SPONSORS

SPONSORS

Alternative Project Systems

for Private Sector Participation in Road Infrastructure Delivery in Nigeria

 

FEATURED PAPER

1Samuel Ekung, 2 Ejike Okonkwo and 3Ejekwu Tobechi

1,3Department of Quantity Surveying, Imo State University
Owerri, Nigeria

2Department of Quantity Surveying, Faculty of Environmental Studies
University of Uyo
Uyo, Nigeria

 



Abstract

Cybernetics from road research in Nigeria indicates the road network totalled 200,000Km; and over 50% are unpaved. Faced with systemic pressure to close deficiency gap, Nigeria embraced policy to boost private sector’s participation. Public private partnership (PPP) evolved into two broad categories concession and purchase of service (private finance initiative (PFI). The models used in Nigeria tend to favour concession. The problems faced in current practice suggest fundamental incongruity with concession and in-country’s systemic variables including cultural fitness and procurement practice. Studies that explore these dimensions are rather very few. The aim of this paper was to critically evaluate PFI ethos for suitability as an alternative PPP model for road infrastructure delivery in Nigeria. The study was an explorative literature review and SLEEPT tool was adopted to analyse the social, legal, environmental, economic, political and technological dimensions of the Nigeria supra system. The study revealed the social, legal, technological, environmental and political institutions are fragile to support private investment in road infrastructure. This study identifies PFI as a robust model for checking leakage in the weak institutions. There is also strong meta-analysis correlation between PFI and cultural fits and procurement practice in Nigeria. These variables require clear identification through empirical studies. These dimensions are currently being investigated to unravel the cultural ingredients that prevailed against the concession model.

Introduction

Nigeria road network totalled about 200,000km and over 50% are unpaved (Onolememen, 2012; Ubogu, Ariyo, and Mamman, 2011). Financing infrastructure development globally remains a major fiasco to its provision and efficiency. The situation is not faring better in the face of dwindling resources. Till date, the provision of infrastructure remains the responsibility of the public sector in many places including Nigeria. Public work construction in Nigeria is funded through budgetary provisions in the short term yearly appropriation. Successive studies have identified budget-financing as one of the leading barriers to infrastructure provision in the country (Olayiowola & Oyegoke, 2010; Opawole, Jagboro, Babalola and Babatunde, 2012; and Onwusonye, 2015). Related outcome is reported elsewhere in Ghana (Mensah, Dansoh. and Amoah, 2011). Schwarka & Anigbogu (2012) found that budgetary releases impact on project performance. The challenge is not just in releases, but also insufficient allocation. The dominant reason is that there are competing needs to allocate resources. Sanusi (2012) stated the federal government of Nigeria spends 7.5% GDP on infrastructure development, a proportion which is quite significant and compares with best in class allocation worldwide. Alufohai (2012) acknowledged substantive contribution to GDP of 2% by the construction sector in Nigeria. This proportion translates to 27% releases if the two reports are examined side by side. Faced with challenges of unsatisfactory performance in projects delivery and deficiency gap to close for sustained economic growth and development; Nigeria keyed to developing policy to boost private sector participation.

The involvement of the private sector in the provision of public infrastructure is not new. Evidence of the use of public-private partnership (PPP) in Nigeria abound. What is not apparent is whether the context upon which PPPs are implemented in Nigeria actually recognises the peculiarities of existing procurement practices and cultural ethos.  The developing nations including Nigeria tend to be in haste in accelerating development. The systemic competition predisposes stakeholders to practice dubbing. Not much attention is given to carefully examine practices in relation to their cultural fits. How well the dubbed practices have fared is a subject of multiple research papers. Failures of concession model are plethora. However, the leading example well pronounced, is the Lagos-Ibadan Express way. Stakeholders have attempted to account for the cause of failure (Babatunde, 2013, 2014). Despite pockets of few successful endeavours in the related sectors including housing, application of PPP in Nigeria is simply re-channelling of public fund directly or indirectly into private hands and commercialization (NIQS, 2010). This experience might be ubiquitous in many places including Hong Kong (Hayllar and Wettenhall, 2010). The eschewing argument supports the different arrangements that heralds PPP structure across the globe. For instance in China, Beh (nd) cited in Hayllar and Wettenhall (2010) assert the ‘so called private context in PPP is partially government-owned corporation than a pure private enterprise. In this way, the term PPP is used as a ‘language game’ that helps politicians conceal the reality of the long term financial debts they are incurring (Hayllar and Wettenhall, 2010).

There are basically three models of PPP including joint venture, financially free standing projects (concession) and private finance initiatives (Cartlidge, 2011). Joint venture and concession have witnessed expansive adoption in the Nigerian infrastructure concession regime including the oil sector. Current models of PPP used in the Nigeria road sector shows inclination towards concession. The incompatibility of this model and its cultural unfitness for the Nigeria’s system is pronounced. By concession, the users pay directly for the service (Blanc-Brude, Goldsmith and Välilä, 2006). In other words, the project is recourse financed and is financially free standing. The private finance initiative (PFI) is used to describe the service buying or ‘purchase of service contract’ (POS). This model simply makes the granting authority (government) rather than users responsible for payments, whilst demand risk is transferred to the private sector (Cartlidge, 2011). Careful examination of the Nigeria’s failed endeavours was intended to foist the burden of payment on the users of the facilities. In analysing factors associated with the failure of concession in Nigeria, issues of cultural compatibility have seen limited discussion.

This study is therefore an explorative review of PPP current practice in Nigeria using both empirical and literature based facts. The objective is to explore the areas needing further studies and to identify and illustrate that PFI can be beneficial to Nigeria as an alternative to concession. The goal of the study is a factor of importance given current dwindling resources of the states. The status quo persists in the face of wide deficit in road infrastructure need. Greater participation of the private sector using in-country special purpose vehicles is more important now than ever.

More…

To read entire paper, click here

 

How to cite this paper: Ekung, A., Okonkwo, E., Tobechi, E. (2018). Alternative Project Systems for Private Sector Participation in Road Infrastructure Delivery in Nigeria; PM World Journal, Vol. VII, Issue X – October.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/10/pmwj75-Oct2018-Ekung-Okonkwo-Tobechi-Alternative-Project-Systems.pdf

 



About the Authors


Samuel Ekung

Owerri, Nigeria

 

 

Samuel Ekung is registered Quantity Surveyor certified by Quantity Surveyor Registration Board of Nigeria. Mr. Ekung obtained his first degree in Quantity Surveying from the University of Uyo, Uyo, Nigeria with Second Class Upper Division in 2008. He bagged double Master Degrees in Quantity Surveying from the University of Salford, United Kingdom with Distinction in 2013 and Construction Management from the University of Uyo, Uyo, Nigeria in 2014. He is currently studying for PhD in Construction Management with interest in Cost Management of Sustainable Buildings in the Tropics. Mr. Ekung is deeply rooted in construction and cost management discourse. He is currently a Lecturer in the Department of Quantity Surveying Imo State, Owerri, Nigeria. Mr. Ekung is an experienced Quantity Surveyor with industry footprint in many high profiled projects. His research interests include procurement, stakeholder management and sustainability cost management. His research outputs are published in many refereed international journals and peer reviewed conferences proceedings. Samuel Ekung can be contacted at [email protected].

 



Ejekwu Tobechi

Owerri, Nigeria

 

 

Ejekwu Tobechi holds BSc. and MSc. degrees in quantity surveying and is a registered member of the Nigerian Institute of Quantity Surveyors (MNIQS). He is a lecturer within the Department of Quantity Surveying at Imo State University in Owerri, Nigeria. Ejekwu can be contacted at [email protected]