Owing to declining resources to fund critical infrastructure in the country, federal government is considering investors for its road projects in the country with the Lagos-Ibadan expressway topping the list.
Adekunle Oyinloye, managing director, Infrastructure Bank who noted that the falling oil price has affected funding of the Lagos-Ibadan road said that some investors had already shown interest in the rehabilitation of the Lagos-Ibadan Expressway.
The Lagos-Ibadan expressway was constructed in 1978 and was the first tolled road in the country though not operated as one. The road is currently under rehabilitation and the delay in its completion is taking toll on the users of the road that links Lagos to other parts of the country.
The road is being rehabilitated by two construction firms at a cost of N167 billion Julius Berger is handling section one of the road, stretching from Shagamu interchange to Lagos while RCC is awarded the section two stretching from Shagamu to Ojoo in Ibadan.
The road was initially concessioned to Bi-Courtney before the award was cancelled by the federal government.
“The rehabilitation of the road is now based on private-public partnership considered to be the option that would not stop the project”.
The TIB boss said that if it had been operated on the concept of a tolled road, the proceeds would have been used for its rehabilitation and continuous maintenance.
Government took the option of PPP because of the concern on how the road rehabilitation would be delivered in four years.
“Then the idea was how was government was going to fund it.
“Government was determined to fund it from the budget, but at that time government did not know that the price of oil would fall.
” As a development finance institution, owned by government and private sector, we were concerned about how the road would be delivered in four years.
“We then decided that may be this is our first opportunity to support the government to deliver on its promises. (
Meanwhile, the bank is looking to create an asset management subsidiary to manage portfolios of private investors in infrastructure projects in the country.
He said that the TIB Assets Management Company would assist potential investors to manage their investments in infrastructure more professionally.
Oyinloye said that funds available to the company would be better managed by professional fund managers or made available on the capital market as quasi or private equities.
He said that the bank’s duty in the whole arrangement would be to see that projects were well conceptualised, dissected and de-risked to make them bankable.
The bank chief executive said that the benefits of an assets management company was to give investors clarity as to the timeframe on when to go in and to exit from investments.
“Our job as infrastructure bank is to take them through that process and create bankable projects with clear exit for debt providers, investors, quasi equities and others.
“We are so friendly with those own funds and who are looking for where to invest with a clear clarity as to when and how to exit.
“Our shareholders’ funds is just to enable us to run when we have ideas initiated by the bank.
“The funds provide the initial capital for the bank to run projects such that fellow investors would come in,” he said.
Comments are closed.