#1REGULATORY CONCESSION INFRASTRUCTURE CONCE ICRC COMMISSION INFRASTRUCTURE DEVELOPMENT AS A PANACEA TO NATIONAL GROWTH BEING A PAPER PRESENTED BY THE AG. DG OF ICRC AT THE FELLOWS INVESTITURE OF THE INSTITUTE OF DIRECTORS NIGERIA ON 26th OCTOBER 2017 Engr. Chidi K. C. Izuwah, Snr. ACTING DIRECTOR GENERAL INFRASTRUCTURE CONCESSION REGULATORY COMMISSION OCTOBER 2017#2Panacea In Greek mythology, Panacea (Greek Пavákɛɩα, Panakeia) was a goddess of universal remedy. She was the daughter of Asclepius and Epione. Panacea and her four sisters each performed a facet of Apollo's art: Panacea (the goddess of universal health), Hygieia ("Hygiene" the goddess/personification of health, cleanliness, and sanitation), laso (the goddess of recuperation from illness), Aceso (the goddess of the healing process), and Aglæa/Ægle (the goddess of beauty, splendor, glory, magnificence, and adornment). Panacea was said to have a poultice or potion with which she healed the sick. This brought about the concept of the panacea in medicine, a substance meant to cure all diseases. The term is also used figuratively as something intended to completely solve a large, multi-faceted problem. Panacea Goddess of Universal Health Panacea (center) administering medicine to a baby (Picture of the Veronese physician J. Gazola as part of a larger woodcut, 1716)#3INFRASTRUCTURE ICU - more time more effort#4Why do We Have Economic & Development Problems ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#5China's Export, 2010 2.0% Printers 2.0% $1,770,801,871,641 9.0% Autom and copying Electronic data process machines machinés integrated circuits 1.9% Diodes, 1.6% Monitors 1.5% transistors, and projectors Cruise semiconductor devices; photosensitive semiconducto recebbon apparatus for televison 1.3% Liquid ships and smar Vessels for the transporto persons crystal device for arcade, 1.3% Articles 45% table or parlo and parts games Structures 1.5% Electrica 1.5% Parts of 0.93% transformers radios, 0.92% Bledinc Insulated instantaneo, Wire: optical telephones and or storage fiber cables TVs Water 0.89% 1.2% Other fumiture and parts thereof 1.0% Seats 0.76% Toys 0.74% Parts and scale mode Lamps and Jahong acressones Duzzes of the motor 4.2% Telephones 3.9% 0.76% Apparatus protecting 0,67% 0.35% Microphones; Bectrical 0.58% Air conditioners Transmissiorances for 0.53% Video recording 2.7% Parts a 0.52% Air or accessories vacuum pump 1.3% Sweate 0.67% Men's 0.36% House 0.29% pullovers, suits, not knit men sweatshirts, Women's 0035% Wave 027% tabrus of Other mac Women's suits 0.59% 0.35% Refrigerator 10.33% Vacuum 0.98% Footwear, with leather body rubber or plastics cases of any kind 1.2% Women suits, not knit 0.46% T-shirts 0138% Footwear, 10.93% Oth: 1.0% footwear of Trunks or 0.76% Other Q.37% articles of Packing of 10.75% Petroleum oils. 0.57% New pneumatic refined CONCESSION INFRAST /CRC REGULATOMMISSION#6South Korea's Export, 2010 $475,527,246,999 1.9% Parts ar1% 11% Dode 0.90% Machines accessories fcand bansistors semiconduc Polyacetals office machin mechanical devices appliances photosenst 8.8% Electro Telephones 1.9% integrated circuits 0.99% 0.80% 71% Automatic data Monitors and Electric processing machines Doedos ledepton 0.38% laundry type storage Dateles Q.68% Polymers of ethylene, in 0.42% Othe 0,83% Polym of styrene, in not 0.73% New pneumatic 0,71% Polym of propylene 1.1% Cyclic hydrocarbons 1.0% Flat role 0% Hot on or non roled on or aloy steel non alby coated with tr steel, collw 0.51% Flat roled products of 0.62% Instated wire; optical 0437% 0.59% Parts for use with Printers and Q.37% Apparatus 3.6% Transmission apparatus fo 0.57% Refrigerators, 0.36% Air or 0.52% Vacuum 2.9% Parts Compressione radios, 031% or submersDE 3.1% Parts ar 2.1% Floating the motor vehicles 8.0% Cruise accessories of ships and sim 6.7% Cars 0.46% Motor vehides for י padoms 0.93% Polycarboxylic acids 5.3% Liquid crystal devic 6.2% 0.59% Gold 07.2% Optical fibers Petroleum oi refined 0.64% Knit p cochet fabric width=30 CONCESSION INFRAST REGULATION /CRC#7REGULATION Malaysia's Export, 2010 4.1% 14% Electrol telephones transistors, integrated circuits $231,180,179,398 3.7% Diodes, 5.5% Palm oiubber semiconduct devices; photosensitiv crude ICTURE CONCE CONCESSION INFRASTR 1.3% Natural 1.2% Articles of apparel and Clothing accessories of vulcanced /CRC Transmission apparatus for rado and TV 0.70% Stearic 0.36% adid hydrogenat 2.2% Monitor 1.6% Printers 2% and projector and copying reception apparatus for machines 5.4% Parts accessories 4.7% Autom 0.67% Parts of radios, 0.66% Apparatus 0.35% Bledbomech 10.34% 0.60% Storage Electrical devices, sman Machines and data processor Air conditioners Petroleum oi Petroleum 5.9% refined 5.6% gases 0.50% Coconu oil crude 4.7% Petroleum oil crude 0.93% Oscilloscopes spectrum 0.84% Other fumiture and Medical 034 beats 0,81% Jewelry 80% of precibus me Plywood, veneered panels and#8Indonesia's Export, 2010 $177,727,831,627 10% Coal; briquettes 7.7% Petroleum gases 6.7% Palm O oil crude crude 1.3% Coconut 5.9% Petrole 3.4% Gold oils, crude content 2.6% 0.95% Printer: 0.58% Monito and copying and projectors machines 0.57% Insulat wire; optical 0.77% Transmission 0.55% 0.71% Video recording 0.70% Parts and Automatic dat 0.52% Electronic 0.48% Electric transformers Petroleum o refined 0.70% Steancadd 0.77% Cocoa beans, whole 0,59% Crustaceans 1.0% Petroleum coke 0.75% Sweaters, pullovers, 0.51% 10.35% Women's suit 0.45% Yam of synthetic stap 0.69% Parts and accessories of the motor 0.61% Cars 1.2% Refined copper and 1.1% Unwrought til 0.97% Nickel mattes and TURE