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Project Finance
in 38 jurisdictions worldwide
Contributing editors: E Waide Warner Jr and Gavin R Skene 2010
Published by
Getting The Deal Through
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Project Finance Global Overview E Waide Warner, Jr and Gavin R Skene Davis Polk & Wardwell LLP 3
2010 Argentina Luis E Lucero Cárdenas, Di Ció, Romero, Tarsitano & Lucero 5
Contributing editor: E Waide Australia John Naughton, Nicole Ho, Amelia Fitzhardinge Mallesons Stephen Jaques 11
Warner Jr and Gavin R Skene,
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ǼLEX nigeria
Nigeria
L Fubara Anga and Chinyere Nwanya
ǼLEX
1 Collateral
What types of collateral are available?
In Nigeria, individuals and companies may pledge, mortgage, grant
assignments, create liens or charge their property, assets or undertak-
ings as collateral for loans. Assets that may be taken as collateral
include real estate, operating or other licence rights or concessions,
leaseholds, buildings, moveable property, contractual rights, receiva-
bles, shares, securities, onshore and offshore bank accounts, entire
enterprises, after-acquired property, proceeds from investments and
the sale of collateral.
A common form of security is the fixed and floating charge over
the assets of a corporate entity. There are certain statutory charac-
teristics of the Nigerian floating charge that suggest that it is a more
effective security than the fixed charge. Pursuant to section 180(1)
of the Companies and Allied Matters Act chapter C20 LFN 2004
(CAMA), a floating charge holder may not only have a receiver but
also a manager appointed by the court to run the assets charged.
Section 180(2) CAMA further provides that a receiver or manager
may be appointed over the assets charged where the floating charge
has not become enforceable but the court is of the opinion that the
assets are in jeopardy. Pursuant to section 180(2) CAMA, assets
charged are deemed to be in jeopardy where events have occurred or
are about to occur which make it unreasonable for the borrower to
maintain freedom to deal with the assets.
2 Perfection and priority
How is a security interest in each type of collateral perfected and how
is its priority established? Are any fees, taxes or other charges payable
to perfect a security interest and, if so, are there lawful techniques
to minimise them? May a corporate entity, in the capacity of agent or
trustee, hold collateral on behalf of the project lenders as the secured
party?
Perfection involves stamping of the security instrument at the Stamp
Duties Office and filing the security instrument at the Corporate
Affairs Commission (CAC). Where land is used as security, the gov-
ernor’s consent must be obtained and the instrument registered at
the Lands Registry. A creditor with a pledge over shares may serve a
notice and affidavit of interest on the issuer of the shares. This would
entitle the creditor to receive notice of proposed transfer payments or
returns in respect of the shares.
Generally, a creditor takes priority if his or her security interest is
registered first in time. The creditor with a legal interest takes priority
over a creditor with an equitable interest.
For registrable security interests, priority is determined by the
order of registration. For example, under the Land Instruments
Registration Law of Lagos State, a security instrument takes effect
from the date of its registration. Section 179 CAMA provides that a
fixed charge on an asset has priority over a floating charge affecting
that asset unless the terms on which the floating charge was granted
prohibit the creation of any later charge having priority over the
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floating charge and the person in whose favour such later charge was
granted had actual notice of that prohibition at the time when the
charge was granted to him.
Stamp duty is 0.375 per cent and filing at the CAC is 1 per cent
of the amount secured. Land registration and the governor’s consent
fee vary from state to state.
In Lagos state, land registration and the governor’s consent are
0.5 per cent and 2 per cent of the loan amount, respectively.
Generally, stamp duty is assessed on the entire loan amount.
However, creditors sometimes pay duty on a fraction of the loan
amount. The implication of not stamping the full loan amount is
that such creditors will only be secured for the amount stamped and
the security will be void against the liquidator and creditors of the
borrower in respect of the loan balance.
In view of the additional consent fee and land registration neces-
sary to perfect security over land, creditors sometimes take a floating
charge over the entire undertaking or property of the borrower. It is
also not uncommon to for parties to agree that title documents to
land will be deposited with the charge holder and an executed mort-
gage instrument be held in escrow by an escrow trustee, pending the
need to perfect the same.
A corporate trustee can hold security on behalf of project lenders.
3 Existing liens
How can a creditor assure itself as to the absence of liens with priority
to the creditor’s lien?
A creditor may conduct searches on the documents and files of the
debtor at the Corporate Affairs Commission and the Lands Registry
as these are public documents. These searches are not necessarily
conclusive. Also, a creditor could obtain assurances (representations
and warranties) from the debtor that there are no existing third-party
liens with priority to the creditor’s lien.
4 Foreclosure on and sale of collateral
What steps must a project lender take to foreclose on and sell
collateral in your jurisdiction?
