were largely responsible for low implementation of the 2008 Budget. Despite concerted efforts to address each of these bottlenecks through bulk release of the capital vote to MDAs, full cash-backing of capital warrants and the decentralization of the procurement process, all with a view to achieving a higher capital budget implementation level, performance is still below the level necessary to achieve rapid improvement of infrastructure services in line with the Vision 20: 2090 aspirations. The National Assembly Committees through their oversight functions have gone a step further and have granted the extension of capital budget implementation to March 31, succeeding year.

Clearly late budget passage is no longer a tenable excuse because MDAs are allowed to commence their procurement processes ahead of the passage of the budget. The ITWG sub-committee on project execution has isolated the following as primarily responsible for the low project execution in Nigeria:

• faulty project execution framework
• project execution capacity and competencies

• Proposed Critical Infrastructure Delivery Framework

Following extensive deliberation and studies, the ITWG sub-committee recommended a project execution framework modelled along lines of the Presidential Task Force on Power. The highlights of the framework are as follows:

1. All project identified as Critical and Urgent will be executed through the Critical Project Delivery Framework;
2. A Critical Infrastructure Delivery Council, chaired by the Vice President, with HMF, HM-NPC, and key ministers of infrastructure sectors as members will provide high level oversight and supervision for the delivery of all critical and urgent infrastructure;
3. The actual delivery of critical and urgent infrastructure will be organized at sectorial levels (power, transport, others, etc.), under the coordination of a Critical Projects Coordinator, chosen from among Minister in the Sector;
4. Project Delivery Teams, reporting to the Critical Projects Coordinator, will be responsible for day to day delivery of the projects or group of projects;

Figure 20 below depicts the recommended structure for Critical Projects delivery.

FIGURE 20: CRITICAL PROJECTS DELIVERY FRAMEWORK

The duties and powers of the proposed Council, Sector Coordinator and Project Delivery Teams are summarized in 5.4.4 to 5.4.9 below.

• The Ministerial Committee

This Committee will comprise of the responsible Ministers and will be headed by the Minister of National Planning. It is the role of the Inter-Ministerial Committee to set targets, give direction, approve deployment of resources and grant necessary approval to ensure overall progress in the delivery of the projects.

The Council will set targets, give direction, approve deployment of resources and grant necessary approval to ensure overall progress in the delivery of the projects.

• The Sector Coordinator

There shall be a Sector sub-committee for each of the critical sectors. A Sector sub-committee shall comprise of related Ministries, Departments and Agencies. Each sub-committee shall be headed by a Sector Coordinator (A Minister from the sector). The headship of this sub-committee can be rotational. Every sub-committee will drive delivery of the projects within its purview.

The Sector Coordinator must have the required authority and full support of all the Ministers. He will report directly to the Inter-Ministerial Committee, and direct and supervise the project teams. The Coordinator has the responsibility to hire and fire Project Delivery Team (PDT) leaders. He should be free to outsource project management skills as necessary to support PTDs, and may use professionals/consultants to assist in the coordination role.

• The Project Delivery Team

Each project will be led by a competent officer (Project Team Leader) from within the relevant ministry (where the necessary competencies exists within the ministry), or may be hired from elsewhere. He will select his team members in consultation with the Coordinator and subject to the approval of the home Minister. He will report directly to the Sector Coordinator and have full responsibility for project delivery.

• Critical Competence For Project Delivery Team

Recent studies indicate that the critical competence for effective project deliver is lacking in most of the MDAs. The challenge could be met in part through recruitment of competent and experienced personnel from the private sector to augment the skill at the MDAs. Several International Development Partners including the DFID have indicated readiness to provide assistance in this area.  The components of the assistance required are as follows:

1. Capacity building and technical assistance;
2. Project preparation and feasibility studies;
3. Transaction Advisory;
4. Project Management

In order to for this framework to work, the Inter-Ministerial Committee and the Sector Coordinator must ensure there is:

• Effective coordination across the various PDTs
• Capacity is developed and projects are assigned to officers with the right skills
• There is speed in decision making
• Team Leaders are sufficiently empowered to deliver on their projects
• Appropriate sanctions are meted to individuals or teams that fail to deliver on their projects.

