Lagos PPP is making the state attractive to private capital – George
Ope George is the director-general of Lagos Public-Private Partnership (PPP). In this interview, he told Daniel Obi that while PPP is a global phenomenon, Lagos has developed a model that works for the environment. George who had worked for City Bank in London, KPMG and was SSA to Babatunde Fashola-led government assured that Lagosians will soon begin to increasingly feel the impact of most PPP projects in the state. Excerpts:
PPP Lagos has been around for some time, could you let us into the history and its objectives?
PPP Lagos was established in 2008, then a law was enacted in 2011. In 2015, the office was shut down and in 2017 it was re-opened. Lagos has been one of the pioneering states in terms of PPP in Nigeria. We were the first to have a law established and also the first to have an office for PPP.
Over the years, the environment has been challenging so we have to be adaptive with the PPP. When we started, we looked at how it is done around the world, but we discovered that our system is different. Not everything that worked in Western countries will work here. Due to the life of PPPs, some of the projects take so much time to complete. We found that we have to be creative with our PPPs. While the big projects are important, we have to look at what can touch the lives of people and they can see and feel the instant impact. So the objective is to drive the overall development of Lagos State.
What caused the shutdown in 2015?
It was due to policy changes. The office was not as vibrant as it should be. Between 2015 and 2017, the office existed but it was scaled down. The law that set up the office has guidelines as to how the office should operate. So in 2017, the office started operating as a full-fledged agency and according to how it’s supposed to operate.
How has the private sector embraced the Lagos PPP?
Going by the way the Lagos PPP office is set up, it is a stand-alone but it reports directly to the governor. So the processes are a lot quicker, there is a lot more efficiency and accountability. People can sit down and we can get things done quicker. Private capital is very sensitive about where it goes to invest.
When private capital is dealing with the government and they can see professionalism and see that due process is being followed, they want to stay and do transactions. It’s difficult for private investors to move from one ministry to the other while dealing with the government, but once you know you can come to a certain location and we can pull all other relevant government agencies together to do what needs to be done, it helps the process. So they have embraced it very well.
Can you mention some of the projects you have executed under PPP?
The landmark project was the Lekki road concession. We learnt from that on how to do things better. The new ones include the Medical Park on Awolowo Road, that is, the old School of Nursing, which has been there for a while. We are developing it into a medical park. You find that a lot of Nigerians tend to travel out for medical treatment and when they get there, they still meet Nigerian doctors and nurses.
For us we think that if we have a place where people feel they can go and get quality health care, it would be a focal point of attracting investment back into the state and the country as a whole. There is also the elephant in the room that we have been trying to crack; the rail. We are making good progress on the blue and red line. We are a sub-national state investing in rail infrastructure. I do not think you can find that anywhere else in the country.
Most times, rail infrastructure is being done by federal government. It is difficult, but I am hoping that we will crack it. Another one is the Fourth Mainland Bridge, which has also been another big elephant in the room. With this project, it is a case of following the right process. We have gone back, done the studies and we are now in the Request for Proposal (RFP) stage. We are hoping that by the end of the year or early next year, we will be sitting across the table with the preferred contract bidder.
Is it possible to put value to some of these projects?
The Fourth Mainland Bridge is about $2.1billion. That sort of huge investment is not what the state can take on by itself, which is why we are looking for private investment. One of the things I will say is that Lagos is a place where what will not be profitable in many other places of the world, will make sense in Lagos. Rail business is not naturally a profitable business, but it will be profitable in Lagos because we have the numbers. No matter how many roads we build in Lagos, we can’t build ourselves out of traffic. Ilubinrin projects is a project of over N3 billion. We are creating about 8000 bed spaces in six blocks in Lagos State University (LASU) for accommodation.
What is unique about Lagos PPP?
The different thing about PPP Lagos is that it is People Friendly PPPs. In Lagos, you have to do PPPs that people can see and can get value from immediately. A transaction like the Fourth Mainland Bridge takes some time but people will see it when the construction starts. We have a Bicycle shared scheme in collaboration with a private company. So we tell people that you don’t need to get into traffic all the time. Within the secretariat, you can pick a bicycle from here and ride to any other ministries. It is very simple. You find it in the city of London and other cities. Initially, we thought people would ride away with the bicycles, but no. As we move ahead, there will also be technology infused into it.
What is happening to Badagry-Lagos Rail?
For the Badagry rail, the blue line comes from Okokomaiko to Mile 2. The red line goes from Agbara to Marina via Muritala Airport. We are hoping that before the end of the year, we will have made significant progress. Civil works have gone very far. By Marina, you will see that the stations are coming up. The mega station will be at Marina just by the waters. Once that’s done, we would start testing. By the end of 2023, I am very optimistic of the rails working. About 70% of the hard work has been done. It’s just about getting that across the line.
Is the rail also a PPP arrangement?
Yes it is. The state has put a lot into infrastructure to get it done. We would look for a concessionaire to help us with running the services. We have started the concession process for the blue and red line. It is a very long process where you have to go through proper EOI to RFQs and RFPs to ensure all due diligence. What you find is that once you are doing such huge transactions, private capital wants to be sure you have done all due diligence, if not, they will not want to invest in it.
What are the challenges you have faced?
It has been a learning curve. We have learnt that we have to constantly innovate. You have to think differently of how you do PPP in Lagos or Africa. We learnt to be creative. We sit around the table and tell investors that we want to make this work, and if there are areas you want the government to do more, we are ready. We want to make the environment easy for you to operate. Like security for instance, we are looking at gridding the whole state. If you look around, you will see fibre cables of different colours being laid around the state. That’s about 3000 kilometers of fibres being laid, I think we’ve done close to 2000 kilometers of it now. If those fibers are laid around the state, we have a smart city with cameras, hospitals are connected, schools connected, information travels faster and security is better. So it’s part of the lessons that once that’s done, it leads to development in other areas.
One major challenge of the country is insecurity, what are you doing under PPP in Security?
With security, one of the things we are doing is making the state a smart city by investing in technology. The state has also invested heavily in providing tools for the Nigerian Police Force to work. And we are working with private companies to have modern police Stations. The private sector will build the stations and hand them over to the Police. We want to equip the Police with the right set of tools. We are looking at providing insurance policies for police officers in the state. You want someone protecting you to be able to go to work knowing that if anything happens to him, he has insurance. The state has invested a lot in the welfare of our officers in terms of cars and ammunitions.
A lot of PPP agreements have gone awry. What measures are in place to ensure that parties doing PPP with Lagos do not regret doing transactions with the state?
That is something we have learnt from and are still learning from. The sanctity of agreement is key. You have to ensure people can trust you to keep your end of the deal. It costs a lot to break agreements as well. If there is litigation, it also affects your credit ratings. Lagos State just got rated AAA financial rating which is one of the best you can get. Everything you do not honour affects your ratings. So the onus is on us to keep that credible status to improve the ease of doing business in Lagos.
QUOTE: Lagos is a place where what will not be profitable in many other places of the world will make sense