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Petroleum Industry Impact on Nigeria’s Road Infrastructure

By Fred Ojiegbe

Appreciable progress has already been made in the first phase of road infrastructure development under the Tax Credit Scheme initiative of the Federal Government, which is being financed jointly by the Nigerian National Petroleum Company (NNPC) Limited and the Federal Inland Revenue Service (NNPCL/FIRS).

And to push forward this developmental agenda during the eight-year tenure of President Muhammadu Buhari, the implementation of the second phase of the rehabilitation and construction of 44 critical roads across the country was discussed earlier in February, as the Minister of Works and Housing convened a meeting of stakeholders, while also unveiling the roads to be upgraded.

The Meeting came barely a fortnight after the approval of the memorandum on the proposal by the NNPC and its subsidiaries, the NNPC Exploration and Production (NEPL) and the NNPC Gas Infrastructure Company Limited (NGIC), to undertake the rehabilitation of the 44 roads, which are spread across the six geopolitical zones of the country.

The selected roads, amounting to 4,554.19 kilometres, include those in the South-South zone of Nigeria, which are the Completion of Benin-Warri Dual Carriageway in Edo/Delta States; the East-West Road (Section I), Warri-Kaiama in Delta/Bayelsa States; the East-West Road (Section II –I), Port Harcourt-Ahoada in Rivers State; the East-West Road (Section II-II), Ahoada-Kaiama in Rivers/Bayelsa States; and the East-West Road (Section III), Onne Junction-Eket in Akwa Ibom State.

Others are the Dualization of East-West Road (Section IV), Eket-Oron also in Akwa Ibom State; the Upgrading of 15-kilometre Port Harcourt-Onne Junction (Section IIIA) in Rivers State; the Construction of Eket Bypass (Dual Carriageway) in Akwa Ibom State; the Dualization of Lokoja-Benin Road: Obajana Junction-Benin Section II, Phase I in Okene-Auchi, Kogi/Edo States; the Dualization of Lokoja-Benin Road: Obajana Junction-Benin Section III Phase I in Auchi-Ehor, Kogi/Edo States; the Dualization of Lokoja-Benin Road: Obajana Junction-Benin Section IV Phase I in Ehor-Benin City; and the Nembe-Brass Road in Bayelsa State. All the roads amount to a total of 1,308.3 kilometres.

An analysis of the road projects under review indicates that the North East Zone has a total of 1,054 kilometres, consisting of the Rehabilitation of Yola-Mubi-Maiduguri Road in Adamawa/Borno States; the Rehabilitation of Maiduguri-Monguno Road; the Rehabilitation of Numan-Jalingo Road in Taraba/Adamawa States; the Rehabilitation of Yola-Hong-Mubi Road in Adamawa State; the Reconstruction of Bali-Serti-(Gashaka)-Gembu Road in Taraba State; and the Rehabilitation of Yashi – Deguri-Yalo Road in Bauchi State.

For the North Central zone, there is a total of 763.13 kilometres of roads being worked on, consisting the Rehabilitation of the Minna-Zungeru-Tegina-Kontagora Road in Niger State, Section I: Minna-Tegina; the Rehabilitation of Minna-Zungeru-Tegina-Kontagora Road in Niger State, Section II: Tegina-Kontagora; the Shendam-Yelwa-Mato Junction-Taraba Border with Spurs in Plateau/Taraba States; the Dualization of Suleija-Minna Road in Niger State: and the Dualization of Lokoja-Benin Road: Obajana Junction-Benin Section I Phase I: Obajana-Okene in Kogi State.

Others include the Reconstruction of the Existing Pavement and Completion of the Additional Pavement on the Dualization of Abuja-Lokoja Highway Section Ill: Abaji-Koton Karfe Road in Abuja/ Kogi State; the Construction of the Jarmai-Bashar-Zuruk-Andame-Karim Lamido Road in Plateau and Taraba States; as well as the Reconstruction and Expansion of Mararaba-Keffi Road in Nasarawa State.

