NSIA provides update on $700m second Niger Bridge

The Nigeria Sovereign Investment Authority (NSIA) has provided more insight on the $700 million second Niger Bridge under construction through its Nigeria Infrastructure Fund and wholly owned subsidiary, NSIA Motorways Investment Company (NMIC).

NSIA is collaborating on the bridge with the Federal Ministry of Works and Julius Berger Investments (JBI) as joint sponsors on the financing, development and construction of the Second Niger Bridge project (the “Project”).

The project

The project is structured as a Public Private Partnership (PPP) and will be constructed and operated on a Design, Build, Finance, Operate and Transfer (DBFOT) basis.

According to the NSIA, the Second Niger Bridge and adjacent roads will be 11.9km in length.

It is expected that the Bridge would be constructed and delivered in 48 months. When completed, the Bridge and adjacent roads will have six (6) lanes with three (3) in each direction.

The project was initially estimated to cost N108billion, excluding duties and VAT, (if duties and VAT are included, the project cost is N117.9billion).

This was equivalent to $700million at the then prevailing exchange rate of N154/$. The final project cost would however, be affected by exchange rate fluctuations and other variables.

The Federal Government of Nigeria (FGN) made an N30billion commitment to the project. The consortium would raise the remaining funds for the project from Nigerian and international lenders and equity providers.

The Federal Government has released N18.3billion so far, of which N10.4billion has been disbursed on early construction works, according to the NSIA.

NSIA’s contribution

NSIA says it has assembled a team of Nigerian and international advisers with proven capabilities and global experience in PPP infrastructure projects to ensure the project get first class advisory services.

These consultants were engaged through a rigorous and competitive procurement process, according to the NSIA.

To date, NSIA has spent a total of $2.21million on consultancy services on the two phases of the project –$247,586 on the due diligence phase; and US$1.96million on the project development phase.

These services have included work in the following areas: Legal, Financial, Technical & Engineering and Environmental & Social Impact Advisory, provided by various credible and well-recognised Nigerian and international professional services firms.

Total consultancy services cost so far is less than one percent of the estimated project cost.

Whilst there is no standardised benchmark for transaction costs, the European Investment Bank’s Economic and Financial Report No. 3 of 2005, indicates that, on the average, the level of transaction cost for the procurement phase of PPP projects is over 10 percent of the capital value of the relevant project in Ireland, the Netherlands, Portugal, and the United Kingdom.

NSIA’s technical consultants on the Project have been instrumental in value engineering the Project and reducing the initial project cost to the current level.

Net income jumps in 2014 annual report

Despite “volatile market conditions,” the NSIA saw net comprehensive income rise to N15.8 billion ($79.4 million) in the year through December, from N525 million in the 15 months through the end of 2013, Chief Executive Officer Uche Orji told reporters in Lagos, on September 03.

The fund’s total assets were N177.8 billion.

NSIA said it doesn’t expect any major payments from the government due to the halving of crude prices in the past year.

“The weakness in crude oil prices might persist for the foreseeable future, thereby potentially impacting on new contributions from the federation,” Nigerian Sovereign Investment Authority Chairman, Mahey Rasheed said in the 2014 annual report.

“Consequently, I do not anticipate a substantial growth in the funds under management through that source.”

About NSIA

NSIA is rated by the US-based Sovereign Wealth Fund Institute as one of the most transparent sovereign wealth funds in the world.

In this regard, NSIA’s accounts are audited by PricewaterhouseCoopers (PwC) and made publicly available within the first 90 days of the new calendar year.

The Nigeria Sovereign Investment Authority (NSIA) was established in 2011 under an Act of the National Assembly, the Nigeria Sovereign Investment Authority Act.

The objective of the NSIA is to promote fiscal stability, build a savings base for future generations of Nigerians and enhance the development of Nigeria’s infrastructure.

The NSIA’s investments are made through three distinct funds: the Stabilisation Fund, the Future Generations Fund, and finally the Nigeria Infrastructure Fund.

The Nigeria Infrastructure Fund aims to invest in infrastructure projects in Nigeria that contribute to the development of essential infrastructure in Nigeria in addition to meeting the NSIA’s targeted financial returns.

PATRICK ATUANYA