CONCESSION INFRAST 4.5% Natural rubber 0.84% New pneumatic ties of rubber 0.62% houstral monocarboxy 0.42% Cyclic hydrocarbons 1.5% 1.4% Paper, Footwear, with uncoat, for leather body writing etc 1.1% Plywoo veneered panels and similar rolls, handmadaminated wo 0.42% Other footwear of 0.85%% Chemical wood pulp, so or sulfate, not 1.2% Gold 0.55% Paper and paperboa coated on one 0.87% Other fumiture and parts thereof 38% Seats REGULATION COMMISSION /CRC#9CONCESSION REGULATION /CRC Nigeria's Exports, 2010 $86,454,231,400 75% Petroleum oils, crud Petroleum 10% gases INFRASTA 1.4% Cocoa beans, whole 0.98% Tanned skins of other animals 0.76% Leather further prepare after tahning of 4.7% Petroleum oil refined 1.0% Floating or submersible drilling 0.42% Natura rubber Q.27% Ammonia#10Import Structure - Nigeria, 2010 2.1% 1.1% Parts for 0.69% Air or use with hoist vacuum pump Telephones and excavatic 0.68% Insulated wire: $36,008,768,188 2.7% Wheat and meslin 0.87% Automatic dal 0,41% Parts of radios 1.5% Electric, processing transformers 0,64% Machinery for Q40% Transmission 0.81% Transmission 0.63% Self propelled Q137% 1.3% Raw Printers and sugar, cane 1.3% Appliances fc0.81% Pumps 1.3% Electric for liquids 0.62% Monitors and 0.75% 0,61% generating se Turbojets, Machines and 31% 8.4% Cars Dishwashing 0,58% Medicamer packaged REGULATORY CONCESSION INFRASTRUCTURE CONCE 0.90% New 0.59% pneumatic Polymers tires, of rubbe of ethylene, 0.43% Other 1.2% vehicles for the Motorcycles transport of> 2.0% Motor 1.3% Motor vehicles for goods transporting 10 persons not renforc 1.1% Frozen 0.56% Mik fish, excluding and cream, fillets 0.46% Fsh flours, meals & 1.0% Structur 0.71% and parts thereof (bridges, lock sheets and Auminum 0155% Paper, DES uncoat, for 0.43% 1.5% Parts artadors accessories o the motor 18% Petroleum oils 40.28% Copper refined 0.35% Embroider SOURCE: Ine oservatory or Economic Complexity ICRC COMMISSION#11INFRASTR • . How they did it Favorable macroeconomic policies Use public funds to leverage private capital (4 to 16 times) Developmental State Approach - - Deliberate state support for manufacturing sector Notable stories of Samsung and Hyundai in S. Korea Agricultural transformation and Value Chain Development (Indonesia, Malaysia and China) - Implemented labour intensive manufacturing sector plans and provided the required infrastructure Human capital development especially in science and technology education - Literacy rate was 99% in 2010 in South Korea CONCESSION /CRC REGULATION#12State of Majority of our Infrastructure Stock ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#13Expressway !!! CONCESSION INFRAST REGULATORY /CRC MISSION#14Small scale IPPS supplied by China INFRAST CONCESSION /CRC REGULATION#15I can still smile RUCTURE CONC CONCESSION INFRAST /CRC REGULATION#16INFRAST CONCESSION REGULATION /CRC Prisons are better than our Hostels.....We need better accommodation....We need better rest rrooms#17The Nigerian Society of Engineers NIGERIAN INFRASTRUCTURE REPORT CARD 2015 "Our national infrastructure stock ranks E2 (2.08 out of 5). This particularly poor state constitutes a danger to public safety"#18We have a national infrastructure emergency Can Be Changed - ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#19Ethiopia/Djibouti Maychew ASSAD Jabalayn Gonder Tana Havk Ad Bahir Dar abor Weldiya Asayita Dese Debre Kumok Mark's Debre Birhan Dire Dawa Addis Ababa አስተናጋጅ Bab el DJIBOUTI Mandob Djibouti Aden Gulf of Aden E CONCESSION INFRASTR REGULATION /CRC Engag Harpeysa Burad SOMALIA የኢትዮጵያ ምድር ባቡር Degeh Bur Laascaanood NC NEW CHINA ERP 00011 Ethiopian Railways#20Exit Kutoka CONCESSION INFRASTR 5301 Kenya MOMBASA TERMINUS ntv Entral Entrance REGULA MISSION#21Political Will ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#22CONCESSION REGULATION /CRC Political Commitment EXCERPTS OF SPEECH OF PRESIDENT MUHAMMADU BUHARI ON AUGUST 23, 2015 INFRASTR 66 .....We also have a huge infrastructure deficit for which we require foreign capital and expertise to supplement whatever resources we can marshal at home. In essence, we seek public private partnerships in our quest for enhanced capital and expertise." ICRC 22 22#23Leadership Commitment CONCESSION ICTURE CONCE INFRASTR ICRC REGULATION Excerpts of speech of His Excellency Vice President Yemi Osinbajo AT 10th Year Anniversary Lecture of Crescent University, Abeokuta, Ogun State June 11, 2016 ...........the Buhari Administration will tackle corruption in all sectors of the economy and establish a sufficient tax culture. The Administration will encourage Public-Private Partnerships ensuring a transparent framework that reduces the bottlenecks in doing business. 23#24TRUCTURE CONCE CONCESSION INFRASTR REGULATOMMISSION /CRC • Introducing Nigeria Outline Infrastructure and Growth Challenges of Infrastructure Financing Myth Bursting • Lessons from Others Success in Nigeria PPP Imperative Way Forward • Transforming Nigeria R C 24 24#25Nigeria ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#26Introducing...Nigeria centre of the world Arctic Ocean Ados Elejers 60 Orland (Den) Arctic Ocean Franc Land 60 Arctic Ocean Fa Norway USA Canada Iceland Finand Russia United Sweden Czech Gay Fly Bea Gloyak France Sko Kahan Mongola North United States Atlantic A Turkey of Amerka North Ocean Pacific Ocean Hawaiian Mexico Саба Do Islands USA h Morocco C Pe Aera Lby Egypt musten Sh UAE Arabia C Mautara Ma Niger Su Yemen Chad Ban Indi Jumal Todd and Tobag POTENTIAL HUB FOR Ve Franch Global Finance Colomb + Global Shipping Ecuador Lavader ICT Fre Po Aviation Etc 130 South Pacific Ocean 60-> 