• Monitoring, Evaluation and Reporting

Monitoring, evaluation and reporting will be provided as a support to the Critical Infrastructure Delivery Council, and will be based on the following premises:

1. set Key Performance Indicators (KPIs) for individual projects
   1. project cost
   1. outputs
   1. benefits

KPIs to be specific, objective, measurable and clearly reflect the basis on which the project has been appraised and approved

•         monitor expenditure and progress closely through the construction phase
  • regular site visits/inspections by independent engineers
  • financial reports by relevant MDAs
  • close review to ensure full contract compliance and management of variances
  • Task Force intervention whenever required
•         regular high level reporting to Critical Infrastructure Delivery Council
  • maintain pressure on project delivery teams to deliver on project implementation
  • get highest level backing for action on failing projects
•         post-completion reports on all projects
  • independent expert reporter(s)
  • covers costs, outputs and benefit performance
  • sets out lessons learned regarding project design and implementation
  • summary reports go to Critical Infrastructure Delivery Council

SECTION SIX CONCLUSIONS & RECOMMENDATIONS

Undoubtedly, Nigeria’s infrastructure deficit has stymied its economic growth, restricted productivity and limited its competitiveness. The challenges of the delivery of critical infrastructure continue to impact negatively on the cost of doing business, investment and capital inflow into the country. Recognizing this fact, the FGN commenced a process of addressing this problem. Through an iterative process which commences with identifying infrastructure projects whose delivery is critical to the attainment of the objectives of the National Vision 20:2020, establishing their delivery status, funding requirement, and matching them with  optimal funding methods and project delivery framework likely to ensure an expedited and accelerated completion of the projects.

Of the numerous challenges of infrastructure delivery in Nigeria, those of long term finance and inappropriate funding methods posed the most daunting. In aggregate terms, the annual budget, which hitherto provided the funding for infrastructure in Nigeria has not only proved completely inadequate. It may indeed be partly responsible for the dismal state of infrastructure in the country.

The drip-feeding of projects by the annual budget, whereby a fraction of funds available through the budget for capital works is spread across a large number of projects with the result that most are abandoned, very few ever completed often at multiples of the original cost and at scandalous extension in the completion time. The budget appropriation process by the National Assembly with the injection of new/additional projects into MDA budgets during the budget approval process, often exacerbates the problem. It also has the greater potential for corrupt practices with the result that increased expenditure on public infrastructure often does not translate to increased stock of capital assets. Indeed, it may also partly account for the very poor quality public infrastructure.

The funding options identified as having the potential to provide adequate, reliable and timely financing for priority infrastructure projects, fall into three broad categories namely On-budget Public Funding, Off-budget Public Funding; and Private Sector Resources. On-budget Public funding sources identified comprise Annual Budgetary Appropriations, Enhanced Budgetary Allocation and the Viability Gap Funding (VGF). Such other funding sources as the Nigerian Sovereign Wealth Fund, Excess Crude Account, US$-Denominated Sovereign (revenue) Bonds Issuance, and bilateral and multilateral Concessionary Funding, all constitute Off-budget Public Funding resources. Infrastructure Bonds, Pension Funds, Infrastructure Funds and such other private sector resources as Export Credit Guarantee Schemes, and Commercial (Term) Borrowing, including Financial Intermediary Loans (FILs) Scheme, Public Private Partnerships, Infrastructure Bonds, Pension Funds, and Private Equity Capital are also available to complement FGN’s financial capabilities. Possible bilateral and multilateral partners include ADB, IDB, World Bank, UNIDO[12], Nordic Group, AfDB, Brazil, China, JICA, etc. The list is by no means exhaustive.

