UNLOCKING RAPID DEVELOPMENT OF TRANSPORT INFRASTRUCTURE IN NIGERIA - - PowerPoint PPT Presentation

UNLOCKING RAPID DEVELOPMENT OF TRANSPORT INFRASTRUCTURE IN NIGERIA

I n d u s t r y O v e r v i e w a n d P P P O p p o r t u n i t i e s N O V E M B E R 2 1 5 Wale Shonibare Managing Director, Investment Banking United Capital Plc

“The World Bank estimates that every 1% of government funds spent

• n physical infrastructure stock leads to an equivalent 1% increase in

GDP”

Outline AGENDA

Transport Sectors

2

Financing Needs & Challenges

3

Experience from other Countries

4

Background

1

Key Structuring Issues for Rail in Nigeria

5

Case Studies - Key Success Factors

6

Key Next Steps

7

4 4

Background

• The international benchmark for infrastructure stock

as a % of GDP is 70%. Nigeria currently stands at 25%

• In order to bring Nigeria up to the benchmark by

2043, there is need for expenditure of ~USD 2.9 trillion

• It is expected that 48% of the required funding

requirement will come from the private sector. This amounts to ~USD 1.4 trillion

• The 2015 Africa Competitiveness

Report by the World Economic Forum ranks Nigeria‟s infrastructure at 134th out of 144 countries

Background on Infrastructure

Other emerging markets Source: National Integrated Infrastructure Master Plan (NIIMP), ITF, GWI, MckinseyGlobal Institute analysis, United Capital Research BRICS (Excluding Russia)

Nigeria needs USD 78 billion over the next four years to finance its infrastructure deficit with USD 37 billion expected to come from the private sector

25% 47% 58% 76% 87% 70% 80% Nigeria Brazil India China South Africa Indonesia Poland

Infrastructure Stock as a % of GDP

Benchmark

Funding Source % Amount (USD Bilion) Private 48 1,392 Federal 29 841 State & Local 23 667 Donor 0.4 11.6 TOTAL 2,911.6

Expected Infrastructure Spend (2014 – 2043)

5 5

Background

• Nigeria’s expenditure on transport infrastructure

as at 2013 stood at USD 2.3 Billion.

• This level of expenditure has created a funding

gap of ~USD 800 Billion which can be covered

• ver the next 30 years according to the NIIMP.
• In line with this, ~USD 22 Billion is needed over the

next 4 years translating to an average of ~USD 5 Billion per annum.

Transport Infrastructure

1.9 2 2.1 2.3 2010 2011 2012 2013*

Spend on transport infrastructure (USD Bn)

Source: 2013 National Integrated Infrastructure Master Plan (NIIMP), United Capital Research 2013* - Current figures as at NIIMP formulation

Transport Sector Funding Requirements (USD Billion) Roads 350 Urban Mass Transit 250 Railway 75 Maritime 50 Aviation 50 Maintenance Cost

• ver the period

37 TOTAL 812

Infrastructure spend requirements over the next 30 years

6 6

• Railway

systems encourage inter-regional development as population and urbanization are on the increase.

• Nigeria has

3,505km of railways which is currently insufficient and underutilized

Source: 2013 National Integrated Infrastructure Master Plan (NIIMP), CIA Factbook, NRC Article

0.4 1.9 0.4 1.8 0.2 Nigeria India Brazil South Africa China

Rail infrastructure stock

Km rail per 100 square km

• The 2015 Global Competitiveness Index of the

World Economic Forum ranked the quality of Nigeria’s rail infrastructure at 100th out of 144 countries.

• To bridge this gap ~USD 75 Billion is required
• ver the 30 years of the NIIMP. USD 19 Billion out
• f

this would be used to execute new construction of more than 6,000km of standard gauge rail while the rest will be used for rehabilitation of existing lines and development

• f rail stations and other rail services.

Rail Transport

Construction Location Length (Km) Region

1898-1901 Lagos-Ibadan 193 South- West 1901-1909 Ibadan-Jebba 295 1907-1911 Kano-Baro 562 North 1909-1915 Jebba-Minna 255 1914-1916 Port Harcourt- Enugu 243 East and Central 1922-1927 Kafanchan-Jos 179 1958-1961 Kafanchan-Bauchi 238 North- East 1961-1964 Bauchi-Maiduguri 302

~56% of the rail lines (km) in Nigeria were constructed during the Colonial Era

7 7

• Nigeria has the largest road network in West Africa and

the second largest, south of the Sahara with an estimated 200,000km

• f

road network connecting villages to cities.