150* Peru Bolia 60 S Japan North China Pacific Ocean Carbod CAR Links BAN MA Somala Maby Ugand Seppo Gabon wand Indonesia -Burundi og Targana Say Malawi Brazil Angola Mozambique Da Paragua ruguay Chile Argentina South Atlantic Ocean The Mave By Agenc Zimbabw Madig Nimba Bob Swaziland South Lesotho При Indian Ocean Caledonia Australia Antarctica 60 90 100 150 180 Ta Myl Mand#27REGULATOMMISSION Africa's Most Formidable CV - Past and Present Largest Economy in Africa, Half a Trillion GDP First TV Broadcast in Africa INFRAST CONCESSION Mandela hid in Nigeria for 6 months to escape the Apartheid Regime Previous longest Bridge in Africa (11.8 Kms) – Egypt now - Largest Black Country in the World - 170 Million (1/5th of Africa's Population) Largest Entrepreneurial Population in Africa, Large Mobile Phone User Base Third Largest Movie Industry in the World - Now 2nd Diversifying Economy With Growing Non Oil Sector - 51% Services, Agric 22%, Industry 26%, Oil 15% Richest Man in Africa - Aliko Dangote Leading Destination for Investment in Africa - UNCTAD IF YOU ARE NOT IN NIGERIA, YOU ARE NOT IN AFRICA ICRC#28Nigeria !!! - Case for Action • Nigeria is rich in natural resources and boasts a large young ambitious and entrepreneur population. Harnessed properly, those advantages could usher in a period of sustained economic growth. Unable to translate endowments into efficient essential services such as electricity, water, roads, railways, ports, communications, etc. Poor physical infrastructure stymie's attraction of FDI, growth, and competitiveness. Nigeria is a monoculture economy - exporting primarily crude oil. Advice Nigeria must address several critical challenges including transportation in order to prosper over the long term BCG - R INFRASTR 28 CONCESSION /CRC REGULATION COMMISSION#29Infrastructure + Nigeria = Progress If you want to grow rich - build a road first (Chairman Mao) INFRASTR CONCESSION REGULATION /CRC "If Nigeria was a three legged stool I would say its stability and future depends on how well and how fast we tackle the infrastructure problem - the shaky leg of the stool" World Bank Official 1% increase in infrastructure stock results in a 1% increase in GDP - World Bank#30Thoughts on Infrastructure and National Growth INFRAST CONCESSION /CRC A developed country is not a place where the poor have cars, it's a place where the rich use public transport (Mayor of Bogota) Infrastructure's contribution to GDP in Emerging Economies: 11% to 6% BUT in Nigeria 1 to 3% (Unknown) 2 Infrastructure is the cornerstone of civilization. As the society and economic organizations become complex, the relevance of infrastructure grows ICRC 30 REGULATION#31Infrastructure & Growth Infrastructure affects economic growth & development through: Efficiencies and reductions in costs Competitiveness in the international market • Domestic market development • Economic Diversification & Structural Changes Improvement in welfare and living conditions ICRC INFRASTR 31 CONCESSION /CRC REGULATOMMISSION#32REGULATION Infrastructure & Growth Cost Reduction: Infrastructure development contributes to the growth of the economy through its effects on production, investment and employment. • Productive activities in the real sector utilize infrastructure such as electricity, telecommunications, water, and transport services as intermediate inputs. According to the Manufacturers Association of Nigeria (MAN), the cost of power and electricity input alone ranges from 44% to 70% of variable cost in Nigeria. INFRASTR ICRC. 32 CONCESSION ICRC#33REGULATOMMISSION Infrastructure & Growth Global Competitiveness: ● ● INFRASTR The net effect of the drastic reduction in transportation costs has been to lower the cost of doing business, increase global competitiveness, increase profitability, incomes, employment and the cost, service and quality of international trade. Globalization has transformed the traditional organization of production and marketing to the management of logistics - leads to cost savings in inventory and working capital and permitting rapid response to changing consumer demands. ICRC 33 33 CONCESSION /CRC#34REGULATION • Infrastructure & Growth Domestic market development: INFRASTR CONCESSION /CRC Empirical studies in developing countries have reached the conclusion that rural (farm-to-market) roads have a major effect in improving marketing opportunities & reducing transaction costs. The marketing of agricultural commodities, excluding the stages of processing, often account for 25-60 percent of final prices for foodstuffs in developing countries – ½ marketing costs attributable to transport. - In Nigeria, e.g. 30-40 percent of the market price of agricultural produce, particularly food crops, consists mainly of transport costs and other incidental services. Farm-to-market costs on the rural road network - three times as high as what they could be with satisfactory road rehabilitation & subsequent maintenance. 34#35REGULATION Infrastructure & Growth Economic Diversification & Structural Changes: ● ● INFRASTR Infrastructure engenders economic diversification through technological innovation & changes in the structure of production/consumption. As with industry, infrastructure has direct effects on production costs & profitability of agriculture, as well as creates significant structural changes on the rural economy. Improved rural roads in Thailand, with attendant reduction in transport cost, was found to shift improve access to markets leading to increased prosperity ICRC. 35 CONCESSION ICRC#36REGULATION ● Infrastructure & Growth Economic Diversification & Structural Changes (Continued): Infrastructure provides the key to modern technology in practically all sectors. ● INFRASTR CONCESSION ICRC • While the railroad & electric power brought significant changes in markets and production in the past, these pail in significance compared to recent advances in informatics, digital technology, telecommunications and the growth of the internet. These technologies underlie a very large share of production/distribution activities in secondary and tertiary sectors of the modem economy, including commerce, banking, government, and culture and tourism. 