NIGERIA’S WATER & WASTE - World...

New Project Opportunities in Nigeria’s

Water and Wastewater Industry

by

Paul Obanua

Group Managing Director

NEW PROJECT

OPPORTUNITIES IN

NIGERIA’S WATER & WASTE

WATER INDUSTRY

INTRODUCTION

Size: 923,764 Sq.KM

Population: 170,229,090

Large Producer of Oil and Gas

INTRODUCTION

NIGERIA

Resource Rich

Minerals

Agriculture

Forest

Location

Demographics

Nigeria has a huge Infrastructure spend deficit. It is expected that $12b to $15b is required annually for the next 5 to 6 years

FGN’s annual Capital Budget can only cover a fraction.

Agriculture contributes over 40% of real GDP and manufacturing, 4%

Public Expenditure is often wasteful and inefficient

There is also a severe limitation in institutional and human capacity for project development, management, operations and maintenance.

Therefore, Private Sector Finance, Expertise (Project Mgt.) and Participation is inevitable if we are to upscale our infrastructure and attain Vision 20 : 2020.....indeed a Paradigm Shift

NEW PROJECT OPPORTUNITIES IN NIGERIA

INFRASTRUCTURE DEFICIT

GOVERNMENT WATER RESOURCES MANAGEMENT STRUCTURE


Nigeria is the largest African country by population and GDP and it is also the continent’s biggest oil exporter. However, high rate of urbanisation and under investment in water resources has resulted in low levels of access to an improved water source and sanitation.

Responsibility for water supply is shared between three levels of government – Federal, State and Local government.

1. The federal government is in charge of water resources management; 2. State governments have the primary responsibility for urban water supply; and 3. Local governments together with communities are responsible for rural water supply.

ACCESS TO MULTI LATERAL CREDIT AND LOANS


The World Bank’s total portfolio on water worldwide at present stands at US$54.3 billion. World Bank support for Nigeria Urban Water Sector Reform Project - US$325 million. Additional US$180 million African Development Bank (AfDB) support - US$200 million. The French Development Agency (AFD) has just pledged US$150 million support to the Urban Water Sector Reform Programme. It is projected that Nigeria will require US$2.5 billion per annum in order to meet her water and sanitation targets. This deficit can only be met through private sector engagement (Ref: Road Map for Nigeria Water Sector, 2011)

NIGERIA’S PPP FRAMEWORK

PROVIDED BY THE ICRC ACT 2005:

Establishment of the Infrastructure Concession Regulatory Commission. (Sec 14. 1)

MDAs may enter into a contract with or grant concession to any duly pre-qualified private sector proponent for the financing, construction, operation, and maintenance of any infrastructure that is financially viable or any development facility of the Federal Government. (Section 1.1).

Functions and powers of the Commission (Section 19)

• Provides general policy guidelines, rules and regulations.

• Take custody of every concession agreement.

• Ensure efficient execution of any concession agreement or contract entered by the Federal Government.

Section 11 (Arbitrary Variation etc) No agreement reached in respect of this Act shall be arbitrarily suspended, stopped, cancelled or changed except in accordance with the provisions

of this Act.


WHAT IS A PPP?


A Public-Private Partnership is a contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility.

PPP OPPORTUNITIES IN NIGERIA


Transport (road, rail, ports, airports)

Fixed links (bridges, tunnels)

Water resources (filtration plants, irrigation, sewage treatment, pipelines)

Tourism (facility development)

Health (hospitals and specialized health services)

Specialized accommodation facilities (courts, police stations)

Educational facilities (schools, museums, libraries)

Correctional services (prisons, remand and detention centers)

Arts, sport and recreational facilities

Convention centers

Government office accommodation

Social housing

Minerals Exploration and Development

Power – Gencos, Transcos, Discos, Specialized Services etc.

Experience is transferable - “Lessons learned from one . . .”


POTENTIAL INVESTMENT AREAS

OPPORTUNITIES

Direct Human Consumption

Agriculture

Hydropower

Industrial Production

Environmental Protection

Wastewater Management

DIRECT HUMAN CONSUMPTION


We noted in page 2 of this document that it is generally accepted that 100 litres of water per day is the average requirement by a human being to live healthily.

Thus we estimated that in a country of 170 million, that the mean average of accessible water by most people in Nigeria should be within the threshold of 25.5 litres per day due to economic water scarcity in Nigeria.