Then, the North West Zone has a total of 980 Kilometres of roads being reconstructed, consisting of the Dualization of Zaria-Funtua-Gusau-Sokoto Road in Kaduna, Katsina, Zamfara and Sokoto States: Section I Zaria-Funtua-Gusau; the Dualization of Zaria-Funtua-Gusau-Sokoto Road in Kaduna, Katsina, Zamfara and Sokoto States: Section II Gusau-Sokoto Road; the Dualization of Zaria-Funtua-Gusau-Sokoto Road in Kaduna, Katsina, Zamfara and Sokoto States: Section II Gusau-Sokoto Road in Zamfara State; and Section III Gusau-Sokoto Road in Zamfara and Sokoto States.

In addition there is also the Dualization and Construction of Kano-Kwanar Dauja-Hadejia Road in Kano/Jigawa States, Section I Tsalle-Hadejia; the Dualization and Construction of Kano-Kwanar Dauja-Hadejia Road in Kano/Jigawa States, Section II Kano-Tsalle; and the Rehabilitation of Kaduna-Pambeguwa-Jos Road in Kaduna/Plateau States.

For the South East zone of the country, a total 297.52 kilometres of roads are being repaired, consisting of the Rehabilitation of Aba-Owerri Road NNPC Depot Expressway, Abia State; the Rehabilitation of Otuocha-Anam-Nzam-Innoma-Iheaka-Ibaji Section of Otuocha-Ibaji-Odulu-Ajegwu in Anambra State; the Construction of Ihiala-Orlu-Umuduru Road (Ihiala-Amaifeke Section) and the Completion of Spur in Isseke Town-Amafuo-Uli in Imo/Anambra States.

Also covered with the South East region for upgrade is the Rehabilitation of Old Enugu-Onitsha Road (Opi Junction-Ukehe Okpatu-Aboh Udi-Oji to Anambra Border) in Enugu State; the Construction of Omor-Umulokpa Road in Anambra and Enugu States; the Rehabilitation of Ozalla-Akpugo-Amagunze-Ihuokpara-Nkomoro-Isu-Onicha (Enugu-Onicha) with a Spur to Onunweke in Enugu State; and the Rehabilitation of Old Enugu-Port Harcourt Road (Agbogugu-Abia Border Spur to Mmaku) in Enugu State.

Down to the South-West, there is a total of 150.56 Kilometers of roads being upgraded, consisting of the Rehabilitation and Expansion of Lagos-Badagry Expressway (Agbara Junction-Nigeria/Benin Border) in Lagos State; the Dualization of Akure-Ita Ogbolu-Iju-Ado Ekiti State Road, Section I: Akure-Ita Ogbolu-Iju-Ekiti State Border in Ondo State; and the Dualization of Akure-Ita Ogbolu-Iju-Ado Ekiti State Road, Section II: Ita Ogbolu-Iju-Ado-Ekiti in Ekiti State.

In his remarks, Fashola described the public-private sector agreement responsible for the efforts to make Nigerian roads better as a very defining legacy for President Muhammadu Buhari. He pointed out that the impact of the “very innovative investment policy” would help Nigeria to really do business both locally and internationally, being a sound infrastructure-based investment policy on which business is done.

Babatunde Fashola

The Minister recalled that back in 2015 at the inception of the Buhari Administration, contractors were being owed two to three years of payment arrears, resulting in the shutdown of many project sites and laying off of construction workers by the companies.

However, the Buhari administration, he said, has arrested the situation by budgetary expansion from N18 billion for the whole of Nigeria’s roads by the previous administration to N260 billion in 2016.

 “You were being owed”, the Minister reminded the contractors at the meeting, adding that “some of the complaints that I heard at the first meetings that I had with many of you when I was first appointed Minister were that you were paid only 10 percent advance payment two or three years ago. That was how bad the construction industry was when we started.” He added that some of the roads were contracted back to “the private sector” to go and raise funds to finance them.

Fashola, who also recalled that the roads contracted to the private sector included the Lagos-Ibadan Expressway and the Second Niger Bridge, wondered “where the private sector was going to raise hundreds of billions of naira to fund the road projects,” but concluded that the Buhari administration had to utilize more practical funding initiatives like SUKUK.

Recalling the controversies and criticisms that followed the borrowing option which the administration chose to fund the road and bridge projects, the Minister, who acknowledged the concern of the people over debt, however, added that the debts “are building roads, bridges, airports and seaports, as well as other assets that will last and sustain Nigeria’s development for the next 50 years”.