36#37CONCESSION REGULATOMMISSION ICRC . Nigeria's Infrastructure Poverty alleviation in Nigeria requires an urgent reduction of the inequality in rural and urban infrastructural distribution...more sufficiency of economic and social infrastructure INFRASTR This proves the quote from Chairman Mao which I modify thus.....if we do not urgently improve our national infrastructure we will not solve the poverty and inequality problems in our country. In Transportation Infrastructure.... The different Transport modes (road, rail, maritime, air and waterways) have specific features and advantages. The overall efficiency and effectiveness of the Transport system depends on the development of these modes and their interfacing/integration. Yes there is a nexus between poverty, national development and transportation infrastructure - QED 37#38A Big But ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#39Nigeria requires over $100 billion for infrastructure development over the next six years... Power Rail Tracks Investment Requirement* $18 - 20b $8-17b Road Oil and Gas >$100 b $14b $60b *Sources: Bridging Nigeria's Infrastructure Gap, National Pension Commission - Nigeria 39 39 TRUCTURE CONCE CONCESSION INFRASTR ICRC REGULATOMMISSION#40Domestic financial depth: The low performance across key categories of money supply translates to a low domestic financial depth Broad Money Government Bonds Stock Market Capitalization CONCESSION INFRASTR REGULATION /CRC Broad Money in % of GDP Government Bonds in % of GDP Stock Market Capitalization in % of GDP China 208.3% South Egypt 68.8% 322.7% Africa Malaysia 130.6% China 65.7% Malaysia 121.4% Brazil 100.2% Brazil 60.1% Saudi 69.4% Arabia Egypt 98.2% Malaysia 55.5% India 69.2% UAE 95.7% India 41.1% China 65.4% South India 79.1% 35.6% Africa UAE 61.1% Saudi 74.6% Turkey 27.8% Russia 48.5% Arabia South Indonesia 24.0% 72.8% Indonesia 45.7% Africa UAE 17.6% Russia 59.2% Brazil 42.2% Nigeria 13.3% Turkey 56.0% Turkey 20.0% Russia 10.9% Indonesia 40.3% Egypt 9.9% Saudi 3.6% Nigeria 20.1% Arabia Nigeria 7.4% 0 20 40 60 80% 20 40 60 80% 100 200 300% +#41Domestic financial depth: Nigeria fairs poorly on domestic savings, investments and government spending vs peers Domestic Savings Domestic Savings 2015, % of GDP Investment CONCESSION REGULATORY INFRAST MISSION /CRC Government Spending Investment 2015, % of GDP Gov. Spending 2016, % of GDP China 48.9% China 43.8% Indonesia Brazil 41.6% 34.6% Indonesia 32.8% Saudi Saudi 38.9% Malaysia 32.7% 29.8% Arabia Arabia Russia 36.0% India 30.6% Turkey 29.7% Russia 30.4% Turkey 33.5% India 29.3% South Saudi 33.0% 29.7% Arabia Malaysia 26.2% Africa Egypt 32.9% UAE 29.3% UAE 23.4% China 32.0% Turkey 25.7% Russia 20.7% South UAE 30.2% South 19.6% Africa 20.4% Africa India 27.9% Brazil 16.5% Brazil 18.1% Malaysia 23.4% Nigeria 15.6% Nigeria 14.8% Indonesia 16.8% Egypt 5.8% Egypt 13.7% Nigeria 9.9% 0 10 20 30 40 50% 0 20 40 60 80% 20 40 60 80% +#42Overall Financial Depth is lowest in Nigeria when compared to peers Overall Financial Depth South Africa 445% China Malaysia Saudi Arabia 366% 339% 230% Brazil 223% India 204% UAE 199% Egypt 183% Russia 143% Indonesia 122% Turkey 115% Nigeria 49% 100 200 300 400 500% C TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION 4#43Our Challenges and Opportunities ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#44EXPORTS IMPORTS Time & Cost Comparisons UNITED STATES NIGERIA Jibiya BURKINA FASO-GHANA Ouagadougou Burkina Faso Chicago Newark Lagos Tema Ghana 5 days 19.5 days 7-14 days $1,958 USD $4,737 USD $3,192 USD 3 days $1,583 USD 12.5 days $3,041 USD Units - TEUS (Twenty-foot Equivalent Units) 4-5 days $2,451 USD#45TRUCTURE CONCE CONCESSION INFRASTR /CRC 70% "Logistics is not our business but it is our problem.... GE - chorus of major investors in Ikeja, Lagos REGULATOMMISSION#46Myth Bursting ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#47Money is not the problem? The world invests $2.5 trillion annually in transport, power, water, and telecom Today A better pipeline of well-developed projects CONCESSION INFRASTR The world needs to invest $3.3 trillion annually just to meet growth forecasts to 2030 How can the world bridge its infrastructure gap? Find a way to attract the $120,000,000,000,000 under management by banks and institutional investors to infrastructure finance through ... Changes to regulation and risk mitigation Market facilitation and standardization Solld cross-border Investment principles REGULATION /CRC#48Legal Framework key General Principles - Focus on Addressing Killer Risks World Bank surveys of investors have repeatedly shown that the issue of 'protection of legal rights' is the primary concern in making decisions as to where to undertake major infrastructure projects Minor Major Legal Protection of Investors Consumer Payment Discipline Government/Multilateral Guarantee Government Efficiency Judiciary's Independence Clear Rules for Exit Investment Grade Debt Rating Transition to Competitive Market Corruption Index Ranking Domestic Borrowing Competitive Selection Possibility of Vertical Integration "Deal-breaker" 3.57 3.11 3.11 2.98 2.91 2.83 2.83 2.68 2.66 2.49 2.43 2.00 PPP Experiences -- Legal Framework Case Studies 48#493 PFA RETURNS 30% With one exception (C)PFA returns in 2016 were in a small range and below inflation Estimated Rate of Return, 2016 25% 20% 15% 10% 5% 0% High returns are possible!!! 