Nigeria has lost $5.7bn to shady concessions, PPP projects – Reps

Over 5.7billion has been lost to Public-Private Projects, PPP and property concession deals in the country, in the last few years, the House of Representatives disclosed on Tuesday.

Besides, the legislators also revealed that  government, is losing over $90million to the Build-Operate-and-Transfer deal between aviation agencies and private investors.

The Lawmakers made the separate disclosures,  at an Inaugural meeting of the “Ad hoc Committee to Investigate the Governing Lease of Federal Government-Owned Assets”, headed by Rep. Daniel Asuquo(PDP-Cross River).

“Categories of public infrastructure that benefit from PPP include power generation plants, power transmission distribution network, roads and bridges, sea ports, airports, railways, inland container depots, logistics hubs et cetera.

“Beautiful as these may sound, it has been discovered overtime that the realization of the federal Government’s objective, may become a tall order if appropriate checks and balances are not put in place by way of oversight.

“A case in point is that of the Murtala Muhammed Domestic Airport Terminal 2 (MMAZ), the domestic terminal of the international airport situated in Lagos and its ancillary facilities which were developed under a BOT agreement. Regrettably, the Federal Government is losing over $90.5 Million annually due to the shoddy agreements between the Federal Airports Authority of Nigeria (FAAN) and its concessionaire at both local and international wings of the Murtala Muhammed Airport (MMA) Lagos”.

“Also in the Aviation Sector, in March 2021, the Secretary General of the Association of Nigerian Aviation Professionals (ANAP) lamented in a document addressed to the Minister of Aviation, the blatant refusal of concessionaires to honour their agreements on land lease shop rentages, concessions and on BOT arrangements. Some of the agreements with the concessionaires made up of Traders, Vendors and Tenants at the Airports have elapsed for more than five (5) years without renewal.

“In effect, the concessionaires have either not been paying rates or have been paying rates below the current going rates in airports across the world.

“A similar situation obtains in the maritime sector where the Nigerian Government has concessioned 26 ports in Nigeria to private companies. The tenures of the NPA concession agreements range from 15 to 25 years and the estimated revenue to government from the concessions is estimated at over $6.54 Billion over the period.

“However, JV companies have allegedly only realized an estimated sum of $3 Billion since 2005 out of the total sum. The story and picture of the scenario is the same in almost all Federal Government agencies where concession agreements were entered into with private companies. 0n the average, the Nigerian economy has lost over $5.7Billion from unfavourable and non-transparent Federal Government concession and lease agreements since its inception”, they stated.

The Federal Government of Nigeria has been using this PPP model to anchor its efforts to diversify the economy.

The common types of PPP transaction in Nigeria are service contracts, management contracts, concession and leases which could take the form of Build Operate and Transfer (BOT), Build Own Operate (BOO), Equip-Operate Transfer (EOT), Build-Transfer Operate (BTO) Build—Own Operate Transfer (BOOT).

Categories of public infrastructure that benefit from PPP include power generation plants, power transmission distribution network, roads and bridges, sea ports, airports, railways, inland container depots, logistics hubs et cetera.

The Committee was set up by the House to among other things: Ascertain if due process was followed in the concession agreements as well as ensure that subsequent concession agreements that will be entered into by the Federal Government follow due process; Look at the market value when the agreements were made vis-a-vis the present market value;

Track payments into the Concession Account to make sure that the Federal Government is not short-changed out of its entitlements under the agreements; Find out if the concessionaires are fulfilling their own obligation in the concession agreements especially as it pertains to servicing and maintenance of assets;

Examine the duration and status of lease/concession agreements with a View to noting the agreements that have elapsed and due for renewal;

Find out if the concessions were awarded to companies that have the technical, financial and managerial capacity to do so.

Credit Vanguard

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