• The 2015 Global Competitiveness Index of the World

Economic Forum ranked the quality of Nigeria’s road infrastructure at 125th out of 144 countries.

• The road sector accounts for the lion’s share of required

transport infrastructure investments. Over the 30 years of the NIIMP, total investment required is ~USD 350 Billion for upgrading and expansion of existing road structure.

21 100 21 30 Nigeria India Brazil S Africa

Road infrastructure stock

Km road per 100 square km

N88 Billion loss due to increased Vehicle Operating Costs N12 Billion loss due to delayed turn-around and increased travel time N75 Billion loss due to reduction in asset value Total annual loss to the economy

• approx. N175 Billion

Source: National Integrated Infrastructure Master Plan (NIIMP), United Capital Research, Federal Ministry of Works Investors Manual

Consequences of Road Sector Decay

Road Transport

90% 10%

Freight and Passenger Movements

Roads Others

8 8

• Required investments for the aviation sector

amounts to ~USD 50 Billion comprising of rehabilitation and remodeling of the eleven (11) airports in Nigeria.

• The 2015 Global Competitiveness Index of the

World Economic Forum ranked the quality of Nigeria’s aviation infrastructure at 121st out of 144 countries.

• Government plans to concession the country’s

major airports to the private sector under the Build-Operate-Transfer (BOT)model.

Project Title PPP Structure PPP Company Domestic Terminal at Murtala Mohammed Airport, Lagos Concession /BOT Bi-Courtney Limited Lekki-Epe International Airport DBFOM N/A Nnamdi Azikiwe International Airport, Abuja Concession /BOT Abuja Gateway Consortium (Contract is currently revoked)

Aviation PPPs

Aviation

9 9

Urban Mass Transit

CABLE CAR

• The 12.85 km Lagos Cable Car Project is currently

the only cable car initiative ongoing in Nigeria for urban mass transit.

• It is expected to cost USD 250 Million under a

Concession/BOT PPP structure being executed by Ropeways Transport Limited.

• This project seeks to have 9,000 vehicles taken off

the roads each day, thereby alleviating congestion and reducing pollution.

Source: Trico Capital

Oke Afa Festac Mile 2 Satellite Town Lasu Marina Liverpool Olodi Apapa Ebute Ero Iddo IBB

Oworonsoki

Ijede Badore West Lekki Ikorodu Falomo Bridge

Mile 12

West Line Central Line Apape Line North Hopper Line North Direct East Line Iddo - Ebute Ero Crossing

Proposed Lagos State Ferry Service route NIIMP indicates a finance gap of USD 300 million

10 10

• The 2015 Global Competitiveness Index of the World

Economic Forum ranked the quality of Nigeria‟s port infrastructure at 110th out of 144 countries.

• Required investments over the 30 year period of the NIIMP

amount to ~USD 30 Billion of which sea port infrastructure would represent ~USD 25 Billion .

• Nigeria currently has 6 major ports: Lagos Port, Tincan

Island Port, Rivers Port, Delta Port, Calabar Port and Onne Port.

• Bureau
• f

Public Enterprises concluded the Seaport Concessioning Programme in 2006 which brought in the current set of private sector operators in Nigeria.

0.15 1.3 2.8 5.9 9.7 28.1

5 10 15 20 25 30

Nigeria S/Africa Brazil Russia China India Maritime Sector Contribution to GDP of Developing Economies (2012)

Port Infrastructure Needs in Nigeria:

• Rail Lines
• Electricity
• Marine services
• Development and maintenance of quay walls
• Towage and pilotage services
• Bunkering facilities
• Inland waterway fleet
• Road network

Maritime

Source: 2013 National Integrated Infrastructure Master Plan (NIIMP), United Capital Research, Federal Ministry of Works

11 11

Financing Needs & Challenges

• With

around 48% expected to come from the private sector, about USD 1.4 trillion will be required over the 30 year period.

• The sources of finance are as follows:

‒ Local project sponsors ‒ International project sponsors ‒ Local banks ‒ International banks ‒ Local institutional investors ‒ International institutional investors ‒ Multilateral finance organizations

• However, there are issues to be resolved in order to take full

advantage of the options available

• We need to foster an environment that encourages sustainable

investment in infrastructure.