2016 Inflation 1,000 10,000 100,000 1,000,000 10,000,000 (C)PFA Assets Under Management (N '000s)#50Herdsmen & Farmers Clashes - Transportation Infrastructure Problems GATU#51Lessons from Senegal ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#52Multi Modal and Connected Fareclos Asse nies CONCESSION INFRASTR REGULATION /CRC Senegal 4 Major Infrastructure Projects in 2 Years Beur Mesar Gued awaye Boun Bakar MOAO Ngon Virage Hord Fore Yot Grand yes Cuakem uberte Hann. Mermoz Grand Escutene Dakar Fenn Meding Flateau T Niaga Autoroutm Dakar - Diamniadio gakam Departement de raque WH Bargmy Yenna Tode Nem Ndieguem Bayakch Gorom Keur Mater Caye Pout Mberdiamm N2 Sébikhotane Nibou Glop Foret de Sebkhoutane Duge Toubab Dialaa bourouk Forel ca Pout Land Forende Thies Bonque Teo Galfenont Ndiass Semmketch TIRDIO Rafou The Bank financed EUR 185m directly, facilitating EUR 1.3 billion in investment Fol B:#53Benefits CONCESSION INFRASTR Senegal Synergies & Catalytic Effects on Economic Development Transport of Goods Complementarity AIRPORT Blaise-Diagne International Airport PORT Dakar Container Terminal Transport Corridor (e.g. Coal) Connection with Free Economic Zone + Power Supply Linkage between the city and the Airport Coal Transport and Power Supply POWER PLANT Sendou Power Project HIGHWAY Dakar Toll Road Autoroute Bakar - Diamnladio Coal Transport Improved accesses REGULATION COMMISSION ICRC#54Lessons from Malaysia ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#55MALAYSIAN ROADS: 1970 - 1980 MKS MTH Source: Plus Malaysia Berhad, 2015 Presentation by Plus Berhard to Engr. Chidi Izuwah November 2015 55#56Malaysian economy literally transformed by PPP execution of the North-South Expressway which was converted to a PPP in response to their 1980s financial crises Development Stage 1986-1988 Construction 1989 – 1994 - Operation and Maintenance 1994 onwards 56#57AVERAGE GDP GROWTH OF STATES Along North-South Expressway (NSE) THAILAND GDP GROWTH BKE 1989 - 2000 - 1993 2013 Northern region PB (6 sections) States Before After Kedah 4.7% 7.5% PLUS Central region (6 sections) PENINSULAR MALAYSIA Penang 4.5% 7.5% Perak 4.7% 7.3% ☐ KUALA LUMPUR Selangor 5.4% 7.7% N. Sembilan 3.9% 7.1% ELITE KL International Airport Southern region (5 sections) Melaka 4.5% 7.3% Johor 5.0% 7.7% State Capital Major Airports Source: Plus Malaysia Berhad, Nov 2015 Major Seaports LINKEDUA SINGAPORE Presentation by Plus Berhard to Engr. Chidi Izuwah November 2015 57#58NEW TOWNSHIP, INDUSTRIAL PARK, BUSINESS CENTER AND RESIDENTIAL ALONG NSE RESIDENTIAL AREAS >200 Bandar Dato' Onn Bernam Jaya Taman Kempas Utama Setia Tropika Bandar Puteri Jaya >44' NEW TOWNSHIPS Nusajaya Setia Alam Putra Mahkota Amanjaya Putra Heights Stargate Bandar Indahpura INDUSTRIAL PARKS >20 Kawasan Perindustrian Bukit Minyak Senai Industrial Park Southern Industrial & Logistics Clusters Tanjung Pelepas Kulim Hi-Tech Park Proton City >9 BUSINESS CENTRES Medini Bukit Merah Laketown Resort I-City Johor Premium Outlet Tadima Business Park Presentation by Plus Berhard to Engr. Chidi Izuwah November 2015 Source: Plus Malaysia Berhad, Nov. 2015 58#59Lessons from UAE ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#60REGULATION The Aviation Industry - Dubai Dubai (2 Airports) . . . . . . . In 2012: Total Passengers processed 57.7 m. INFRAST CONCESSION Aviation industry contribution to GDP -20%; estimated to rise to 32% in 2020 In 2013: Passengers processed rose to 65.4% Connects to 149 cities all over the world Generated revenue of $10.2 billion Supported 157,000 jobs Industry estimated contribution to GDP to rise to 32% in 2020 /CRC Sources: ATAG - Aviation Benefits Beyond Borders, 2014; Oxford Economics: Economic Benefits from Air Transport in Nigeria, 2012 60 60#61• Understanding Capital Capital is a big coward . Capital is very intelligent • Capital is fungible • • . Telecoms Success in Nigeria Turkey 3rd Istanbul Airport 3rd Bosphorus Bridge • Izmir to Istanbul Expressway with sea bridge • Eurasia Tunnel INFRASTR CONCESSION 61 /CRC REGULATOMMISSION#62Success in Nigeria ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#63Garki Hospital Abuja Client: FCT Health and Human Services Sector: Social Infrastructure- Health Sector Year the project was signed: 2007 This was concession to NISA Premier Hospital Ltd in 2007 for a period of fifteen years (15yrs). The introduction of a a public private partnership (PPP) arrangement in the hospital has been very effective in the delivery of services. The hospital performed its first successful heart surgery in July 2013 and also performed three (3) successful kidney transplants on the same day in November 2013. The hospital ranks in the top 50 of all evaluated hospitals in Nigeria. R C 63 TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#64BADIOLOGY ULTRASOUND ANTENATAL CLINIC CLINIC FAMILY PLANING M.VA. AFTER BEFORE VINI#65Pre PPP Theatre She Garki Hospital Abuja#66Garki Hospital Abuja PPP Theatre: One Of Our 3 Theatres (June 2015 Cardiac Surgery) TAL THEATRE#67Garki Hospital Abuja Pre PPP ICU (Non - Existent)#68PPP: ICU During June 2015 Cardiac Surgery Garki Hospital Abuja#69PPP ICU (State Of The Art 5 Bedded ICU - February 2016) ASWAS She Garki Hospital Abuja#70PPP ICU (State