PPP will catalyse securitisation, deepen capital market – Eghobamien

by | May 19, 2017 1:00 am

Osaro  Eghobamien, Managing Partner of Lagos-based law firm Perchstone and Grays, says Public Private Partnership (PPP) could deepen Nigeria’s capital market through securitisation of infrastructure projects assets.

Eghobamien, who spoke with BusinessDay, ahead of the Edo State Government PPP workshop slated for tomorrow (Saturday) in Benin, the state capital, said PPP projects have become an inevitable option for Edo State, like the other governments, since all of them have limited funds to execute large infrastructure projects. The workshop is being facilitated by Perchstone and Grays.

PPPs are contractual and more efficient means of delivering public services to the citizens of a state/country.  The key stakeholders in a PPP are government, sponsors, lenders, investors, consumers, regulator/authority, with each part having its role to play in ensuring that projects are successfully executed.

Recent estimates by the National Planning Commission (NPC) reveal that Nigeria requires an investment of $2.9 trillion within the next 30 years, to build up its infrastructure to globally competitive levels. Deloitte, the global consultancy and advisory firm, said in its publication, ‘Addressing Africa’s Infrastructure Challenges’, that sub-Saharan Africa alone needs up to $93 billion annual investment in infrastructure over the next ten years to overhaul the regions infrastructure.

Public-private partnership models include concession, franchise, build –operate-transfer, build-rent-transfer, and build-transfer-operate, among others.

Eghobamien said PPP structure is important for the various governments, as they have limited capacity to borrow, adding that that there is a cap on the amount government can borrow to fund infrastructure projects.

“What PPP allows you do is simply to credit-enhance your projects and make it attractive to investors,” He added. “Again, many of the states are not even in a position to borrow the amount they are looking for so they have to look at alternative ways of funding the projects.”

He said that apart from the use of PPP to fund infrastructure, it could also help to deepen Nigeria’s capital market by adding instruments that will give investors options to realise their return objectives. He said that one of the ways that PPP will deepen the Nigerian capital market is by securitising the project assets.

What is interesting is that if you include securitisation in PPP, it will allow you link the capital market to infrastructure, he said. What that means is that all of us can become investors in roads.

“And the simple way I explain it is, if you have a mutual fund where we all have to donate N500 in the country, multiply that by 200 million. You will be then be able to build may be 50 km of road. The 50 km will then be tolled. That toll will generate income, pay for itself, and then pay the people an interest.”

Through the PPP workshop, Edo state will project some of its assets and prepare those who will be involved in marketing those assets under a PPP. It will also prepare those who will be involved with the projects so that they will have sufficient knowledge of what the government is putting across under the PPP structure.

Osasere Osazuwa, Associate at Perchstone & Graeys, who is the Edo PPP workshop organising personnel, said that the workshop, tagged “Accelerating infrastructural development through effective PPP in Edo State”, will seek to expedite an understanding of the PPP concept and its impact on economic growth and development; it will also strive to enlighten the critical stakeholders on their respective duties in this bilateral relationship.

“We have invited limited key stakeholders in infrastructural development of Edo State as guests for this workshop to equip them beforehand with knowledge in this area, in preparation for discussions with relevant investors in the future”, Osazuwa told Businessday in a mailed response to questions. “We have also invited relevant federal government agencies, as well as key players in the banking sector.”

The Edo PPP initiative will initially target projects in priority areas such as security, housing, and tourism.



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