Mobilization of domestic savings through such instruments as Sovereign (revenue) Bonds and Infrastructure Bonds, often provide reliable funding for infrastructure development. Unlike borrowing to support current consumption, infrastructure programs leave behind an asset that raises the future standard of living of the people. At present, however, these might not provide very viable funding options. Apart from the limited absorptive capacity of the domestic capital market, and the FGN Yield Curve, that serves as a reference benchmark for domestic borrowing, the rising profile of domestic debt indicates the increasing non-viability of this option. The Pension Fund, while having both a tenure and size appetite for infrastructure projects, currently lacks the necessary legislative backing for such investment in Nigeria.

First, infrastructure projects from the Federal Government’s MTSS were harmonized with the National Implementation Plan (NIP) of the Vision 20; 2020 blueprint, and subsequently screened against agreed criteria to produce a list of prioritized projects. From a total of 139 infrastructure projects spread across 11 economic sectors, about 51 or 37% of these infrastructure projects, projected to cost N8,582.24 were determined to be critical and urgent. The rest were classified as neither critical nor urgent. The criteria adopted in screening exercise are the projects’ strategic fit with the National Vision 20: 2020, expected economic impact, relationship with sector goals, geographical spread, and clarity of justification. Most of the projects identified have the likelihood of speedy completion before 2015.

The 51 critical and urgent projects comprise 21 ongoing and 30 new projects, and respectively require an outlay of N1,664.25 billion and N6,917.99 billion during the FY 2011-2015. Of the 21 ongoing projects, 16 requiring N1,281.60 billion were considered bankable. As such, forms of private sector resources including Export Credit Finance, concessional loans, PPP, etc., could be harnessed to provide adequate funding for this category of infrastructure projects.  The 5 ongoing projects considered not to be economically viable, require a total financial outlay of N382.65 billion during the period FY2011-2015 to ensure completion. As critical and urgent projects require adequate, reliable and timely funding to ensures expedited completion, Enhanced Budgetary allocation should be the preferred first line of funding for this category of projects. Front-loading the budgetary allocation to these projects for the next 2-3 years, during which the projects are expected to be completed, with allocations of the next 5-7 years, will provide sufficient funding for an accelerated completion of the projects.

The 30 identified new projects have a total financial requiring of N6,9117.99 billion for the FY 2011-2015. Of this number, 20 requiring N3,644.85 billion were considered bankable. As most of the viable projects are at their preparatory stages, various forms of Public Private Partnerships should be considered appropriate in providing adequate funding.  PPP/Project Finance, being non-recourse, would have been best suited for the development of these green field infrastructure and services, but a prima facie case of commercial viability and bankability have to be established ab-initio. Besides their processes are complex and require considerable length of time to put in place. This makes PPP clearly unsuitable for this category of critical and urgent infrastructure.   It would clearly be the method of choice where the financial outlay is considerable and the projects are economically viable. Such financing methods as Export Credit Guarantee Schemes (ECGS), Commercial Bonds, Term Borrowing, including Financial Intermediary Loans (FILs) Scheme, all provide dependable funding for this category of infrastructure projects. Where PPP/Project Finance is the preferred funding option, budgetary provision, MUST, as a matter of policy be made for the technical studies, bankable feasibility report, pre-feasibility studies, Outline Business Case (OBC) and Full Business Case (FBC) studies, EIA and other studies in the preceding year. 

For the remaining 10 considered new projects not to be bankable, and requiring N3,273.14 billion, a variety of  variety of funding sources including Special Intervention Funds, Infrastructure Bonds, and Bilateral and Multilateral Concessionary Loans, could provide more reliable and adequate funding. Where such funds are not readily available or would require some considerable period of time to structure their financing, the Excess Crude Account (NSWF as the case may be), subject to availability, could provide the initial take-off funding for these projects in the near term, while more permanent funding arrangements are concluded. A total of N1,800 billion or about 90% of this amount, relate to the planned Niger Delta Coastal Road for which a special arrangement is being envisaged. This arrangement involves collaboration between Government and such stakeholders as NDDC, MNDA, OPTS, Brass LNG, Bonny LNG, Olokola LNG, NNPC, etc. This leaves a balance of N1,473.14 billion to be funded through the regular annual budget.

