• Sunday, July 14, 2024
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BusinessDay

Role of private sector in road maintenance

Dealing with home emergencies

In Nigeria, road construction represents the epitome of public finance and often used by public officials, especially state governors, to highlight achievements. We are often inundated with public announcements indicating how many kilometres of roads have been built since they assumed office.

In a political terrain like Nigeria, it is understandable to link road construction with achievements – roads facilitate intra-country trade, aiding movement of goods and services and allowing for higher productivity that leads to further economic growth.

Road construction is also critical in an unexpected way. According to Transparency International, contracts for public works/construction has the highest propensity for corruption through bribery on bidding and super inflated cost of such construction.

Aside the fact that road costs are often very high, not usually financed by development aid, costs skyrocket even more when corruption and political instability are present, according to the World Bank.

Therefore, particular attention is required for road maintenance, not just to roads construction as they take a good chunk of public finance in a country like Nigeria currently with a poor corruption index.

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Usually, costs are high because of many factors, one of which is the different terrain. For example, roads in certain parts of the country would cost more than in other parts because of the soil conditions; however other negative factors increase the cost further.

Involving private sector in roads maintenance has gained traction since the 2000s when low- and high-income countries started to implement what is known as the Performance Based Maintenance Contracting (PBMC).

It is a method where road maintenance is outsourced to private firms with clear performance indicators, using long term contracts for specific sectors of roads, and often with negotiated fixed price.

The advantages include cost savings for as much as 30 percent for government, sharing of risks by government and the contractors, reducing the need for highly specialised people on permanent government payroll while allowing better specialisation and skills of the private/local construction companies, contributing to the growth of that sector.

As the contracts are often performance-based, governments would only pay based on how set targets are met. PBMC often focuses on routine maintenance including fixing of pot-holes, guardrail maintenance, lights maintenance and litter pick up on highways, urban roads etc. The contracts would exclude major repairs like bridge repair.

To have a successful PBMC in place, there must be enough skilled personnel available to the contractor to undertake successful maintenance on a long term, while saving costs, as well as advance financing since governments will only pay after specific performance indicators have been met.

Even with the advantages to government and growth of the construction sector, this is still a difficult process to implement. Corruption and high cost necessary to start affects bidding which discourages competition and participation.

Even when successful, local construction companies have to grapple with the highly specialised skills and equipment necessary for ongoing road maintenance projects and could be frustrated by staff of government public works agencies who risk losing their jobs except an arrangement is made for government skilled workers to be taken over by the contractors.

To make PBMC successful, political patronage and corruption have to be eradicated. Technical schools and engineering colleges must be restructured for acquisition of relevant engineering skills and government must allow certain waivers on importation of equipment.

Government should also be willing to relinquish some control, and provide flexibility to contractors to determine an optimized mix of technical solutions and execution schedule without interference from key stakeholders.