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NSIA, FG still discussing Lagos-Ibadan Expressway financing deal

By on March 1, 2014

The Nigeria Sovereign Investment Authority has not finalised the details of its involvement in the redevelopment of the Lagos-Ibadan Expressway, but is discussing with the Federal Government through the Ministry of Works to work out the modalities.

The agency had announced on Wednesday that it was interested in financing the redevelopment of the road as well as the Second Niger Bridge in Anambra State.

However, the Managing Director, NSIA, Mr. Uche Orji, said at a news conference in Lagos on Thursday that the Sovereign Wealth Fund agency was interested in financing the Lagos-Ibadan Expressway project but the details, including the amount that would be committed to it, were still being worked out.

He said the investment would be made through its NSIA subsidiary, Motorways Company Limited.

The reconstruction of the Lagos-Ibadan Expressway will be largely financed by the private sector, with investors raising the sum of N117bn.

The Federal Government had made provision for a total of N50bn, representing 30 per cent of the N167bn cost of the project, with half of that amount included in the 2014 budget proposals, while the balance will be included in the 2015 appropriation.

Private investors and financiers led by the Infrastructure Bank will raise the N117bn balance needed to complete the project.

Orji said the authority had been negotiating with the Ministry of Works on a bankable agreement on the Lagos-Ibadan Expressway project.

“We are neck-deep in negotiations regarding Lagos-Ibadan Expressway as our other core infrastructure investment. We have also been working on this for over 10 years and hopefully, we can reach an agreement on a bankable structure,” Orji added.

He also said the NSIA, through the Motorways Investment Company Limited, had signed an agreement with Julius Berger Nigeria Plc for the construction of the Second Niger Bridge.

The project, which is projected to cost N117bn, according to the Minister of Works, Mr. Mike Onolememen, will be constructed with an additional 39-kilometre dual carriageway along the Onitsha-Enugu axis.

The Federal Government had said it would provide an irrevocable payment guarantee for the Infrastructure Bank to enable it to raise N25bn as provided in the 2014 budget proposals for the Lagos-Ibadan Expressway project pending the release of the money.

According Orji, the NSIA, which is now the lead financial partner in the second Niger Bridge project, will be investing in it and in the Lagos-Ibadan Expressway through its Motorways Investment Company.

“Today, we announce our first Motorways Investment in the second Niger Bridge. We are the lead financial partner in the consortium with a responsibility to invest our equity and attract other equity partners to raise debt for this project,” he said.

Under the partnership with Julius Berger, Orji said the NSIA was negotiating the concession agreement to ensure that construction costs would be bankable in the current structure, adding that between its own and Julius Berger’s equity and soft commitment from other equity partners as well as the government viability gap funding, the commencement of the project should be done in March.