Foreign firms lack the “emotional capital” required to develop Nigeria’s infrastructure.
These were the words of the Chairman of the Resort Group and Pro-Chancellor of the University of Lagos, Dr. Wale Babalakin (SAN), at the 60th Anniversary/8th Fellowship Conferment Lecture and Ceremony of the Nigerian Society of Engineers in Abuja.
Delivering a lecture titled: “Constraints of Implementing Infrastructure Projects through Public Private Partnership,” Babalakin urged Nigerian engineers to sit up and insist on “certain parameters and minimum quality of work”, adding that most of the things foreign firms do in Nigeria are things they cannot suggest in their countries.
Using the Lagos-Ibadan Expressway as a case study, the lawyer said the contractor, Julius Berger Plc, was just resurfacing the road.
He described the work done as “completely inappropriate and outdated”.
Babalakin’s words: “The road cannot accommodate the geographical growth that has taken place on the road since 1977. This includes the emergence of towns like Ibafo, Isheri, Mowe and the Redeemed Church Camp. The road with the heaviest traffic in Nigeria is being built without the necessary accompanying facilities. Julius Berger is constructing a road in Nigeria that it can never contemplate building in Germany.
“Our (Bi-Courtney Highway Services Limited, BHSL) design provided for entry and exit to these towns without obstructing the flow of traffic on the expressway. We realized that simply resurfacing the road as is being done now by the Ministry of Works is a disservice to Nigeria. The reason given for the termination of BASL’s concession, which is the need to complete it expeditiously, has not been realized six years after. Nigerians continue to suffer on that road till date.”
Babalakin explained that no government has enough money to provide for all the needs of its people, noting that private investors must be encouraged to build sustainable projects so that the limited government resources can be used for other areas which are not commercially viable.
“The mindset of the average Nigerian when a Nigerian invests in infrastructure is that he’s taking government money away and that mindset must be corrected. We built the Murtala Muhammed Airport Terminal 2 (MMA2) and we’ve been running at a loss for the past 12 years but to the undiscerning person, who does not know the cost of putting that infrastructure in place, we are making a lot of money,” Babalakin added.
Urging the government to be consistent and respect agreements reached with investors, Babalakin said anytime the government violates the terms of a contract, the investor’s banker panics, his cost of borrowing increases, his marketability reduces and he will have to pass it on to the project.
Giving example of the Victoria Garden City in Lagos, Babalakin said the project was initially designed for mid-income earners but owing to incessant challenges from the Lagos State Government and the unfriendly environment to the investors, the project cost increased and the houses became unaffordable to mid-income earners.
He said the housing crisis in Lagos would have been non-existent if the system was investor-friendly.
On his experience at MMA2, Babalakin said: “As soon as we completed the project, our partner, the Federal Airports Authority of Nigeria, started violating the terms of the agreement. It began to run another terminal next door to us, taking away 60 per cent of our traffic, totally disrupting our cash flow and making it extremely difficult for us to meet our obligations on the project. FAAN created a new terminal, now known as the General Aviation Terminal. The grantor of a concession is using government money to compete with his concessionaire/private capital for the same traffic. This is an unfair scenario and very discouraging to investors.
“We went through hell. We were paying back the bank N1.8b per quarter and we were generating N300m per quarter because of the violation of the agreement. So we were seeking N1.5b from other sources which is something I don’t wish on my enemy.
“If we had been allowed to continue our vision in Lagos, we would have completed Phase 2 of the terminal, which has been fully designed. We also offered to build an Independent Power Plant (IPP) at the airport long before the government contemplated privatizing power. We had planned to provide power for the entire airport complex including the International Airport and the Airforce Barracks. The powers that be did not accept our proposal but proceeded to spend more money than the cost of our IPP on buying generators, which consistently breakdown, causing an embarrassment to the nation because of power failure at the International Airport.”