48% 23% 29% ~0.4%

Infrastructure spend funding source

Private State & Local Federal Donor

Financing Needs for Transport Infrastructure

Source: National Integrated Infrastructure Master Plan (NIIMP)

12 12

Local Project Sponsors

• Often inexperienced; lack of credible track record

International Project Sponsors

• Little local knowledge; very risk averse; concerned about transparency

Local Banks

• Short –term focus due to asset liability mismatch; inadequate access to long-term capital;

need to build human capacity; high interest rates International Banks

• Cyclical – fickle appetite; introduces currency risk

Local Institutional Investors

• Lack access to long-term investment opportunities; underdeveloped corporate bond

market International Institutional Investors

• Little local knowledge; lack access; require quick exit

Multilateral Finance Institutions

• Slow cumbersome processes; country limits; many strings attached

Private Sector Financing - Challenges

13 13

Slow implementation of the National Integrated Infrastructure Master Plan

• The National Integrated Infrastructure Master Plan (“NIIMP”) (covering 2014 to

2043) envisages a total investment outlay of USD 2.9 trillion to bring Nigeria’s infrastructure stock to the international benchmark of 70% of GDP by 2043. Limited Budgetary Allocation to Transport Infrastructure

• The budgetary allocation to the Ministry of Works stood at 2.26% of the 2014

budget with road infrastructure being allocated a paltry 0.3% Appropriate Macro/Micro Economic Conditions

• Encourage stable exchange rates, low inflation, low interest rates; build out yield

curve; pensions reform; regulate effectively; sanctity of contract; tax incentives, capital markets reforms

Public Sector Financing - Challenges

14 14

Financing Needs & Challenges

Source: FMDQ OTC as at 26/10/15

Maturity (Years)

0.81 1.85 2.59 4.30 8.38 14.74 18.73

Yield

10.70% 12.74% 13.02% 13.32% 13.41% 15.52% 13.95%

8.00 10.00 12.00 14.00 16.00 0.81 1.85 2.59 4.30 8.38 14.74 18.73 Yield

Federal Government of Nigeria Yield Curve

Yield (%) Years to Maturity

The Domestic NGN Yield Curve

15 15

Matching institutional investors with infrastructure projects Enhancing the marketability/liquidity of infrastructure projects

• Enhance the projects through:
• Financial Guarantees
• Political Risk Insurance
• Liquidity Facilities
• Financial Engineering/Transaction Structuring
• Securitisation (converting the projects into tradable securities)

Reducing the cost of project related financing

(USD 78.1 bn)

Nigeria‟s infrastructure investment requirement

• ver the next

four years

(USD 23.9 bn)

Pension Funds available for investment

Institutional Investors

• Cash rich
• Long-termInvestment horizons
• Relatively stable returns
• Low risk tolerance
• Includes Pension Funds, Other

Fund Managers and Insurance Companies

(USD 108 bn)

Aggregate Market Cap of listed Debt and Equity securities on THE NSE

8 10 12 14 16 18 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Percentage Month FGN 10yr Bank Loans

Capital Market Solutions

Source: Bloomberg, United Capital Research

16 16

Legal Framework Sources of Finance Infrastructure Financing Institutions Government Support Incentives and Reliefs Sector-Specific Initiatives Project Development Appropriate Risk Allocation This sect ion fo cuses

• n

measures t aken by

• t her

count ries t o facilit at e infrast ruct ure development by t he privat e sect or

Experience from other Countries A B C D E F G H

17 17

S/N Initiative Precedent 1. Clear regulatory framework. Amendment of regulatory frameworks and issuance of regulat ions and clarity of procurement requirements is necessary t o ensure a robust framework t hat attracts financing. Japan/ Unit ed Kingdom 2. Standardised Framework. The development of st andardized laws, documents, guidelines and manuals aid t he process of project development and assure part icipants of uniformity and predict ability on projects. India/ Unit ed Kingdom 3. Institutional Capacity Building. MDAs should be t rained on private part icipation in infrast ructure financing t o enable t hem st ructure bankable projects and regulate appropriately. The PPP Resource Centre could be enhanced t o pool expert ise and resources for ut ilisation across MDAs. Unit ed Kingdom/India Legal and Regulatory Framework

Experience from other Countries A

18 18

Sources of Finance S/N Initiative Precedent 1. Infrastructure Banks/Specialised Development Banks. Government est ablished/supported financial institutions with a mandate to fund development of infrastructure. It could involve grant of t ax-exempt status t o debentures issued by infrast ructure banks. Unit ed St ates/ Malaysia/India- IIFCL/ Brazil 2. Financial Guarantee Institutions/Monoline

