Nigerian govt moves to strengthen highway concession policy, demands transparency

The Federal Government of Nigeria said it is set to strengthen the concession policy for concessionaires and to enhance funding and private sector participation in road infrastructure development under the Highway Development Management Initiative (HDMI).

Minister of Works, Engr. David Umahi, stated this during a meeting with stakeholders and concessionaires with the aim of having a more realistic, transparent, and productive approach to financing in the construction and maintenance of road projects under Public-Private Partnerships.

In the two-day meeting held at the conference hall of the Federal Ministry of Works, which started on Friday and was concluded on Tuesday, Umahi identified certain articles and clauses in the existing concession agreements executed on 23rd May 2023 that needed to be reviewed, both in the original concession agreement and the proposed addendum, to ensure value for money, strengthen long-term collaboration, transparency, and accountability, as well as degravitate‎ potential Put-Call Option Agreement and litigation.

He raised issues for discussion, including the issue of the Put-Call Option Agreement (PCOA), additional facilities, performance security, shifting of encumbrances on site, the role of the independent engineer, competing road/alternate road, change in project scope, revision of toll fees, force majeure, and stakeholder consensus building to ensure active citizen participation in the effective take-off of project construction, tolling, and maintenance.

Umahi recalled that contractors were already on some of the project sites before the signing of the concession agreement by concessionaires and that innovations had been introduced to add value to the works sector, hence the need for a review of the existing concession agreement and its addendum.

He listed some of the requirements for the concessionaires to activate the implementation of their projects, including their obligation to ensure mutual termination of existing contracts before taking over their respective sites, the need to show evidence of their capacity and readiness, including proof of source of funds for the project, payment of all outstanding debts owed to the existing contractors, evidence of technical and financial competence, and availability of company or partner’s equipment.

This is contained in a statement issued on Tuesday by the Minister’s Special Adviser on Media, Orji Uchenna Orji, and made available to journalists in Abakaliki.

The Honourable Minister restated that the Federal Ministry of Works would not disengage any existing contractor from the site in any of the projects unless the conditions precedent are complied with by concessionaires.

He presented the full details of the proposal of the Federal Ministry of Works on the matters of concern in the existing concession agreement inherited from the past administration and maintained that the essence of the review sought was to ensure that the concessionaires comply with the best practices and the innovations introduced by the Renewed Hope administration of President Bola Tinubu.

He read the draft review as prepared by the Federal Ministry of Works, clause by clause and page by page. Part of the new addendum he presented was that the concessionaires shall construct compulsory facilities which shall include CCTV and solar streetlights, rest areas, and any other additional facilities needed to improve travel safety and comfort of travellers on the entire project route.

He subjected all the issues and concerns raised to extensive deliberation by the stakeholders, including the Honourable Minister of State for Works, Bello Muhammad Goronyo; the Permanent Secretary, Cabinet Affairs Office of the Secretary to the Government of the Federation, Dr. Emanso U. Okop; representatives of the Federal Ministry of Justice, Federal Ministry of Finance, Debt Management Office, Bureau on Public Procurement, Infrastructure Concession Regulatory Commission, Bureau of Public Enterprises; the team from the Public-Private Partnerships Unit of the Federal Ministry of Works; and directors of key departments, as well as the concessionaires who were in the meeting, including Africa Plus/BAAECC, Africa Finance Corp, Morta-Engine, Morta-Engil, Balosh Integrated Services, LIB Concession, and Greg Jane Int. Limited.

In his speech, the Honourable Minister of State for Works tasked the concessionaires on commitment to the extant laws and regulations necessary for them to achieve the objectives of the HDMI. He praised the passion and sense of patriotism of the Honourable Minister of Works.

Nigerian govt moves to strengthen highway concession policy, demands transparency