FG woos investors for Truck Transit Parks, insists Nigeria has no infrastructural problems
Vice President, Prof Yemi Osinbajo
The Federal Government has urged both local and foreign investors to take full advantage of investing in the Truck Transit Parks TTPs project as part of efforts to bridge the funding gap in infrastructural development in the country.
The TTP, a brainchild of the Nigerian Shippers Council and promoted by the Federal Ministry of Transport, is a place, equipped with some facilities and services where truck drivers congregate while on transit in the course of moving cargo from one point to the other.
The Vice President, Professor Yemi Osinbajo, who spoke at a breakfast meeting on the Financing of Transport Infrastructure organised in Lagos, Thursday by the Nigerian Shippers Council, urged investors to throw their weight behind Federal Government’s efforts at enhancing infrastructural development in the country by massively investing in the TTP project.
The Vice President, who was represented at the event by his Senior Special Adviser on Infrastructure, Mr. Kolade Sofolahan, however said that Nigeria does not have infrastructure deficit rather a lot of opportunities for investors both home and abroad.
“We have infrastructural opportunities not a problem in Nigeria. It’s a huge opportunity that everyone should come together to develop a strategy to take advantage of. It is described as crisis but I see it as an opportunity. We have to think about how to grow our roads, TTP and Inland Container Depots ICDs in a way that they are integrated to diversify the nation’s economy”, he said
Meanwhile, Director-General of the Nigerian Stock Exchange, Mr. Oscar Onyema, who also spoke at the event, observed that attracting private sector investments remains the only way to bridge the finance gap for the TTPs and ICDs in the country. Onyema also identified a number of financing options that can be adopted by investors for the TTPs and dry ports projects.
According to him, considering that the transport infrastructure development funding gap was estimated to be greater than US$750bn over the next 30 years, it becomes very clear that a way around the financing becomes a major challenge.
He also said that the financial participation of the private sector in building infrastructure can take a number of forms, including public private partnership PPP and full privatisation.
The NSE-boss cited the example of the Lekki-Epe Expressway Toll Road Concession Project, which is the country’s first ever PPP, under which the Lekki Concession Company was able to secure long term financing to the tune of N50bn for the construction phase of the project with participation from several local and international financial institutions on terms regarded as groundbreaking in the country.
He assured that the NSE was committed to exploring and developing innovative ways to finance the nation’s transport infrastructure in order to accelerate the growth of the key sectors of the economy.
He said: “Leveraging established PPP funding mechanisms, SPVs can utilise the NSE’s platform to gain access to low-cost, long term capital.
This can be achieved through public bond issuance by a project company or by incorporating a separate company to issue bonds and lend the proceeds to the project company”.
It was gathered that the SPVs involved in PPP projects can also utilise funding from listed funds focused on PPP infrastructure investments, a good case, which was the NSE’s recent partnership with the Lagos State Government and Visionscape Sanitation Solutions where a N50bn Medium Term Note to finance the implementation of the Cleaner Lagos Initiative (CLI) was issued.
While describing investment prospects for transportation infrastructure as very promising, he added that if the recently exposed draft rules by the National Pensions Commission PENCOM, were issued, they will allow for up to 20 per cent accumulated pension assets (N7.16tn) to be invested in infrastructure compared to the current five per cent, which does not include potential investments from insurance, savings and fund managers.
He added that with the engagement of NSE with Pension Funds Administrators PFAs and other institutional investors, there is an indication of a healthy appetite for alternative investment outlets such as infrastructure funds, such as Education Trust Funds ETFs, bonds, among others.
Available records show that over the years, the NSE has implemented far-reaching transformation policies aimed at providing products that were aligned with investors’ requirements, increasing market access and ensuring a fair and orderly market, which gave rise to the Nigeria Infrastructure Debt Fund NIDF, expected to raise N200bn.
He explained that the fund which has its core investment focus on the traditional infrastructure sectors, primarily transport, was an ideal investment vehicle for the planned truck transit parks and inland dry ports.
“We believe that these achievements improve investor confidence and will go a long way to support the Ministry of Transport and NSC in their quest to unlock the private sector investment required for financing the transport infrastructure gap.
The NSE DG however identified impediments outlined by the National Planning Commission MPC that need to be mitigated as far as private investment in the nation’s transport sector was concerned.
The impediments include “inconsistency in enforcing policies and unpredictable regulatory regimes that limit investors’ ability to protect investments; difficulties in accessing finance due to high costs and lack of maturity associated with Nigeria’s credit/venture capital market; lack of economic incentives in some sectors to encourage private sector investment; insufficient public sector capacity incentives in some sectors to encourage private sector investment; insufficient public sector capacity to design and implement PPP projects and security concerns, corruption and other governance issues”.
Minister of Transport, Mr. Rotimi Amaechi, while speaking at the event, said the Federal Government has approved that the established six ICDs across the geopolitical zones be designated centres for export of non-oil agricultural commodities and solid minerals products.
He disclosed that the Ministry will soon direct the Nigerian Shippers Council to open talks with the Nigerian Export Processing Zone Authority NEPZA to obtain export processing zone status for the ICDs, insisting that there are great opportunities for investments in terms of value addition, warehousing, commodity processing, packaging among others in the ICDs.
He said, “Government has approved the establishment of six ICDs across the geo-political zones at Erunmu, Ibadan in South West; Isiala-Ngwa, Aba in the South-East; Futua, Katsina and Zawachiki, Kano in the North-West; Heipang, Jos in North Central and Jauri, Maiduguri in North-East.
“Construction work at the recently concessioned Kaduna ICNL Inland Dry Port has been completed and awaiting inauguration for full operations. The inland container depots are Ports of Origin for imports and exports and will see transportation of cargoes to the hinterland and even landlocked neighbouring countries.”
He said the TTP projects are priority to the government, which has also provided institutional and legal framework for their establishment, adding that following the concession of the six ICDs, the TTPs known variously as Rest Stops, Rest Area in other jurisdictions will be inevitable since road transport accounts for over 90 per cent of all freight and passenger movements in Nigeria.