FG needs $166bn in 5 years to meet energy, transport infrastructure needs

Federal Government on Monday said it would require $166 billion over the next five years to meet the country’s energy and transport infrastructure needs.

In the bid to garner adequate funding, efforts are in top gear to revisit previous privatisation of railway, ports and transport sectors of the nation’s economy aimed at attracting private sector funding.

Rotimi Amaechi, minister of transportation, who spoke at the public hearing on Nigerian Railway Authority (NRA) bill and National Transport Commission bill, said the Federal Government and General Electric (GE) had concluded arrangement for the commercialisation of Lagos-Kano railway project.

“Besides privatisation, government also realised a monumental infrastructure deficit hitch as at 2015 stood at over $3.05 trillion in 30 years or $166 billion in five years, with energy and transport infrastructure taking more than 50 percent of that need.

“Transport infrastructure alone needs a whopping $50.9 billion in five years to cover the current gap in the sector, an average of $10.2 billion per year. Currently, the ratio of funding in the sector between the public and private is 9:1. This constituted a major disincentive to private sector participation in the industry.

“In addition, it is considered imperative to intimate this Committee that full government ownership and management of these agencies had inherent restrictions for third party funding, undue government interferences, burdensome bureaucratic structures and over-bloated workforce, among others,” the minister told the stakeholders.

Amaechi, who argued that privatisation of railway would conflict with public interest, said “governments all over the world have realised that it is not best suited in ownership and management of businesses and as such considered it imperative to shift from purely government to public private partnership (PPP).

“The policy therefore is intended to guarantee efficiency, sustainability, competitiveness and profitability. To actualise these objectives, the Federal Government had established a trajectory towards driving the model. These led to the institutionalisation of agencies such as Bureau of Public Enterprises (BPE) and Infrastructure Concession Regulatory Commission (ICRC) with the statutory power to superintend the transition of government owned concerns to the private sector under the various models of PPP.”

While declaring the public hearing open, Yakubu Dogara, speaker of House of Representative, urged that the NRA bill, which spells out the operations and regulation of the railway sector, should be thoroughly examined as an efficient rail system was a much safer and cheaper mode of transporting goods, services and persons across the length and breadth of Nigeria.

“It will reduce drastically the damage done to our roads and highways by heavy duty trucks. Rail transportation also provides a strong foundation for industrial activities in any economy, as the haulage of raw materials can be effectively undertaken though the railways.

“The current efforts by the Muhammadu Buhari administration to consolidate the revival of the rail sector, evidenced by the recent presidential trip to China and the appropriation by the National Assembly of billions of naira to it on the 2016 budget, is highly commendable. It must also be accompanied with a revised up-to-date legal framework to organise and regulate the sector,” Dogara said.

Speaking on the intendment of the National Transport Commission bill, Nicholas Ossai (PDP-Delta) noted that effective regulation of the transport sector would provide level playing ground for private sector players, attract funding and new investments, encourage competition among major players and reduce loss of about 30 percent revenue accrued to the federation due to non-integration in the transport sector.

Ossai, who sponsored the bill, said, “80 percent of total national and household income goes into transportation,” saying the 2 percent commission of the revenue realised would be set aside for the Commission.

Lawmakers noted that the move to have single regulatory agency would be supported by the House.

Other stakeholders that spoke in support of the bill, including ICRC, urged that the Commission should not be subjected to BPP regulation, stressing that such effort would serve as disincentive to investors.