He pointed out that the administration also met debts on ground when it took power in 2015 but also noted that the difference between it and its predecessor was that the debts it met on assumption of office in 2015 had no assets attached to them, while the Buhari administration invested its debts in infrastructure assets.

Fashola explained that the choices at the time were either to borrow or increase taxation, noting that without any of the choices, the economy could have collapsed.

Faced with these options, the Minister said that the Buhari-led administration chose borrowing and also utilized an expansionist fiscal budget from N18 billion to N260 billion. The government thereafter supported the SUKUK and also went ahead to recover some of the monies taken away from Nigeria, the Minister confirmed  “building the Abuja-Kano Highway, Lagos-Ibadan Expressway and the nearly completed 2nd Niger Bridge.”

Giving a brief history of the NNPC/FIRS agreement, Fashola, who said that NNPC Limited was investing its resources into infrastructure, explained the ideology of the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme as “a new model of partnership with the private sector companies, whereby government is saying, give me my tax in advance and I will invest it in infrastructure. 

“The innovation shows the clear difference between two different government policies and it shows how they affect your businesses.”

On the 44 roads, Fashola, who explained that many of them have been contracted but without funds to execute them, told the contractors that “this intervention, therefore, is to complete those roads and NNPC Limited is providing the funds.

Valuechain learnt that there are 21 roads in Phase One of the Scheme, covering 1,804.6 kilometres, and there are other interventions by other groups like the Dangote Group, the NLNG Group in Bodo-Bonny, the MTN Group in Enugu-Onitsha Highway and others, representing a very defining moment for the construction industry and allied industries.

The Minister appealed to all the communities encroaching on the right-of-way along the road corridors to vacate the places, as all the claims for compensation by people who have encroached on such right-of-way would not be honoured but they must quit the encroached places or risk forceful ejection.

His words: “Our right-of-way is 45.75 metres from both sides of the centre line. Many of the people who have built petrol stations and shops are inside our right-of-way. We will not pay compensation to those who have trespassed into our land, so they must leave.”

In addition, Fashola advised that where the government needs right-of-way outside its zone, state governments, village and traditional heads should appeal to their people to allow passage. He also added that “these roads are not taking away your lands. Rather, they are bringing prosperity to you and we expect that in the process of nation-building, everyone must be ready to contribute something.”

Highlighting the benefits of the revitalized construction industry to the economy, the Minister said “we have increased the number of quarrying companies and sand quarrying companies have increased from 247 to 302, while granite quarrying companies have also increased from 334 to 655 and those who are quarrying laterite have increased from 108 to 259.”

Describing quarrying as a driver of the construction industry, the Minister who said it is impossible to build roads without laterite and granite, added that “this translates to jobs as we build more quarries. I am sure members of NARTO and NURTW who are here can begin to calculate how many truck trips and how much income that could bring.

“I was at their AGM recently and the least they could say was “business is good, and this is the impact of a policy that is driving the economy”.

The Minister also cautioned contractors against variation in the contract, noting that the agreement was very specific on the variation. He declared, “So if you are going to ask for variation, please, opt out and say you cannot carry on with the programme. That is one of the reasons we are signing the agreement, and that is from the investors’ side because they are not factoring in variation.”

He appealed to the financiers for timely payment of certificates for work done, saying that “we need to improve the governance side of payment so that when receipts come, payments should not be delayed unnecessarily.

“Delayed payments increase the chances of variation. So, it is critical now that we also, with dispatch, sign the contracts when we are able, start the work so that we can process all the advance payments”.

Fashola also warned the contractors that quality must not be compromised, as payments will not be made for job done by contractors when consultants query the quality of their jobs.

Those who spoke at the event included the Group Chief Executive Officer of NNPC Limited, who was represented by the Chief Financial Officer, Umar Ajiya; the Chairman of the FIRS, Mr. Mohammed Nami, who all pledged to ensure the success of the Scheme.

Others were representatives of the contractors and the President of NARTO, as well as the President of NURTW, who hailed the Buhari administration and the Minister for driving the economy positively through massive investment in infrastructure. According to the NARTO President, “this Minister has set a record of achievements”.

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