The new, proposed and planned infrastructure projects that were adjudged as Not Critical and Urgent are 88 in number, and cut across all the sectors.  It is the recommendation of the TWG that these projects be funded through the regular annual budget, subject to availability of funds.

While appropriate financing presents formidable challenge to infrastructure and service delivery in Nigeria, there are other challenges. Empirical studies reveal that faulty project execution framework, together with the dearth of project execution capacity and competencies also pose significant challenges to infrastructure delivery. The recommendations of the NEMT’s ITWG sub-committee project execution framework, modelled along the lines of the Presidential Task Force on Power should be given some serious consideration. An appropriate monitoring evaluation and reporting framework must be attached to the is …

In conclusion, for a nation with a rapidly deteriorating basic infrastructure, a clear departure from the old ways of doing things is imperative if the country is to create and sustain modern, efficient infrastructure that delivers cost effective public services for accelerated and sustained economic growth. Addressing the challenges of appropriate financing and project execution framework, will be a good starting point. Concessional funding by multilateral and bilateral development institutions provide, perhaps the most viable sources of funding for infrastructure development. Not only do they meet the requirements of fiscal responsibility, the do not exert undue fiscal pressure on the budget. However, there must be an institutionalized framework for accessing and harnessing these funds.  Bankability studies, must as a matter of priority, be completed for all projects identified as critical and urgent. As the FGN completes discussion through bilateral and multilateral engagements, these agreements are handed over to some institutional body on infrastructure comprising the ICRC and other key infrastructure institutions for delivery.

In conclusion, three factors emerged as critical in determining the optimal funding methods and project delivery framework likely to ensure an expedited and accelerated completion of the infrastructure projects. These are:

• Project Preparation: The dearth of capacity by public authorities to carry out economic appraisal of projects, undertake development of a long-term investment strategy which will provide a planning tool for the development of infrastructure, irrespective of the financing source, significantly reduces the speed at which bankable projects are brought to the market.  
• Project Delivery: Faulty project execution framework, together with the dearth of project execution capacity and competencies has been identified as primarily responsible for the low project execution in Nigeria.
• Project Funding: Concessional funding by multilateral and bilateral development institutions provide, perhaps the most viable sources of funding for infrastructure development. Not only do they meet the requirements of fiscal responsibility, they do not exert undue fiscal pressure on the budget.

FIGURE 21: PROCESS FLOWS AND TIMELINES

The timelines for project implementation will be on a project by project basis. Project preparation with designs/studies must be ready before funding negotiations commences. This process takes between 6-18 months. Projects whose designs/studies are complete will commence funding negotiation immediately. Depending on the complexity of the transaction, between 6-12 months could elapse before negotiations are concluded. It often takes up to 24 months for project preparation and funding negotiations to be concluded for new projects. Projects for which funding discussions have already commenced may conclude within 6 months and begin implementation. The possible sequencing and timelines for project execution is depicted in Table 21 below.

Having identified the 51 projects whose delivery is considered critical to the attainment of the objectives of the National Vision 20:2020, the challenge now shifts to the coordination of various interventions of Government in the three areas mentioned above. The services of investment bankers may be required to meet this challenge. The role expected of the Investment Banker in the critical infrastructure framework is best illustrated in Figure 22 below:

FIGURE 22: PROJECT IMPLEMENTATION FRAMEWORK

Project Preparation	Project Delivery	Project Funding

The necessary next steps include:

1. Convening the Critical Infrastructure Project Delivery Council.
2. Appointing Sector Project Coordinators for Critical and urgent projects as identified
3. Undertaking-a detailed project-by project assessment of all identified projects. DFID has provided a team for 20 identified projects. However, this will require the support of all relevant MDAs  for access to data and  information.
4. Undertaking a regular review of the performance of the Taskforce.

