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Regulatory Commission Cautions on PPP Programme

By on March 26, 2011

The Director-General of the Infrastructure Concession Regulatory Commission  (ICRC), Engr. Mansur Ahmed, has warned that Nigeria’s Public and Private Partnership (PPP) transactions may be prone to failure if the financial modelling competencies of finance and accounting professionals in both its public and private sectors were not significantly raised.

Declaring open a three-day training programme on financial modeling and analysis organised by Urban Development Bank of Nigeria (PLC) in Abuja, Engr. Ahmed also stressed the need for adequate management capacity building for the “sustainability of our ambitious infrastructure development programmes”.

He noted that since the establishment of ICRC two years ago, “our experience with virtually all the legacy PPP projects we have examined is that their sustainability and capacity to deliver value for money are generally compromised due largely to the fact that they were structured on poorly constructed financial models or none at all”.

The director-general, therefore, commended the training initiative of the Urban Development Bank which, he described as a  conscious and concerted effort to develop for the country a crop of highly skilled and competent financial modellers that will safeguard the future of our PPP programmes.

Engr. Ahmed declared that only well-constructed financial models will help promote a robust and highly competitive PPP and other project finance markets in Nigeria.

The director-general, however, cautioned that while financial modelling was an important tool for investment analysis and structuring of PPP and privately financed projects, it must be recognized that models were mathematical constructs that seek to mimic the real world of human and market behaviour.

“We must, therefore, inject a good deal of common sense and avoid over-sophisticated models or being carried away by the elegance of the mathematics and the intoxicating power of the computer,” he concluded.

Earlier in an address of welcome, the Managing Director of Urban Development Bank of Nigeria, Mr. Adekunle Oyinloye, said that the bank was committed to its mandate of promoting infrastructural development in Nigeria.

Mr. Oyinloye said that the training programme was organized in collaboration with the Development Bank of South Africa (DBSA) and Industrial Development Corporation of South Africa (IDC) to increase capacity of Nigerian investment bankers in project financing and management.

He urged participants at the workshop to take full advantage of the training opportunity which, he assured, would be sustained by the bank.

Source : Thisday