• Insurers. Established

financial guarantee institutions can raise credit rating of bonds that would normally be below invest ment grade by lending t heir own rat ings t o bond issues. Malaysia/ Chile/Brazil 3. Emphasis on Early Stage Funding. Establishment of a fund to cater for early st age development funding would improve access to capital and ult imately t he probability of project financing success. Government also can play a role in the development stage of projects and t ake projects t o bankability. Unit ed Kingdom/ Infraco/ Africa 50 4. Long-term Credit Banks. Privat e-sector

• wned

institutions backed by government with a specific mandat e t o fund infrastructure projects. Japan 5. Growth of Non-interest (Islamic) Finance Market. Issuance of sukuks used to fund infrastructure projects and encouragement

• f

Islamic finance instruments through favorable tax treatments (no tax on profits) opens up a significant financing avenue. Malaysia/ Indonesia/UAE

Experience from other Countries B

19 19

Government Support S/N Initiative Precedent 1. Federal Government Grants. Provision of grants and credit assistance to state and local governments through loans, loan guarant ees and t ax preferences. Viability Gap Funding: The Indian government provides up to 20% of the total capital cost for PPP projects undertaken by government ent ities. Unit ed States/ India (VGF) 2. Federal Capital Assistance Programs. FGN credit assistance to projects through loan guarantees and lines of credit including loan guarantees for majority of const ruction costs for qualifying projects. Unit ed States – TIFIA program. 3.

• Guarantees. Government commitment towards providing guarantees

to cover risks which t he private sector is not prepared to t ake will galvanise internal sources of funding within the country as well as encourage external financiers. Note however that Government must be able to monitor the guarantees it provides to keep t rack of cont ingent liabilities. Unit ed Kingdom

Experience from other Countries D

20 20

Incentives and Initiatives S/N Initiative Precedent 1. Specific tax incentives.

• 5% tax rate for dividend income from investments up to a cap, and 14%

above the cap.

• 0% tax rate for VAT for construction services of revertible infrastructure

facilities

• Separate tax

rate is applied to dividends from infrastructure bonds investments. South Korea 2. Specific Tax Incentives for financial Institutions

• FIs are allowed to deduct 40 per cent of the profit arising from long-term

lending to infrastructure from their total income India 3.. Expansion of Pioneer Status List. Grant of extended tax holidays for companies

• perating in certain infrastructure sectors.

Indonesia 4.. Tax incentives for project companies. Provisions allowing PPP projects to enjoy certain tax rebates/deduction therefore projects enjoy lower tax burdens. Malaysia/India

Experience from other Countries E

21 21

Project Development S/N Initiative Precedent 1. Encouragement of Unsolicited Proposals. Promotion of solicited as well as unsolicited projects in line with government infrastructure plans and priorities. Government agencies could be mandated to consider unsolicited proposals. South Korea Japan 2. IIPDF: GOI has also set up a revolving fund with a corpus of USD 20 million titled, „India Infrastructure Project Development Fund‟ (IIPDF), to support project development expenses. India 3. Adequate Institutional Planning. Successful projects are t he product of an elaborate planning framework which ranks all infrast ructure projects in t he order of import ance t o t he economy. Important projects can be prioritized in t erms of government support and funding .

• Nat ional Highway Development Programme in India is an example in

t his regard. Unit ed Kingdom/ India 4.

• Marketing. Selling specific project s further t o t he Nat ional Infrastructure

Plan in a coordinated manner would increase int ernational int erest in Nigerian projects. South Korea

Experience from other Countries G

22 22

Project Development S/N Initiative Precedent 5. Minimum Revenue Guarantee. Provision of operational period subsidy in the form of minimum revenue guarantees which guarantee a portion of projected revenues for a fixed number of years. Alternate structure: government assumes a part of the investment risk and makes payment to the privat e sector for the shortfall in actual operational revenue in comparison t o shared investment risk of government. South Korea 6. Early Termination Payment. Provision of clear methodology for determining payments in case

• f

early t ermination which must be stipulated in concession agreements. South Korea/India 7. Exchange Rate

• Guarantee. Provision of

guarantee of exchange rat e guarantees (up t o a cap) for a limit ed period for project s. Chile 8. Standard Risk Allocation Template. Development of a t emplate regulates which risks Government must t ake on t o increase bankability of project s.

