An online news medium, Nairametrics stirred a little controversy last weekend when it inaccurately reported that the federal government has awarded the contract for the construction of the approximately 700 kilometres Lagos-Calabar coastal highway to Hitech Construction Company.
Many commentators immediately starting seeking clarifications from the Minister of Works, Engr. Dave Umahi on how the contract was awarded and if due process and relevant procurement requirements were followed before the award. However, it is necessary to point out that a more critical analysis of the news report by Nairametrics would reveal that there was never a mention of an award of contract during the press conference where the news emanated from.
The following are the true situation of things on the proposed coastal superhighway:
1. The project is not a federal government-funded projected.
2. It is a type of PPP that the Infrastructure Concession Regulatory Commission (ICRC) classify as Privately Initiated Infrastructure Project (PIIP) or an ‘Unsolicited PPP’.
3. Unsolicited PPP like this coastal superhighway passes through three phases namely:
a) PPP project development and preparation phase where the private proponent submits a bankable Outline Business Case (OBC) to the necessary MDA (in this case Ministry of Works). If the MDA accepts the OBC, it then forwards it to ICRC for review and approval. ICRC is mandated to approve or decline WITHIN 30 days (meaning it can be attended to in one day or at most in 30 days).
The ICRC issues an Outline Business Concept Compliance certificate to the MDA if it approves with the proponent paying a prescribed fee. Phase 1 is then complete.
b) PPP Procurement Phase: In this phase, the MDA (Ministry of Works) will then set up a Project Steering Committee, Project Delivery Team and appoint a PPP Project Officer for the project.
Thereafter, a Transaction Adviser would be engaged by the MDA to prepare a reference OBC, access the value for money and other baseline parameters to guide the procurement and negotiation process.
The MDA’s Transaction Adviser will then commence a procurement process leading to a competitive bidding process in which the original proponent of the PPP project will have a right of first refusal to submit and match or concede to a more responsive offer other than his offer in the original proposal.
After a preferred bidder has emerged (which can be the original proponent of the PPP project or a new entrant with a better offer that the original proponent could not match), negotiations then proceed leading to the conclusion and submission of a Full Business Case (FBC) to ICRC for review and approval. The window for this approval by ICRC is 20 days and if approved issues an FBC Compliance Certificate to the MDA.
The MDA (in this case, Ministry of Works) through the Minister will then present this FBC Compliance Certificate to the Federal Executive Council for approval. It is AFTER FEC has approved that the MDA will then sign a PPP contract with the preferred PPP project proponent (the investor). This is called the ‘commercial close’ and marks the end of the second phase.
c) PPP Implementation Phase: Following the commercial close (signing of contract), the Transaction adviser will follow through with the preferred bidder to achieve a financial close. A Financial Close refers to the point at the end of the procurement phase where the PPP contract has been signed, any conditions precedent for financing are met and financing is in place so that the Project Company can commence construction.
The MDA will then be supervising the project diligently and in conjunction with ICRC conduct periodic inspection of the project until the end of the contract.
So, in essence in the case of the coastal superhighway from Lagos to Calabar, it has not gotten to the point of contract award and signing, which is in phase two. What was witnessed between the Federal Ministry of Works and a consortium involving Hitech Construction (the PPP Proponent) is simply the start of the first phase in which the consortium presented its Outline Business Concept to the Ministry of Works.
The fact that the Minister was giving a general outline of what the project will entail is still in line with the content of an outline business case for a road construction project, which include information such as the capacity of the proponent to finance, deliver, construct and/or operate the project; a technical feasibility study; an estimated total project cost and financial model; justification of project need as well as environmental and social impact assessments.
Also, that the Minister of Works, Engr. Dave Umahi stated that the project will be completed in four years or that concrete technology will be used does not mean contract has been awarded and the four years has started counting. He is merely stating all the parameters and information around the project as part of the Outline Business Case.
If a contract has been awarded for the coastal highway or any federal project for that matter, this would be categorically announced at the Federal Executive Council and official government spokespersons will release press statements in that regard. So, I think it is necessary the people understand the processes projects (including PPP projects) have to undergo before implementation kicks off to avoid being misled by media houses who may be ignorant about these processes themselves.
Hitech Construction, a division of the Chagoury Group that is promoting the Eko Atlantic city project is simply spearheading the proposal. Hitech has constructed quite a number of PPP projects including the Lekki Deep seaport road, Lekki-Epe expressway among others.
The Lagos-Calabar coastal superhighway is an ambitious project which has gotten the endorsement of President Bola Ahmed Tinubu courtesy of the excitement shown by the Minister for Works regarding the project. The project’s right of way is a 100-meter corridor, with provisions for a rail line in the middle of the road spanning about 20 meters. Each carriageway will be divided into four lanes. The service lanes are planned to be 10 meters wide, while the main carriageway will span 14 meters. It is understood that Hitech Construction has already secured the necessary funding commitment in a bid to demonstrate its financial capacity and readiness to deliver on this major infrastructure project.
I am very expectant like most progressive-minded Nigerians that this project and other high ticket infrastructure projects planned across the country would see the light of the day. These projects apart from helping to bridge our infrastructure deficit with no undue financial burden on the federal government, will equally spur economic growth and provide jobs. No matter the angle you look at it from, all I see are exciting days ahead.