Of The Art 5 Bedded ICU - February 2016) Garki Hospital Abuja 866#71Pre PPP Ward She Garki Hospital Abuja GARKI HOSPITAL, MAY 2007#72VIP Ward a Garki Hospital Abuja E CONCESSION INFRASTR REGULATION ICRC#73Pre PPP Radiology She Garki Hospital Abuja N#74PPP Radiology (CT Scanner) Garki Hospital Abuja Alexion 0 TOSHIBA#75Pre PPP Laboratory Garki Hospital Abuja#76PPP - One of our laboratories She Garki Hospital Abuja 1921-20#77PPP - IVF Examination Room She Garki Hospital Abuja ULTRAS#78PPP - IVF Incubators Garki Hospital Abuja Thermo HERACELL 150#79PPP - IVF She Garki Hospital Abuja#80Port Terminals ☐ Major Ports reform in 2004, to improve clogged, inefficient, and very expensive ports. Experienced private operators engaged through Concessions to rehabilitate and manage 24 port terminals Months after the concession of the Apapa-Lagos container terminal, delays for berthing space had dwindled, and shipping lines reduced congestion surcharge from $525 to $75, saving the Nigerian economy significant sums Goal of concession yet to be fully achieved due to external factors and actors Lessons Risk allocation should consider Government Capacity to deliver (channel depth, wrecks) The transaction lead agency should be the grantor who remains accountable for services Success requires an integrated approach (Roads, Customs, Rail, Security, State Government) C INFRASTR CONCESSION /CRC REGULATION#81REGULATION · Conditions for Success to Grow Infrastructure Success in other Jurisdictions - India INFRAST CONCESSION A stable policy & regulatory framework - competition/ clear entry criteria, clear role for the private sector, setting of tariffs, use of real estate as incentive Contract sanctity /CRC · • . · • Long term vision, strategy and plan owned by the government. Adequate PPP project development - capacity to develop PPP projects of requisite scale Equitable PPP contractual framework - fair risk allocation to all parties Transparent selection process ie. competitive bidding Reliable revenue sources - sustainability Managing the unexpected - implementation & monitoring/ partnership in practice This will incentivize PPPS 81#82PPP Imperative ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#83The PPP Imperative – Procurement Spectrum - PPP represents a balance between state ownership and privatisation as indicated below: Conventional procurement The procurement of assets by the public sector using conventional funding Public Private Partnership Design, build, finance and transfer (DBFT) Source: KPMG, KLegal Public Sector ■ Build, operate and transfer (BOT) Full privatisation CONCESSION INFRAST ■ Build, operate and own (BOO) Design, build, finance and operate (DBFO) Publicly regulated but privately owned in perpetuity Risk Spectrum ICRC Private Sector 83 REGULATOMMISSION#84The PPP Imperative REGULATORY INFRASTRUCTURE CONCESS /CRC COMMISSION Definition A Public-Private Partnership is a contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility (Nat. Council on PPP USA) Wide Infrastructure Gap Growing demand for private sector participation in infrastructure Small and depleting Government resources Urgent need for alternative funding of Infrastructure 84 The goal is to combine the best capabilities of the public and private sectors for mutual benefit#85PPP Advantages (1) What each party brings to a PPP Land Legislation Public Subsidies & Concession Sector Guarantees (SPV) Rights of way Long term vision TRUCTURE CONCE CONCESSION INFRASTR /CRC Design & Build innovation Operation & Maintenance Private Financing Sector Capital Access to the market Revenue Users C REGULATION#86PPP Advantages (2) What each party gets from a PPP Design & INFRASTR CONCESSION /CRC REGULATION Taxes People Construction Contract Operation Mobility Contract Public Economic Concession Servicing Private development of Debt Sector (SPV) Sector Social function Incomes Associated Profit benefits Time/cost saving ↓ Service Quality Users Environment protection C#87● . Why Public Private Partnerships PPPs fill a critical resource and expertise gap in infrastructure procurement, delivery and operation PPPs engender accelerated procurement of infrastructure and services (additionality) PPPs promote faster implementation of projects, and reduced lifecycle costs and operations/mtce due to private sector efficiencies PPPs provide for better risk allocation between public and private sectors, thus offering a better and sustainable incentive to perform PPPs engender accountability in resource utilization and also improve the overall quality of service PPPs often lead to the generation of additional revenue and overall value for money for the entire economy#88PPPs are Fundamentally Different Formal contract between public and private partner (over the years duration the service will be provided) – usually multiple years duration - • Entered through competitive procurement Using output specification - government specifies 'what', private sector can define 'how' • With suitable risk allocation between parties Putting private investment at risk • With regulation or contract management of performance of the private partner - - Example Government defines output = connection to let 1,000 vehicles p.d. travel between islands - Government tenders for best solution over 30 years - e.g. ferry, tunnel, bridge?? Government enters 30-year contract with private company – Private company designs, builds, finances bridge, then operates and maintains it for 30-years – Private company receives payment if the bridge works and is available for traffic – Government checks on safety and availability - - If the bridge