• India has model concessions documents

India

Experience from other Countries G

23 23

Sector Specific Initiatives S/N Initiative Precedent 1. Highway projects. For selected highway projects, Government provides subsidy on int erest cost incurred by companies or ext ends soft loans to projects. Malaysia/ Chile 2. Road Fund. Establishment of a dedicated fund such as the Central Road Fund through fees, levies and fines. The fund could be used as a viability gap fund. I ndia

Experience from other Countries F

24 24

• Components
• f the rail

business include the rail network infrastructure , the rolling stock and the services to be rendered to end users.

Rail Infrastructure

• Infrastructure Construction
• Track, terminals, signal, control and communication system
• Infrastructure operations and maintenance
• O&M of support systems for rolling stock
• Scheduling and control of trains
• Preventive maintenance of

civil infrastructure, track and command & control systems

• Renewals

Rolling Stock

• Provision and maintenance of rolling stock
• Freight/Logistics services to end users
• Passenger services

Rail Services

Heavy Rail –Structuring Options for Nigeria

Main Components of a Rail Business

25 25

Heavy Rail – Structuring Options for Nigeria

Public Private Infra Co Service Co

• Govt. Rail Co
• Govt. Body
• Govt. Body
• Pvt. Rail Operator

BOT Concession

Franchise

• Govt. Body

Infra Co. (Govt.)

• Pvt. Service Co.

Management contract for Infra O & M License Regulator

• Pvt. Investor

Infra Co

• Pvt. Service Co
• Govt. Body

DBFOM Concession Franchise 1 3 2 4 5 Public Vertical Integration Horizontal Integration (Hybrid) Private Vertical Integration (BOT Concession) Privatized Vertical Integration Horizontal Integration (DBFOM)

Horizontal Integration Public Vertical Integration Private Vertical Integration

E.g- Nigeria, Russia, India E.g. UK E.g. US

26 26

Revenue

• Financial analysis will

determine whether the Project is economically viable

• r whether subsidies

will be required. A passenger service will typically require subsidies.

Demand Tariffs Infrastructure Rolling Stock Services Debt Equity Grant/Annual Subsidies Project Returns Debt Service Coverage Ratios

Capital and Operating Costs Financial Structure Project returns and key financial indicators

Feasibility Report Must be competitive against road transport costs Provided by the technical consultant Assumptions and scenarios Project and Equity IRR DSCR and LLCR

Heavy Rail – Structuring Options for Nigeria

27 27

Example Cashflow Profile for an Infraco

• 5.0
• 4.0
• 3.0
• 2.0
• 1.0

0.0 1.0 2.0 3.0 4.0

Year – on – Year Cash Flow Profile

• 5.0
• 4.0
• 3.0
• 2.0
• 1.0

0.0 1.0 2.0 3.0

Year – on – Year Cash Flow Profile

(16) (14) (12) (10) (8) (6) (4) (2) 2 4

Cumulative Cash Flow Profile

AED bn

With Grant

(8) (6) (4) (2) 2 4 6 8 10

Cumulative Cash Flow Profile

AED bn

Without Grant

AED bn AED bn

28 28

Example of Cash Flow Profiles of an Opco

(3) (2) (1) 1 2 3 4 5 6

2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Cumulative Cash Flow Profile

AED bn

With Charge

(5) 5 10 15 20 25 30 35

2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Cumulative Cash Flow Profile

AED bn

• 1.0

0.0 1.0 2.0 3.0

Year – on – Year Cash Flow Profile Year – on – Year Cash Flow Profile

• 1.0

0.0 1.0 2.0 3.0

Without Charge

AED bn AED bn

• Free Cash Flows
• Debt Serv ice
• Total Maint. Cost
• Operating Cost
• Inv estment

29 29

20,000 40,000 60,000 80,000 100,000 120,000 Amount (US$'000s) Fare revenue Operating expenses

Comparison of fare revenues and operating costs, USA (24 States) 2004 Fare Revenue as a percentage of Operating costs, USA (24 States) 2004

0% 10% 20% 30% 40% 50% 60% 70%

% of farebox revenue to operating costs (2005) % London Underground 129 New York Underground 77 Paris Underground 63

Source: Federal Transit Administration National Transit Database

Global Light Rail

Source: United Capital Research

30 30

PROJECT APPROACH COMMENTARY Croydon Tramlink, UK Government Subsidies

• Funded via a contribution of government upfront grant and

private farebox revenues Madrid Metro, Spain Specialized Government agencies with borrowing powers

