Federal government set to concession 12 highways for enhanced efficiency

Federal government set to concession 12 highways for enhanced efficiency

Abiola Seun

In its bid to ensure the regular maintenance of its road network across Nigeria, the Federal Ministry of Works and Housing plans to concession no fewer than 12 federal highways to private entities to manage.

The arrangement would enable the private companies to introduce toll gates on the 12 highways and collect revenue which they would use and regularly maintain such roads.

This information is contained in a document, which newsmen obtained, from the Federal Ministry of Works and Housing in Abuja.

The 12 highways to be concessioned under the Ministry’s “Highway Management Development Initiative”, HMDI, are: Benin-Asaba, Abuja-Lokoja, Kano-Katsina, Onitsha-Owerri, Shagamu-Benin and Abuja-Keffi-Akwanga.

Others are: Kano-Shuari, Potiskum-Damaturu, Lokoja-Benin, Enugu-Port Harcourt, Ilorin-Jebba, Lagos-Ota-Abeokuta and Lagos-Badagry-Seme Border.

The roads, according to the ministry, come under the pilot phase of the HDMI to be managed by selected private sector investors under its Value-Added Concession, VAC, arrangement.

The 12 highways represent merely 5.6 percent or 1,963 kilometres of the country’s 35,000 km federal highway network.

The document estimates that not less than N1.34 trillion of private sector investment would flow into the highways while no fewer than 50,000 direct jobs and 200,000 indirect jobs would be created by the concessioning of the highways to the private operators.

“It’s not really about revenue; it is about the expected injection into the economy. The estimated private sector investment required for the development and maintenance of the 12 routes is N1.34 trillion and the impact such investment will have on the economy cannot be overstated.

“The anticipated private sector investment will stimulate thousands of job opportunities for Nigerians as the Highway Economy comes alive along federal highways.

A minimum 50,000 direct jobs and over 200’000 indirect jobs are envisaged to be created spanning construction works, installations, steel fabrication, security, hospitality, vehicle repairs, waste management and administrative work as the Value Chain along the Highway Economy is activated. The combined impact of this mini economy will be a significant boost to our national GDP as productivity and earnings are enhanced,” the ministry document boasted.

Beyond the Value-Added Concession, VAC arrangement, the FMWH is also planning to use another vehicle known as the Unbundled Assets Approvals initiative, UAAI, to maximize the use of its assets on the highways.

Under this category, the ministry plans to issue approvals/permits to individuals to use assets on the right of way on a Build, Operate and or maintain basis.

Both the VAC and the UAAI, according to the ministry, aims to provide adequate highway services through the development of revenue-generating assets along the highway.

“This is key to maintaining the functionality of the highway as well as engaging and generating wealth for indigenous small and medium enterprises,” it says.

The ministry explained that it had already obtained the approval of the Infrastructure Concession and Regulatory Commission, ICRC, to go ahead with the implementation of the HMDI which incorporates the concessioning of the highways and the right of way to private sector operators.

Explaining the objectives of the HMDI, the ministry said: “The objective is to develop an eco-system along the federal highway network by bringing multi-dimensional resources of skills, manpower, finance, technology, and efficiency into the National Highway governance.

“Ultimately, this home-grown initiative will be the lasting solution to the development and management of federal highways by introducing order, accountability and profitable entrepreneurship to the operation, management, and maintenance of Nigeria’s 35,000 km federal highways.

“The Initiative is expected to be anchored on private sector engagement via concessioning of economically viable routes to technically and financially capable private companies, through the management and development of the right-of-way. A major hindrance to highway development and management has been a paucity of required funds to service the vast and ever-expanding road network.

To negate this handicap, the FMWH proposes the engagement of concessionaires who will manage and develop the right of way, whilst maximizing its commercial potential.

“The main objective of the Initiative is to attract expertise and sustainable investment/funding in the development of road infrastructure and to maximize the use of assets along the Right of Way and develop other highway furniture,” the ministry pointed out.

The government, according to the document will soon call for bidders in a transparent process that would be conducted in collaboration with the ICRC.

It said: “The Federal Ministry of Works and Housing, in collaboration with the ICRC, will soon advertise the Request for Qualification (RFQ) bidding process for the available categories under the HDMI scheme.

“The process will be transparent to allow the most effective bids to compete vigorously in a process that delivers service and dividend to Nigerians. (technically and financially capable firms/consortiums).

“We are determined to ensure our assets are entrusted into capable hands. Therefore, interested persons, companies and groups are advised to

Form consortiums of construction/road maintenance companies, financiers, toll operators, rest house operators, advertising companies, lane marking experts, refuse managers and other partners.”

Some of the revenue-generating assets and highway services being targeted by the ministry are: Toll plazas, weighbridges, advertising assets, directional signage structures and space, street lighting with advertising space and open spaces, including but not limited to truck parks and rest areas, refuse management, towing services, highway monitoring and emergency services.

The ministry made it clear that it was carrying out the new initiative since it has a legal framework under the Federal Highway Act, which vests the Minister of Works and Housing with authority over federal highway network and empowers him to administer tolls on federal highways.

Besides, the ministry said that the Infrastructure Concession Regulatory Commission (ICRC) is mandated by law with regulatory oversight over Ministries, Departments and Agencies in developing bankable PPP projects, pointing out that the ICRC worked closely with it in the conception of the initiative.

“The ICRC has just issued a Certificate of Compliance to the Ministry of Works and Housing, what this means is that the ministry has met all the conditions necessary to proceed to the next stage of procurement of the HDMI scheme.

“So, we are about to kick-off with the pilot phase of the HDMI scheme. In the first phase, the government is proposing the concession of 12 selected federal highways to private sector investors, under the Value-Added Concession, VAC arrangement”.