is closed, or unsafe, the private company looses money Infrastructure Concession Regulatory Commission#89REGULATION . • . . What characteristics have PPPs got? Characterised by the Public Sector: Entering into contracts to acquire services, rather than procuring an asset INFRASTR CONCESSION Specifying the service requirement on the basis of outputs, not inputs Linking payments to the private sector to the level and quality services actually delivered Often requiring a 'whole life' approach to the design, building and operation of project assets Seeking optimal risk transfer to the private sector Requiring private partner to be responsible for raising some, or all, of investment finance required Utilising diverse payment mechanisms, such as market revenue, shadow tolls, capacity availability payments and so on /CRC#90PPP as a Viable Option Legal, Regulatory & Institutional Framework • The Infrastructure Concession Regulatory Commission Act (Establishment Etc,) Act 2005 In 2009, the Federal Executive Council (FEC) approved a National Policy on PPP which provides guidance on PPP project structuring. ICR Federal Republic of Nigeria INFRASTRUCTURE CONCESSION REGULATORY COMMISSION (ESTABLISHMENT, ETC) ACT 2005 The Presidency NATIONAL POLICY ON PUBLIC PRIVATE PARTNERSHIP (PPP) A document of the Infrastructure Concession Regulatory Commission (ICRC) 00 90 INFRASTR CONCESSION /CRC REGULATION COMMISSION#91REGULATION PPP LIFECYCLE in line with National Policy 532 PERC The Presidency NATIONAL POLICY ON PUBLIC PRIVATE PARTNERSHIP (PPP) E CONCESSION /CRC Preliminaries Development Phase ▪Project Identification ▪Project Prioritization "Project Selection Procurement Phase A document of the Infrastructure Concession Regulatory Commission (CRC) Implementation Phase TRANSACTION ADVISER NEEDS ANALYSIS PPP OPTIONS APPRAISAL VALUE FOR MONEY AFFORDABILITY SUSTAINABILITY PRELIM RISK MATRIX VIABILITY/BANKABILITY VGF OBC OBC APPROVAL BY FEC TRANSACTION ADVISER Eol/RFQ Phase AND RFP BIDDING BIDDERS CONFERENCE BID EVALUATION VALUE FOR MONEY TEST PREFERRED BIDDER FULL BUSINESS CASE BY FEC INDEPENDENT ENGINEER MONITOR DESIGN AND CONSTRUCTION COMMISSIONING TEST VERIFY OUTPUT REQUIREMENTS CONTRACT MANAGEMENT PREPARING AND IMPLEMENTING EFFICIENT AND EFFECTIVE PPP TRANSACTIONS#92REGULATION 92 92 The PPP Imperative India, South Africa, Malaysia and many developed INFRASTR CONCESSION countries have accelerated there infrastructure provisioning through PPPs. With the drastic fall in oil prices and fiscal retrenchment Nigeria; we must create an enabling environment that would promote PPPs to accelerate transportation infrastructure. In the last 18 months Turkey has opened transportation infrastructure projects ie. third Istanbul bridge, Izmir to Istanbul highway and sea bridge costing over USD 6 Billion. These projects would not have been built if the PPP imperative was not adopted by Turkey. /CRC#93Advantages of PPPs • • • • • Maximizes the use of each sector's strength Reduces development risk Reduces public capital investment Mobilizes excess or underutilized assets Improves efficiencies/quicker completion Improves service to the community Improves cost effectiveness Shares resources Shares/allocates risks • Mutual rewards#94Way Forward ICRC TRUCTURE CONCE CONCESSION INFRASTR /CRC REGULATOMMISSION#95World Class Highways 人在籍上,安全第一 INFRASTR CONCESSION /CRC REGULATOMMISSION#96T-R ΠΥΛΚΟΠΟ WORLD CLASS AIRPORT HUB ΠΥΛΚΟΒΟ AA ПУЛКОВ KOBO VAKORO ΠΥΛ TYAKOBO#97Nigerian Rail Dream as of 2015 Bimin Kebbi (2018) Nigerian High Speed Rail Lines Sokoto Talata Mafara Gusau Chafe Funtua (2018) Kaduna Katsina Kusada Zaria Kano Wudil Dutse Azare Potiskum Damaturu Bauchi Bajoga (2018) Biu Gombe Maiduguri Dikwa Damboa N'Djamena Kafanchan Jos Ilorin (2018) O Ogbomosho (2017) Oyo (2016) Abuja Egbe-Ejiba Oshogbo Abeokuta (2018) Ibadan Iwoo ● Abaji Kabba Ife O Ikeja Lagos Porto-Novo O Cotonou Lomé (2021) Ikire Shagamu Ondo டுபோ Lokoja !!! Amper (2017) Numan (2019) Lafia Kwolla Jalingo Yola (2017) (2018) (2019) Makurdi டுடு Ore Okene Akure Auchi Idah Onicha Awka Benin City Agbor Abakaliki (2018) Sapele Warri Umuahia Owerri Yenagoa Ikot Ekpene Port Harcourt Aba Calabar Kumba (2020) Uyo (2019) Douala (2021) Otrukpo Énúgu Wukari (2017) Garoua (2020) 97 46#98REGULATOMMISSION Key Actions Transperency - PPP Web Portal and Removal of Fees Panel of Advisers and Agreed Pipeline of Projects PPP Infrastructure Development Fund We have a national infrastructure emergency and should declare one immediately TRUCTURE CONCE CONCESSION INFRASTR Pull the right resources to address.....war against bad infrastructure (WABI) An Executive Legislative Infrastructure Advisory Council (ELIAC) needed Presidential Council or National Council on Accelerated Infrastructure Delivery and PPPs - National Consensus, Political Direction...Match words with action ICRC is working across ministries under the Leadership of HE President Buhari to provide the stable world class regulatory framework that will drive and accomplish our major Infrastructure Delivery Objectives. DO NOT ASK WHAT NIGERIA'S INFRASTRUCTURE CAN DO FOR YOU...BUT ASK HOW WE CAN PARTNER AND UPSCALE NIGERIA'S TRANSPORTATION INFRASTRUTURE STOCK. Remember that 1% increase in a nation's infrastructure increases GDP by 1%. The fastest way to accelerate economic growth in Nigeria is by developing infrastructure. 98 /CRC#99REGULATOMMISSION PPP Support Initiatives Nigeria Integrated Infrastructure Masterplan Nigeria Infrastructure Development Fund Annuity PPPs INFRASTR Nigerian Sovereign Investment Authority (NSIA) and Infra Credit Guarantee Fund PPP Units in MDAs Federal Roads and Bridges Tolling Policy Standardization Efforts (Business Case, Contracts etc) ICRC CONCESSION /CRC 99#100REGULATOMMISSION Road PPP Opportunities 1. 