Estimations of water consumed in Nigeria daily, ranging from bottle

water to “pure water” (sachet water) is about N8 billion ($40 million Dollars) per day according to Dr. Paul Orhii, DG National Agency for Food Drug Administration and Control.

Consumable water is a fast growing business in Nigeria. Each bottle water cost N50 (25 cents) at the minimum, with the population of Nigeria which is over 170 million people.

Amongst the foregoing number, over 100 million Nigerians consume bottled water per day. This consumption rate excludes water used within a household for cooking, cleaning dishes, baths, laundry and all other forms of sanitation.

Thus investment in consumable water in Nigeria is a goldmine for investors to harness.

AGRICULTURE


In agriculture there are opportunities for building of dams and irrigation systems around the country as there is a push by the government to encourage all season agricultural practises. Nigeria has potential to irrigate 3.1 million hectares of farmland but today only 150,000 hectares is available.

Also we have seen an upsurge in fish farming which also requires proper deployment of efficient water collection and distribution systems.

Animal husbandry such as cattle ranching, poultry etc also require guaranteed access to good quality water.

HYDROPOWER


Given the severe shortfall in available power supply to the economy the Nigerian government has encouraged private participation in raising power supply appreciably.

The present capacity of power generation is about 4,000 megawatts which is grossly inadequate and it is projected that Nigeria needs to generate at least 100,000 megawatts in order to meet present requirement.

One area that will be very useful is the

harnessing of Nigeria’s water resources to not only serve the agriculture industry but also contribute to the energy pool.

The government have in place licences and permits for investors willing to build hydro dams.

INDUSTRIAL PRODUCTION


There is a high demand for water for industrial production especially in such industries as textiles, breweries, beverages, chemical industries, food processing etc. Most of these companies source their own water. They will happily subscribe to accessing water from an efficiently organised private sector supply company as this will allow them to concentrate on their areas of core competence.

ENVIRONMENTAL PROTECTION


Technologies for harnessing and managing available fresh water resources are highly needed in order to minimise the impact of climate change on the environment.

Such effects are noticeable in the encroaching desertification in the North and flooding in the South of Nigeria.

WASTEWATER MANAGEMENT


There is need for the building of modern waste water treatment facilities in the cities as a result of rapid urbanisation.

Installations for treating and recycling industrial and sewage waste water are in demand as this will impact the environment positively and prevent contamination of both surface and ground water.

URBAN WATER SUPPLY/DESALINISATION PLANTS


As a result of the collapse of public water supply system in Lagos and other major cities around Nigeria there is need for private sector initiatives in building and providing water to captive communities using the PPP model. Take Lagos for example, the prime locations such as Lekki, Victoria Island, Ikoyi etc suffer from high saline content in both surface and ground water because they are mostly situated on land reclaimed from the ocean.

Hence there is a thriving business of fresh water being hauled in to households through water tankers. This is quite expensive. This present an opportunity for an investor to build a desalinisation/treatment plant with the resulting piping network to supply metered water to this high net worth neighbourhoods. Such opportunities exists across the country, though some areas may not need desalinising but just normal treatment facilities.

EQUIPMENT/MACHINERY/CHEMICALS


There are high growth opportunities for manufacturers and distributors of such machinery as Metres, Pumps, Pipes, Valves etc. Water treatment chemicals are also a necessity and hence they are always in demand.

RISKS AND CHALLENGES


Like any other infrastructure investments, water and sanitation

projects may be subject to political and economic risks.

However, in the recent past the Nigeria authorities have strived to

put a conducive environment in place through setting up stable

regulatory institutions and legislation.

This is also aided by the fact that today Nigeria is a democracy,

which has mitigated the possibility of unplanned political upheavals.

One other down side is the lack of some basic infrastructure like

electricity, good transport systems but these challenges can be

overcome as can be attested by others who have taken the leap.

RISKS & CHALLENGES


CONCLUSION

Globally, the availability of accessible fresh water is under major strain,

moreso in Nigeria because of indiscriminate drilling of private wells.

This makes it imperative for the intervention of private investment partnering

with various governments to build and operate viable water supply and

treatment systems.

This is a very viable business with sustainable long term investment returns.

The FGN is looking to public-private partnership (PPP) to meet its critical

infrastructure gap and improve resource management/service delivery to the

people.

Greenfield Assets Ltd has the capacity , local knowledge and contacts and is

ready to work with any investor willing to explore the exciting and viable

Nigerian water sector.

Date post:	30-Jan-2018
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