Obaseki adopts joint venture financing model to transform Edo’s infrastructure

At a time external and traditional sources of infrastructure funds are thinning out in most states of the country leading to a surge in the number of abandoned roads and other infrastructural projects, the Edo State Governor, Mr Godwin Obaseki, has tailored the joint venture (JV) financing framework to secure the collaboration of private sector companies in the delivery of infrastructure.

This transformative approach to infrastructure delivery is behind the construction of the 16.74 Kilometre Ikpako-Ajoki Road linking Ikpoba Okha and Ovia North-East local government areas of Edo State, which was flagged off on Thursday, February 10, 2022, in the state.

The project, according to Obaseki is being financed by the Edo State Government, the Nigerian National Petroleum Corporation/Enageed Resource Ltd. (a Sahara Group Upstream Company) and the Edo State Oil and Gas Producing Areas Development Commission (EDSOGPADEC).

The innovative infrastructure financing model, the Governor added will catalyse private sector funding of infrastructure in the short, medium and long term in the state.

According to the World Bank in a 2019 report, “Infrastructure development lies at the nexus of economic growth, productive investment, job creation, and poverty reduction.”

The bank added that “Financing the huge investment gaps in Emerging Market Economies (EMEs) – an estimated $1.3 trillion per year – is paramount to attaining the SDGs.”

Joint venture financing has proven to be a dependable project financing framework hence its customization by Obaseki to deliver capital projects.

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Investopedia explains that a joint venture (JV) “is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity.”

A popular financing model in the private sector, especially in Nigeria’s oil and gas industry, joint ventures (JVs) are often used to make inroads into new/external markets, Investopedia adds.

Speaking at the ceremony to flag off the construction of the road project, Obaseki said the project will boost trade, agricultural activities, increase oil and gas business, as the road will open up several oil and non-oil bearing communities in the two local councils, on completion.

The governor added: “We are making history not just because we are constructing another road; we have constructed so many roads in Edo State, but this road is special. Before now, we used to suffer the embarrassment of accessing Edo communities from Delta State.

“With this road, we can now access all the Edo communities in this region. This road is going to be an economic road because it is connecting oil-producing communities. Not just the communities but the activities that these companies bring. We are likely to see a road that will now begin to bring in more than just agricultural produce. It will also boost oil and gas production. This road is very unique in terms of the way we conceived it and it gives us hope.”

He explained that “This road is a joint venture and collaboration between Edo State Government, Edo State Oil and Gas Producing Areas Development Commission (EDSOGPADEC) and Enageed Resource Ltd, which is a partner to NNPC.

The Edo State Government brought 30 per cent, EDSOGPADEC brought 30 per cent and Enageed is bringing 40 per cent.

“But this is not just about the money; it is the way we have come together in securing the contract for the road projects. It shows that our procurement in the state is of international standard because it meets the same standards NNPC uses in procuring their infrastructure.”

Recalling his administration’s past effort to deploy the same financing model in the reconstruction of the Benin-Abraka Road project, Obaseki said: “This is important to us and me personally because of its unique structure. We tried to use this method about two years ago with the Niger Delta Development Commission (NDDC) for the Benin-Abraka Road. We proposed the same financing agreement. We established bank accounts, signed agreements and NDDC failed us.

“We didn’t believe that this kind of structure can work. But we are now working with the NNPC and partners on the same financing structure and flagging off this road project today with the funds for this road project already in the bank, which gives us lots of hope and courage.

“Before now, the bulk of infrastructural development was done by the government but today you can see that we are creating innovative ways in partnering with the private sector and the federal government to create infrastructure.”

He told residents of the communities that will be linked by the road: “This is just the beginning. The best is yet to come. Let me assure Ikpako, Obateru, Evbuorokho, Abiala, Kolokolo, Ajamokha and Ajoki communities that we have already started the design of the road from Gelegele to connect Ekehuan Road and we are going to accelerate that work because of this one so that you will not have challenges in coming to the city.”

Group Managing Director of NNPC, Mele Kyari, expressed confidence in the actualisation of the road project as the corporation would pick its part of the bills.

“I grew up here and I am very familiar with the area because when I was working in the Benin office of the NNPC, we carried out a lot of seismic operations in this area. Our partner Enageed Resource Ltd. and NNPC are committed to contributing to national development and to growing communities where we work. NNPC will pick its bill because this is our bill.”

Executive Director, Sahara Group, Temitope Shonubi, said: “Today we celebrate this collaboration as this road will bring families together. Thank you for allowing us to be part of the project. In Edo State, we see continuity, progress and the best is yet to come.”

Responding on behalf of leaders of the communities, a visibly elated Mr Collins Ogbeide, saluted Governor Obaseki’s commitment towards bringing development to the area.

“Today is a day we will never forget. This project on completion will reduce insecurity, boost our local economy and bring development to our communities. Thank you our governor for always allowing your projects to speak for you,” he added.