2nd Niger Bridge 2. Lagos Ibadan Expressway CONCESSION TRUCTURE CONCE INFRASTR /CRC 3. Rehabilitation and upgrade of 368 Km Shagamu-Benin-Asaba Expressway 4. Reconstruction and Upgrade of Abuja - Kaduna – Kano Dual Carriage Road 5. Reconstruction and Full Dualization of Ibadan - Ilorin Tegina - Kaduna Highway 6. Reconstruction and Upgrade of Enugu to Port Harcourt Expressway 7. Reconstruction and Upgrade of East West Road 8. Reconstruction and Upgrade of Aba-Ikot Ekpene - Calabar 100#101LAKAJI Corridor JIBIYA Katsina Point of Production LKANO Niger Kano Chad CONCESSION INFRASTR Benin Kwara Oyo Ogun LAGOS Osun 1 Niger Kaduna 1,150 Kms Point of Consumption • Reduce time & cost to transit goods along Corridor Support export-oriented agribusiness investment along Corridor Make doing business easier along Corridor /CRC REGULATOMMISSION#102LAKAJI CORRIDOR - transformation INFRAST CONCESSION ICRC REGULATOMMISSION To - Multimodal Trade Expressway Freight-only airport/s Designated Zone State Junction/Cluster Silos, Cold Storage etc. ROI - Nigeria; 35 % 4th highest in the world! World average; 7.7% - UN figures#103Ports and ICD Opportunities Kirikiri Port Lighter Terminal I & II, Lagos. • Lekki Deep Water Port • Ibom and Bakassi Deepwater Ports Badagry Deep Sea Port • Ontisha Inland Container Depot (ICD), Anambra State Asaba Container Freight Station (CFS), Delta State • Nnewi Inland Container Depot, Anambra State • Gombe CFS, Gombe State Dagbolu Inland Container Depot, Osun State • Lolo Inland Container Depot, Kebbi State C INFRAST 103 CONCESSION /CRC REGULATOMMISSION#104Rail, Aviation and FCT Oppurtunities TURE CONCESSION INFRASTA ICRC . NRC Narrow Guage New Standard Guage Lines Abuja Light Rail Lots 1A and 3 Bus Rapid Transit for Cities Lagos, Abuja, Kano and Port Harcourt Airports • Aircraft MRO Facility • NNPC Pipeline and Depot Syatem CRC. 104 REGULATION#105• CONCESSION CTURE CONCE INFRASTR ICRC Conceptual Issues in Infrastructure Financing Infrastructure Financing Options Status of Infrastructure in Nigeria Sources of Finance for Infrastructure Appropriate Funding Model for Infrastructure Challenges Summary & Observations CR C. 105 REGULATION#106REGULATION . • Observations Government has traditionally provided for the infrastructure requirement of the country from budgetary appropriations. INFRASTR CONCESSION ICRC Even at the best of times, annual budgetary appropriations hardly meet expenditure requirement in a timely and sustainable manner. Declining financial resources is making this option even less attractive. The NIIMP projects an expenditure of US$3.10 trillion in 30 years, 48% of which will be provided by the private sector. ICRC. 106#107REGULATION COMMISSION . . • • Observations INFRAST CONCESSION /CRC Private Sector Financing Instruments loans, bonds and equity or a hybrid. The stage of an infrastructure development project will determine the optimal mix of instrument and sources. The infrastructure financing sources include: local project sponsors, international project sponsors, local banks, international banks, local institutional investors, international financial institutions, multilateral financial institutions, bilateral development institutions and export credit arrangements. Credit enhancement is essential to make bonds attractive to the investors. The recent agreement between NSIA and GuarantCo will provide such feature as PRG and securitization of project cash flows currently absent in the Nigerian financial system. 107#108Transforming Nigeria is Doable – Transformation - here involves more than an incremental or evolutionary change.....we are implying a radical/dramatic/revolutionary change in the course of things for the better.....should lead to improved overall performance that is sustained for all Nigerian's.....if you cannot provide for the many...you cannot protect the few Everybody Has a Role to Play 108#109DUBAI 1990#110SAME STREET IN 2003 WE'VE SET OUR VISION. HIGHER RUCTURE CONCE CONCESSION INFRAST REGULATION /CRC#111• ...I have a dream Like Martin Luther King Jnr I have a dream that very soon every valley of infrastructural challenge in Nigeria shall be overcome and every hill and mountain of infrastructure problem made low, the rough places made plain and crooked winding and pot marked roads made good and straight so that Nigerians can travel from Abeokuta to Ogoja then onto Enugu and Katsina Ala to visit friends in a few hours; I have a dream that very soon Nigerians will take high speed trains from Sokoto to go to Bar Beach, Lagos, Tinapa, Calabar and holiday over weekends; I also have a dream that the North-East region of Nigeria, a region sweltering today from the heat of terror, will one day, be transformed into an oasis of freedom, with constant electricity...I have a dream that then the real glory and possibilities of Nigerian will be revealed for all to see.#112Every morning in Yankari, a Gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed Every morning a Lion wakes up. It knows it must outrun the slowest Gazelle or it will starve to death#113It doesn't matter whether you are a Lion or a Gazelle... when the sun comes up, you'd better be running.#114CONCESSION ICTURE CONCE INFRASTR /CRC REGULATOR Y COMMISSION Thank your You! INFRASTRUCTURE CONCESSION REGULATORY COMMISSION Plot 1270 Ayangba Street, Near FCDA Headquarters, Area 11, Garki, Abuja - Federal Capital City. Phone: +234 9-4604900, E-mail: [email protected] Website: www.icrc.gov.ng C 114