The immediate past Minister of Power, Works and Housing, Babatunde Fashola has called for floating a N10 trillion infrastructure bond.
This, he said, would serve as alternative source of infrastructure finance in Nigeria and take care of the nation’s infrastructure issues and deficit going forward.
He lamented that the nation lacked the much needed funds to fix the alarming infrastructure deficit currently bedevilling the country.
Fashola, a former governor of Lagos State, and ex Minister of works, stated this on Monday at his ministerial screening in Abuja, while fielding questions from lawmakers.
Fashola is the thirty-second Ministerial nominee to be screened by the Senate.
The nominee, however, pointed out that the infrastructure bond should have legal backing from the National Assembly and guaranteed by the Federal Government.
“I propose that we should consider something like a N10 trillion infrastructure bond backed by parliamentary support and secured by the Federal Government with a reasonable coupon, and issued in tranches each year, as we need to fund infrastructure,” he said.
In April this year, the Federal Government had disclosed that a minimum of $3 trillion investment would be needed if the country is to bridge the infrastructure gap in the next three decades.
The Director General of the Bureau of Public Enterprises (BPE), Alex Okoh, had said the country would require an average of $100 billion per annum for the next 30 years to meet the target.
Fashola noted with regret that several attempts by the Federal Government to tackle the challenge through borrowing had failed to achieve the desired results as the loans accessible to the country was a far cry to address the menace.
He also said that attempts by the past governments to address the deplorable state of some of the nation’s highway through the Public-Private-Partnership (PPP) arrangement ended up in a disaster as the concessionaires failed to meet the stringent conditions contained in the law.
Fashola said budgetary allocations to infrastructure, especially highway construction over the years have made mockery of the nation’s attempts to achieve meaningful progress.
He explained that the Federal Government has been finding it extremely difficult to fund the projects due to poor fund releases, a situation he said, was forcing the contractors to abandon their various sites.
He said: “I think there is some opportunity and one of the ways I think is for Nigeria to leverage from the large pool of fund with the ordinary people looking for secured investment. And some of them are not even in the banking sector keeping their cash. And I propose that we should consider something like a N10 trillion infrastructure bond backed by parliamentary support and secured by the Federal Government with a reasonable coupon issued in tranches each year, as we need to fund infrastructure.
“And broken up into even very small denominations that people can invest as much as only N1,000. Those who want to invest in billions can do so. And in my view, if we don’t try this, we wouldn’t know whether it has worked. But I am convinced that we can do something along this line based in the interest that I saw in the SUKUK that was oversubscribed, which meant that there was an appetite for it.”
The ministerial nominee therefore suggested three fundamental strategies to save the country from experiencing a total infrastructure collapse.
He suggested the prioritisation of the major highways that are crucial to most Nigerians and raising an infrastructural bond to fix them. He also suggested the suspension of the award of new road contracts for at least two years to enable the government to adequately fund the critical ones that are nearing completion.
The former governor also urged senators to look at the most important major highways that are very critical to the socio-economic development of their area and jointly agree to present them as their priorities for the purpose of budgetary allocation.
He noted that Nigeria currently lacked enough money to execute road projects, hence its decision to prioritise its projects.
He listed roads facing funding constraints to include the Eleme-Port Harcourt Road, Lagos-Ibadan Express Road, Bodo-Bonny Bridge, Yenagoa-Kolo- Otuoke Road among others.
On the use of PPP to fund road projects, he explained that private investors are more interested in airports and hospital projects where they are able to make quick returns.
“PPPs are complex. They take time to negotiate. Even here in the Federal Government, we need to go through the ICRC to advertise. In a government that has four years to show results and in a country where there is high expectations for results, we must be more skilful on how we use them.
“Let me also say that PPPs are not attractive for all projects. I have learned to distinguish between social projects like roads and commercial projects like airports, hospitals where there is a daily cash count. And those are easier for private investors to want to put their money into than roads and the risk of construction that it requires.”
“And there are so many modules. To use policies like the Nigerian Tax Credit Initiative Policy which we are now using to build the Apapa-Oworonshoki Expressway which Lafarge has also used to build a factory in Calabar. And a couple of others are showing interest. And I think at a time I left, there were about 28 roads on the shortlist for the committee set up to review and hopefully approve for implementation,” he said.
OWEDE AGBAJILEKE, Abuja