Vice-President Yemi Osinbajo has said the Muhammadu Buhari administration is collaboration with the private sector to develop 19 road projects covering about 708.15 kilometres across the country.
The Vice-President spoke at a webinar on public-private partnerships (PPP) organised by the Law firm of Yusuf O. Ali and Co., in collaboration with the Business Law Department of the Faculty of Law, University of Ilorin (UNILORIN).
A statement by the Senior Special Assistant to the President on Media and Publicity in the Office of the Vice-President, Mr. Laolu Akande, listed the road projects.
It said most of them were nearing completion.
The statement named the roads as Apapa-Oshodi-Oworonshoki-Ojota Road in Lagos State (34 kilometres) by Dangote Industries Limited; the reconstruction of Obajana-Kabba Road in Kogi State (43 kilometres) by Dangote Industries Limited; the construction of Bodo-Bonny Road and Bridges across Opobo Channel in Rivers State (38 kilometres) by the Nigerian Liquefied Natural Gas (NLNG) Limited.
Osinbajo said: “In 2017, we introduced the Road Trust Fund (RTF). The fund is a tax credit scheme to incentivise private sector participation in the development of Federal road infrastructure. The relief is enjoyed by a deduction of 50 per cent of the amount spent on the project from the income tax that would have been payable by the company.”
The Vice-President also alluded to the Executive Order Number 007 of 2019, the Companies Income Tax (Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme) in the administration’s efforts to develop the country.
“The objective of the scheme is to accelerate public road infrastructure development by incentivising private sector entities to construct and refurbish eligible roads across the country in exchange for tax credits, which could then be applied against company income tax payable,” he said.
The Vice-President announced that “19 roads have been approved so far by Mr. President under the scheme, totaling, 780.15 kilometres. These roads, in 11 states across the six geo-political zones, are being executed by six private sector players in the manufacturing and construction industries”.
Emphasising the importance of PPPs in funding critical infrastructure projects, Osinbajo said: “There can hardly be a better time to explore the use of PPPs, especially in the delivery of public infrastructure.
“First, public revenue, both for states and the Federal Government, have fallen precipitously in the wake of the disruptions of the COVID-19 pandemic.
“For the Federal Government, barely 30 per cent of the budget is available for capital expenditure, besides a national infrastructure deficit. So, clearly, there is a need to bring in the considerably larger size of private capital to participate in public infrastructure projects.”
Justifying the need for strong PPP initiatives, he added: “Dangote’s Lekki project, comprising a refinery, fertiliser factory, and a subsea pipeline, is estimated to cost $15 billion (about N6 trillion, almost half of the entire Federal budget of N13 trillion).”
Osinbajo explained that access to capital from international commercial lenders is cheaper for private companies with a good reputation.
Besides access to cheaper capital, the Vice-President noted that the “private sector partnership with the public sector also brings in the discipline of execution and expenditure which is often missing in government projects”.
He added: “Even with PPPs, you will sometimes find that the inefficiencies and bureaucracy of the public sector hold down the execution. So, here, you find that the PPP is an attempt to bring in private sector credit into execution of contracts. I think this is helpful because it helps to discipline the public sector implementation process, which is usually bucked down by bureaucracy.
“These factors have largely informed our government’s clear preference for PPPs. We have also sought to create a conducive policy and legal environment for PPPs to thrive.”
Osinbajo advised that “in thinking through the PPP framework, we must also think through some of its challenges, especially in PPP’s where the private partner’s compensation is from user-based payments such as tolls on roads, or charges or fees in an airport concession, for example”.
Citing the example of the Lekki-Epe road concessioning, the Vice-President affirmed that “it was perhaps one of the best models that you could find. A number of foreign banks and infrastructure companies were involved in it”.