APPENDIX 1

ASSUMPTIONS

1. Theestimated cost of Civil Works and electromechanical installations for one MW of Hydropower is US$1million.
2. This has been used in determining the cost of upgrading the following dams to small hydro power projects.

	N (b)
Ikere Gorge Small Hydro Power Dam (9 MW)	0.684
Oyan Small Hydro Power Dam (9 MW)	1.026
Bakalori Small Hydro Power Dam (3 MW)	0.342
Itisi Small Hydro Power Dam	47
Tiga Dam (6 MW Potential)	0.684
Dadin Kowa (34 MW Potential)	3.876
Kiri Dam (20 MW Potential)	2.28
Chalawa Dam (6 MW Potential)	0.648
Jabiya Dam  (3 MW Potential)*	0.342
Owena Dam  (3 MW Potential)	0.342
Kampe Dam  (2 MW Potential)	0.228
Zobe Dam  (3 MW Potential)	0.324
Kashimbilla Dam  (22 MW Potential)	3.3
Ogwashiku Dam (1 MW Potential)	0.15

• Estimates are not likely to vary substantially from the original design values.
• Conversion of Dollar to Naira is at the rate of US$1/N150.
• A sum of 10% of the project’s estimated cost was set aside for studies. This amounted to N22.25 billion.
• According to the Federal Ministry of Mines and Steel, it costs approximately US$ 1million to lay 1km of rail track. This has been used to determine the cost of the following planned rail lines for which studies are yet to commence or completed:

	N (b)
East-West Standard Gauge Line (650km)	97.50
Eganyi – Jakuru Rail	10.50
Ajaokuta – Otukpo -Onne Rail	24.00
Sidings to Oza-Nagogo	2.25
Sidings to Osara Dolomite	2.25

• In assigning funding methods to priority projects, the following assumptions were made:
• Where the annual budget is the optimal method of funding, only 10% of the cost of the project has been suggested to be funded through the regular budget and 90% through the enhanced annual budget;

• For projects that the preferred method of funding is a combination of Infrastructure Bond/Special Intervention Fund or some concessional funding method, the cost of the project had be allocated on a 50:50 basis.

• Some projects requiring a combination of Infrastructure Bond/Special Intervention Fund or some concessional funding method, but considered very critical, provision of 25% from the ECA/NSWF is suggested to provide initial funding.

• All Project Preparation costs are included in the regular budget

APPENDIX2

CRITERIA FOR IDENTIFYING PRIORITY PROJECTS

	Criteria	Grade	Points	Weight
1	Strategic Fit (Relevance/ Alignment)	Is the project relevant to NV2020 Objectives and Targets ?	Yes/No	100%
2	Clarity of justification for budget commitment	Very well accounted for, with strong argument	4	20%
Costs identified but not all justified	3
Some costs identified, limited justification	2
Not at all	1
3	Current Impact of budget commitment	Abundant and convincing evidence	4	25%
Sufficient and convincing evidence	3
Some evidence of moderate positive impact	2
No substantial evidence of positive impact	1
4	Likelihood of completion in 2010-2015 Timeframe and future running costs considered	Evidence of completion, future running costs	4	25%
Likely to be completed	3
Substantial progress but not completion	2
No substantial progress or running costs	1
5	Relation to Sector’s Goals	Very High (Vital)	4	30%
High (Important)	3
Moderate	2
Low (Limited)	1

