Highlights Models, Options and Opportunities

Minister of Transportation, Mu’azu Jaji Sambo, is urging foreign and local investors to look at the transportation needs of Nigeria, take decision and invest quickly in the transport sector as the demand for transport services has grown exponentially along with the increase in socio-economic activity.

Speaking at the Nigerian International Economic Partnership Forum held in New York, the minister highlighted what his ministry is thinking and doing when it comes to transport infrastructure in the maritime, inland waterways and rail subsectors to build an inclusive fast-growing economy that embraces the necessities of transformation, deepen citizens’ ownership and optimize investors’ opportunities in the sector.

The minister noted that Nigerian sea ports constructed in the seventies and eighties have aged and require urgent rehabilitation.

“The six seaports were concessioned in 2006 to private investors in order to create efficiencies, increase revenue and the general well-being of the economy. Notwithstanding, the port infrastructure has suffered dilapidation and decay over the years and they now require massive capital investments for upgrade and rehabilitation. Herein lies an opportunity for private capital investments in the face of highly competing demands on the nation’s income flows. This particularly applies to Apapa and Tincan Island ports which account for about seventy per cent (70%) of the nation’s maritime trade”, the minister told his audience and prospective investors.

On the economic potentials and investment opportunities in Dry ports Sambo said “In order to decongest seaports, improve supply chain logistics and bring shipping activities closer to shippers in the hinterland, Nigeria has initiated the development through the Nigerian Shippers Council, of inland dry ports as ports of origin and destination”.

“Nigeria now has a fully operational inland dry port in Kaduna, while other inland ports in Kano, Katsina, Aba, Ibadan, Jos and Funtua, are at various stages of development and completion. Against the backdrop of Nigeria’s extensive landmass and population, huge investment opportunities exists for private capital investments in inland dry ports and rail networks targeted at the manufacturing, agriculture and solid minerals base of the country”.

The minister also disclosed that Nigeria has about ten thousand kilometres (10,000 km) of potentially navigable waterways out of which only three thousand kilometres (3,000 km) are currently navigable all year round.

“This creates a lot of investment opportunity in the inland waterways sub sector as an alternative, cost-effective and environmentally-friendly mode of transport connectivity” Sambo said.

On the Rails and what has been done, the transport minister stated, “The unbundling of the Nigerian Railway Corporation which now acts as owner, operator and regulator rolled into one is essential for efficiency, effectiveness, enhanced productivity and the creation of more jobs and revenue flows-making opportunities that exist for private sector investments in the rail subsector are limitless”

Sambo noted further that Nigeria’s core infrastructure stock is estimated at 20% to 25% of GDP, for which the National Integrated Infrastructure Master Plan (NIIMP) estimates that about USD35billion is required annually over the next five years to sustain a robust economic growth and USD3Trillion is needed over 30 years .

“In view of the huge infrastructure gap, massive capital requirements and grossly inadequate government funding, the need for private sector participation in infrastructural development cannot be overemphasized” the minister stressed.

The minister listed the existing financing options/models to include:

• Design, build, finance and transfer (DBFT);
• Design Build Finance Operate and Transfer (DBFOT)
• Build, operate and transfer (BOT)
• Build, Own, Operate and Transfer (BOOT)
• Design, build, finance and Operate (DBFO)

“As the government makes concerted efforts toward ensuring its infrastructural projects are viable within a stable financial ecosystem, the areas enumerated summarizes priority areas in the Maritime, inland waterways and rail subsectors of the transportation sector of our country” the minister declared.