• Creation of company to act as financing agent for the

Administration Hong Kong Mass Transit Railway Privatization

• Shares in the Hong Kong Mass Transit Railway are publicly

traded on the stock exchange, followingprivatisation in 2000 Nottingham Express Transit, UK Vertical Integration

• r

Separation

• This project encountered problems due to separate operating

and construction contracts Florence Light Rail, Italy Authority Guarantees

• First public transport PPP in Italy
• Line 1 was state-funded: Lines 2&3 put out to tender to private

consortia London Underground Complex Public Private Partnerships

• Government transferred all operations and maintenance to

private sector. The PPP was eventually cancelled A variety of North American schemes use this financing technique Dedicated Transport Taxes

• Government set up taxes that were dedicated to funding

transport infrastructure Manchester, UK Integrated Transport System

• Key to an integrated transport policy in Manchester is receiving

access to the Transport Innovation Fund (TIF)

• Funding is likely to be increased if applicants demonstrate

commitment to an innovativecongestion charging scheme

Global Light Rail – Key Structuring Issues

31 31

5 6 7 8 9 10

Project realism Project preparation Regulatory environment Strength of financial market Legal framework Bidder expertise

Key Success Factors

32 32

Project Realism

• Strong link between cost and affordability
• Problem for “prestige” projects
• Unrealistic traffic projections can cause project failure
• Grants/guarantees can help project financial viability
• Tolls must be set at the right level

Project Preparation

• Good feasibility studies are essential
• Planning risks should be shared
• Stakeholders buy-in is crucial
• Beware technically complex projects
• A programme of projects helps build capacity and develop expertise

Regulatory Environment

• Effective and unambiguous regulatory framework is vital
• Regulation may be through contracts or via an independent regulator

Financial Markets

• Must facilitate long-term lending in local currency
• Innovative and competitive products reduce cost of funds

Legal Framework

• Sanctity of contract is key
• Internationally acceptable procurement practice helps

Bidders Expertise

• Credible bidders increase competition and value for money
• Confidence in the process will encourage bidders to invest in developing expertise

Key Success Factors

33 33

Project realism 3



Low usage; tolls too expensive Project Preparation 6



Inaccurate traffic forecasts; local opposition Regulatory environment 5



Brief history of concessions Financial markets 4



Under-developed in immediate post-communist era Legal framework 7



Concession legislation in place Bidder expertise 8



Phase 1 completed on time and within budget 1 2 3 4 5 6 7 8 9

Project realism Project preparation Regulatory environment Strength of financial market Legal framework Bidder expertise

Case Studies – Hungary M5

34 34

Project realism 7



No demand risk transfer, availability-based payment; Project Preparation 7



Complex project; well promoted Regulatory environment 7



Well established Financial markets 7



Strong and broad based Legal framework 9



Very well established Bidder expertise 10  International experienced bidders

1 2 3 4 5 6 7 8 9 10

Project realism Project preparatio n Regulatory environme nt Strength of financial market Legal framework Bidder expertise

Case Studies – Netherlands High Speed Rail

35 35

1 2 3 4 5 6 7 8 9 10

Project realism Project preparation Regulatory environment Strength of financial market Legal framework Bidder expertise

Project realism 4



Revenue shortfall resulting in renegotiation and government guarantee Project Preparation 7



Significant technical planning Regulatory environment 9



Well established Financial markets 10  Deep, strong and innovative Legal framework 9



Well established Bidder expertise 4



Weak; original financing structure was unstable

Case Studies – Channel Tunnel Rail Link

36 36

Assess Current State Of Infrastructure

Step 1

The NIIMP identifies the funding gap in Nigeria’s infrastructure Identify Funding Gap

Step 2

Determine Optimal Funding Mix

Step 3

An optimal funding mix will be determined around bridging this gap Create an Implementation Plan

Step 4

A holistic and well-thought of plan will be formulated to guide implementation across various infrastructure projects The implementation of this plan will begin to move Nigeria’s transport infrastructure from current state to the level

• f its peers

Begin Implementation

Step 5

A current state assessment has been conducted by the National Planning Commission and other related MDAs

Key Next Steps

Wale Shonibare Managing Director – Investment Banking Office: +234-1-280 8669 Mob: + 234-703-414-5045 Email: Wale.Shonibare@unitedcapitalplcgroup.com