APPENDIX 3

Criteria for the Preliminary Assessment of Economic Viability
	Criteria	Grade	Points
1		Sectoral policy, legal, and institutional frameworks are already in place	4
The necessary policy, legal, and institutional frameworks are in place	The sectoral policy and legal framework is PPP friendly and the requisite institutional framework can be established relatively easily	3
	The sector policy and/or legal framework is not PPP friendly	0
2	Ability to establish captive revenue stream	Very easily – the project benefits can straightforwardly be converted into a stream of income from final users/customers	4
The project benefits can be converted into a stream of income from final users/customers but this will need to be supplemented by government payments for services or output-based subsidy	3
The project benefits can be converted into a stream of income from government/MDA payments for services	2
It is difficult to identify how the project benefits can be captured as a revenue stream for the project developers	1
3		The prospective cash flows have been subject to analysis and modelling and show a commercial RoR	4
Ability to deliver a positive rate of return for investors	Although the prospective cash flows have not been subject to analysis and modelling, a judgmental assessment suggests there is good potential for the project developers to earn a commercial RoR	3
	There is a reasonable prospect the prospective cash flows will offer a fair rate of return for the project developers	2
	The chances of the project developers earning a fair rate of return are not good	1
4	Project scale sufficient to justify the additional transaction costs of procuring as a PPP project	The project is large scale and the transaction costs can easily be absorbed	4
A number of similar smaller projects can be grouped together in a larger package that will enable the transaction costs to be absorbed	3
The scale of the project (or project package may be sufficient to enable absorption of PPP transaction costs	2
The scale of the project (or project package) is insufficient to allow absorption of PPP transaction costs	1
5	Project risks can be appropriately allocated	There are good precedents for allocating project risks successfully	4
It is likely that the project risks can be allocated appropriately	3
There is some doubt that the project risks can be allocated appropriately	2
It is unlikely that the project risks can be allocated appropriately	1

APPENDIX 4

LIST OF NON-CRITICAL OR URGENT PROJECTS

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	AVIATION
1	Construction 2nd runway Abuja International airport	Aviation	New	5.3
2	Installation of 4 Doppler weather radar	Aviation	New	1.1
3	Procurement and installation. maintenance of ALSIM, Thales radar and visual tower simulators	Aviation	New	1.4
4	Construction of Bayelsa airport	Aviation	Ongoing	0.7
5	Fencing of all major airports	Aviation	Ongoing	10.6
	TOTAL			19.1

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	COMMUNICATION
1	Completion of abandoned Post Office buildings nationwide to make them internet compliant	ICT	New	5.7
2	Construction Of New ICT Compliant Post Offices (Neighbourhood Pb4 Type)	ICT	New	3.5
3	National Street Address system	ICT	New	9.0
4	ICT Infrastructure	ICT	New	11.4
5	Rehabilitation & Remodelling of Existing Post Office Buildings Nation Wide to Become ICT Compliant.	ICT	New	19.3
	TOTAL			48.9

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	FCT
1	Construction of inner southern expressway(ISEX) phase ll from the southern parkway	FCT	Ongoing	8.6
2	Development of Idu Industrial area IB Engineering Infrastructure	FCT	Ongoing	40.8
3	Extension of outer southern expressway from ring road 3 to Abuja A2 in Gwagwalada	FCT	Ongoing	6.0
4	Rehabilitation and expansion outer Northern Expressway Lot 11 (19km-39+400km)	FCT	Ongoing	60.8
5	Rehabilitation and expansion outer Northern Expressway lot II (Murtala Mohammed Expressway North Lot I)	FCT	Ongoing	46.7
	TOTAL			162.9

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	OIL & GAS INFRASTRUCTURE
1	Abeokuta City Gate Oben	Oil & Gas	New	7.3
2	ELPS Abeokuta – Ekiti Gas Spur Line	Oil & Gas	New	37.8
3	Gas supply from Obigbo North-imo River	Oil & Gas	New	3.8
4	Gas Supply from Oso-QIT	Oil & Gas	New	29.0
5	GTS1 Cathorn Channel – Alakiri – Owarza Gas Pipeline	Oil & Gas	New	–
6	Trans-Sahara Gas Pipeline	Oil & Gas	New	27.0
7	Gas Supply to PHCN Power Piant at Olorunshogo formerly Papalanto.	Oil & Gas	Ongoing	4.7
8	Gas Supply to PHCN Power Plant at Alaoji	Oil & Gas	Ongoing	4.3
9	Gas Supply to PHCN Power Plant at Geregu	Oil & Gas	Ongoing	29.5
10	Gas Supply to PHCN Power Plant at Omotosho	Oil & Gas	Ongoing	1.7
	TOTAL			144.8

