Change Nigeria Project

INVESTMENT IN INFRASTRUCTURE

A WATER AND SANITATION PERSPECTIVE

PAPER BY BIWATER Plc

AT A CONFERENCE ON STATE OF THE NIGERIAN ECONOMY:  STRATEGIC OPTIONS FOR BUILDING AND SUSTAINING A VIBRANT ECONOMY 

ORGANIZED BY 

CHANGE NIGERIA PROJECT, INC. IN COLLABORATION WITH NIGERIA INVESTMENT PROMOTION COMMISSION AT :

THE COMMONWEALTH CLUB

LONDON, ENGLAND SATURDAY JANUARY 30, 2010

Mr Bob Kottel: MD BiWater PLC.

THE COMPANY
40th anniversary March 28th 2008

31 years in Nigeria as Biwater Nigeria Ltd.

Active in 35 countries, Projects delivered in 85 countries

Water supply & water treatment. Design, construct, own, and operate

Management of water assets. Project finance initiative

MILLENIUM DEVELOPMENT GOALS

Many countries not on track to meet the MDG targets for water and sanitation

• Improved water and sanitation is key to economic development.  WHO study concludes that investments in improved access to water and sanitation services are one of the most effective ways of promoting the equitable economic growth that is a prerequisite for poverty alleviation.
• WHO study concludes that the accrued economic benefit of investment in water and sanitation for Africa is USD 11 for every USD 1 invested.  A substantial return to the country.
• Investing in improved water and sanitation is good business for national economies and poverty alleviation

NIGERIA AND THE MDG FOR IMPROVED WATER AND SANITATION
 Goal 7 – Halve by 2015, the proportion of people without sustainable access to safe drinking water and sanitation

Water and sanitation is still relatively low priority for government. Need to move to top of its agenda

• Need for increased public investments in water and sanitation, particularly for “sanitation crisis”
• Importance of utilities and regulatory reform running in parallel with public investment
• Investments should focus on sustainable service delivery, rather than construction of facilities alone
• Users should be charged, but care needs to be taken to cover the costs that poor households cannot meet
• Innovation must be encouraged to speed progress.

FINANCING IS MAIN DEFICIENCY.  Nigeria has traditionally funded water and sanitation from its State current budget. Recommend alternative form of funding:-

• Should rather align capital investment to infrastructure useful life (long term loans) with cost recovery from Consumers.
• Nigeria is now seeking to bridge the funding gap by way of private sector investment (Concession / Lease type contracts).
• Current view: Preferred role of the private sector is that of performance contractor, not investor.

                                                         i.            Strong decline in private infrastructure projects: investment flows peaked in 1997 and dropped by more than half since. Limited numbers of players still active; very little equity appetite.

                                                        ii.            A number of failed PPP’s in Africa – Politically unpopular

• Shift in Private Sector Participation Models: back to quasi-public financing / service agreements.