The Minister of Works and Housing, Babatunde Fashola, has said the controversial Nigeria-Niger rail project is to be funded by the contractor, just as he said the Sukuk bond has grown by 60 per cent in three years, from N100billion to N160 billion.
Fashola disclosed this Tuesday, during the inaugural session of Concrete Ideas Webinar series , with the theme: Public-Private Partnership Approaches to Rapidly Upscaling Nigeria’s Economic Infrasctucture,organisd by Lafarge Africa Plc.
According to him, despite the COVID -19, the country is still holding to the deals signed with some companies on infrastructure financing, contrary to what obtains in other parts of the world.
His words: “We have kept the private sector deal that we have closed. We have a continuation of the annual Sukuk, which is private capital coming in to fund the gap that budget and treasury can not bridge. The Sukuk bond has grown from N100billion three years ago to N120billion in the second year and this year to N162billion. Indeed it was subscribed to the tune of N600billion but because of budgetary consideration , we could only take N160 billion.
“In spite of what I see as the private sector struggling, global difficult economic climate, the good news to me is that the PPP we have negotiated, that we have commenced are still being undertaken. So we have the tax credit scheme being used to construct the new bridge in Rivers State, and funded by the NLNG; we have the tax credit scheme being used by the Dangote Group on the Obajana-Kabba highway and the Apapa-Oworonshoki bridges given the economic reality that I have presented, I think it is a sign of success that those deals are still viable, they are still going concerns.” He said.
On the Kano-Niger rail project, he said: “Two weeks ago, the Federal Government, through the Ministry of Transportation announced an agreement to construct a rail line from Kano to the border town of Niger Rpublic, which has generated some controversies. What underpins it is that it is an EPC contract where the contractor is going to raise the finance on the back of a sovereign guarantee. Again, it is a highbreed of partnership with private sector.”
Speaking on the PPP, Fashola added: “The people who play in this sector are not enough. If you look around the World, in most jurisdictions whether in Europe, or Asia or America, South America, the most you will see is about 30 or 40 per cent private capital investments on roads; 60 per cent of them is government funded. “If we talk in isolation of the economy, globally and locally, then our expectation will not be properly calibrated. When we talk about Public-Private Partnership (PPP), we essentially talk about investment, we talk about resources, we are talking about availability of capital and the mobility of capital; capital is ready to move in today’s economy.