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	NIGER DELTA
1	Construction Of Bodo-Bonny Road With A Bridge Across The Opobo Channel. C/No. 5662	Niger Delta	New	2.6
2	Construction of skills acquisition centers in the nine states of the Niger Delta region	Niger Delta	New	6.2
3	Equipping and operations of skill acquisition centres	Niger Delta	New	0.7
4	Land reclamation, shoreline protection and flood/erosion control for seven states: Azumni – abia States, Ibakan Nsit-Akwa Ibom State, Odi -Bayelsa state, Essien town – Cross River State, Ijaghalla – Delta State, Okhelen Awo -Edo State and Amadi Ama – Rivers State	Niger Delta	New	2.8
5	Dualization of East-West Coatal road project section 1	Niger Delta	Ongoing	14.5
6	Dualization of East-West Road-Section II-I	Niger Delta	Ongoing	6.8
7	Dualization of East-West Road-Section IIII	Niger Delta	Ongoing	8.0
8	Dualization of East-West Road-Section II-II	Niger Delta	Ongoing	10.1
9	Dualization of East-West Road-Section IV	Niger Delta	Ongoing	5.9
10	Feasibility Studies and design on land reclamation, shoreline protection and flood/erosion control for 10 sites in Niger Delta region	Niger Delta	Ongoing	0.1
	TOTAL			57.8

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	POWER
1	Rehabilitation and expansion of transmission/ Distribution Networks and Infrastruture	Power	Ongoing	314.2
2	Construction of 10MW Katsina wind Project	Power	New	0.8
3	Construction of 215MW Low Pour Fuel Oil (LPFO) Power Plant in Kaduna	Power	New	15.0
4	Construction of 230 300MW Dual Power Plant using gas in Badagry	Power	New	5.2
5	Construction of coal-fired power plant in 3 States (Enugu, Benue and Gombe)	Power	New	27.7
6	Solar Rural Electrification Project in 4 Communities; Ogun, bauchi and Katsina	Power	New	16.7
	TOTAL			379.6

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	ROADS & BRIDGES
1	Construction and dualisation of Owerri – Eiele road merelu section)	Roads	New	14.5
2	DUALISATION OF OBAJANA JUNCTION – BENIN	Roads	New	2.9
3	Dualisation of Onitsha – Owerri and Onitsha Eastern bypass C/No 5660	Roads	New	7.0
4	Kano -Kazaure-Daura-Mai Adua Road In Katsina State, C/No. 5997	Roads	New	87.0
5	Kano Western bypass C/No 5960	Roads	New	10.0
6	Panyam – Bokkos Wamba C/No5944	Roads	New	60.0
7	Borom-Nasarawa abaji Road	Roads	Ongoing	0.8
8	Construction of Kano western by pass	Roads	Ongoing	7.0
9	Construction of main carriage way of FCT HW 106 from kusaki yanga(OSEX) to kuje	Roads	Ongoing	6.0
10	Construction of Panyam – Bokkos Wamba Road	Roads	Ongoing	2.9
11	Dualization of Onitsha – Owerri Road and Onitsha eastern by Pass	Roads	Ongoing	5.6
12	Jakuru Access Road	Roads	Ongoing	0.2
13	KADUNA – KANO (140KM)	Roads	Ongoing	66.3
14	Rehab of Okene -Ajaokuta Road	Roads	Ongoing	1.5
15	Rehabilitation Of Apapa – Oshodi Express Way In Lagos	Roads	Ongoing	5.6
16	Rehabilitation Of Enugu-Port Harcourt Road Section Ii (Umuahia-Aba-Port Harcourt)	Roads	Ongoing	24.0
17	Rehabilitation Of Funtua – Yashi – Dayi – Kano State Border Road. C/No. 5264	Roads	Ongoing	11.2
18	Rehabilitation Of Lafia-Obi-Awe-Tunga Road In Nasarawa State	Roads	Ongoing	80.0
	TOTAL			392.3

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	STEEL
1	Rehabilitatation of Niomco, Itakpe	Steel	Ongoing	13.0

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	RAIL, PORT & INLAND WATERWAYS
1	Aba-Enugu-Asaba-Agbor-Ajaokuta (323km)	Railways	New	225.0
2	Procurement and installation of 5 self recording marine buoys	Railways	New	1.5
3	Zaria-Kaura Namoda – Sokoto – Ilela (604km)	Railways	New	50.9
4	Completion of the 22km standard gauge from Ovu to Warri	Railways	Ongoing	7.6
5	Construction of Modern Coastal Railway Line (from Benin – Calabar) 423km Cutting across Niger-Delta States-Studies	Railways	New	3.2
6	Oza-Nagogo -Agbor – Benin Road	Railways	Ongoing	0.2
	TOTAL			288.3

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	WATER & SANITATION
1	Dasin Hausa Dam in Adamawa State (Multi Purpose Dam)	Water Res.	New	0.2
2	Ishiagu Water Supply Scheme .	Water Res.	New	3.0
3	Yedsaram Dam in Adamawa (Earth Dam)	Water Res.	New	5.4
4	Zungeru/Wushishi Water Supply Project	Water Res.	New	3.6
5	Aba Water Supply Rehabilitation	Water Res.	Ongoing	2.4
6	ABU Zaria Water Supply Scheme	Water Res.	Ongoing	0.8
7	Biu Water Supply Scheme	Water Res.	Ongoing	7.2
8	Completion of Okpilla Water Supply Scheme	Water Res.	Ongoing	0.8
9	Dadin Kowa Irrigation in Gombe State (rehabilitation of existing Canal)	Water Res.	Ongoing	0.1
10	Greater Onitsha Water Supply Scheme	Water Res.	Ongoing	4.2
11	Port Harcourt Water Supply Project	Water Res.	Ongoing	6.4
	TOTAL			34.1

Unique ID	Project Title	Sector	Status	Total Cost   (N b)
	HOUSING
1	Recapitalizatio of FMBN	Housing	New	17.23
2	Construction of 600,000 Housing Units under PPP nent	Housing	New	104.74
3	Construction of 240,000 affordable housing units by FHA	Housing	New	72.35
	TOTAL			194.31

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[1]The TWG is chaired by the Director General of ICRC.

[2] The MTSS has still not been completed.

[3] FMW

[4] Director-general of the Nigerian Energy Commission, Abubakar Sanni Sambo

[5]Renaisance Capital

[6] Source: CBN

[7] Renaisance Capital

[8] Constant 1960 Prices

[9]The ECA, which has no real legal backing since it was formed under a political arrangement,  will be replaced with a National Sovereign Wealth Fund (NSWF). The investment fund, which is state-owned will be composed of three main parts – savings for future generations, an economic stabilization fund and an infrastructure fund for co-investment with other investors, the latter being the largest.  The NSWF will manage Nigeria’s excess earnings from crude oil, which will be invested in international capital markets in financial assets such as stocks, bonds, property, precious metals or other financial instruments, shielding the country’s economy from the impact of any sharp falls in global oil prices.

[10]China’s expansion for instance, continued to moderate, with GDP growth slowing to a 10.1% annual rate in the 2Q’08 from the 1Q’s 10.6%

[11]The acronym, standing for Brazil, Russia, India & China

[12] UNIDO provided funding for the completion of Waya and Mbowo Small Hydro Power plants.