The project lender must apply for a court order to foreclose the bor-
rower’s right of redemption. In his application, the project lender must
include evidence of indebtedness and show that the contractual pay-
ment date has passed with the principal or interest remaining unpaid
and that a reasonable time has lapsed with the default continuing. An
application for a court order to foreclose is made by originating sum-
mons and is supported by an affidavit verifying the claim.
The deed of mortgage may prescribe the conditions for the exer-
cise of a power of sale. If these conditions are not met the sale shall be
ineffectual. Where the deed does not provide for a power of sale, the
project lender may apply to court for a judicial sale. Legal mortgagees
have power of sale conferred by the provisions of the Conveyancing
Act 1881 and the Property and Conveyancing Law 1959.
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nigeria ǼLEX
Generally, a sale of collateral is by way of a public sale through
a licensed auctioneer or by a private sale if the terms of the secu-
rity instrument provide. Project lenders cannot participate as buy-
ers in a sale or it will be tainted by fraud. A sale may be in foreign
currency.
5 Foreign exchange
What are the restrictions, controls, fees, taxes or other charges on
foreign currency exchange?
The Foreign Exchange (Monitoring and Miscellaneous Provisions)
Act Chapter F34 LFN 2004 (FEMMPA) restricts foreign currency
exchange to eligible transactions. Eligible transactions are prescribed
by the Central Bank of Nigeria (CBN) from time to time. Repayment
of loans qualifies as an eligible transaction.
6 Remittances
What are the restrictions, controls, fees and taxes on remittances of
investment returns or loan payments to parties in other jurisdictions?
The FEMMPA requires that foreign capital or loans be brought into
Nigeria through an authorised dealer (a local bank authorised by the
CBN to deal in foreign exchange), which will issue a certificate of
capital importation. The certificate of capital importation evidences
the flow of funds into the country and entitles the local beneficiary
to remit the interests, dividends, profits or capital net of taxes attrib-
utable to the investment or loan. For purposes of monitoring the
flow of foreign currencies into or out of Nigeria, banks are required
to notify the CBN of any transfer to or from any country of a sum
greater than US$10,000 or its equivalent.
Dividends on shares and interest on loans are subject to a with-
holding tax of 10 per cent as final tax on the foreign party. However,
pursuant to section 11(1) and schedule 3 of the Companies Income
Tax Act, chapter C21 LFN 2004, interest on the following categories
of foreign loans is exempt from tax:
• loans with repayment period of at least seven years including
moratorium, with a grace period of not less than two years are
entitled to 100 per cent tax exemption;
• loans with repayment period of between five and seven years
including moratorium, with a grace period of not less than 18
months are entitled to 70 per cent tax exemption; and
• loans with repayment period of between two and four years
including moratorium, with a grace period of not less than 12
months are entitled to 40 per cent tax exemption.
7 Repatriation
Must project companies repatriate foreign earnings? If so, must they
be converted to local currency and what further restrictions exist over
their use?
Persons exporting goods, including petroleum products, are required
to open and maintain a foreign currency domiciliary account with
an authorised bank in Nigeria for retaining foreign currency corre-
sponding to the entire proceeds of the export concerned. All export
proceeds are to be repatriated and paid into such domiciliary account
within 90 days from the date of shipment. There is no requirement
for export proceeds to be converted to local currency.
Export proceeds may only be utilised for eligible transactions.
8 Offshore and foreign currency accounts
May project companies establish and maintain foreign currency
accounts in other jurisdictions and locally?
Any person may open, maintain and operate a foreign currency
domiciliary account designated in any internationally convertible
currency with authorised dealers. A foreign currency domiciliary
account (export proceeds) must be opened for the repatriation of
140 Getting the Deal Through – Project Finance 2010
export proceeds. Investors may open foreign currency domiciliary
accounts in Nigeria.
There are no restrictions on Nigerians (except for public office
holders) establishing and maintaining foreign currency accounts in
other jurisdictions.
9 Foreign investment and ownership restrictions
What restrictions, fees and taxes exist on foreign investment in or
ownership of a project and related companies? Do the restrictions
also apply to foreign investors or creditors in the event of foreclosure
on the project and related companies? Are there any bilateral
investment treaties with key nation states or other international
treaties that may afford relief from such restrictions? Would such
activities require registration with any government authority?
Foreign investors may own up to 100 per cent of or invest in any
business in Nigeria that is not a prohibited enterprise. Prohibited
enterprises include the production of arms or military wares and the
production of or dealing in narcotic drugs and psychotropic sub-
stances. Profits, dividends and interest on loans are subject to tax.
An enterprise involving foreign ownership incorporated in
Nigeria must be registered with the Nigerian Investment Promotion
Commission and obtain a business permit before it can commence
business in Nigeria. Permits and licences are required from the
relevant regulator in the specific sector to carry out its activities.
Where there is a transfer of technology from a foreign entity to a
Nigerian entity, approval must be obtained from the National Office
of Technology Acquisition and Promotion (NOTAP), otherwise no
payment can be effected by any local bank to the credit of the foreign
entity in respect of payments due. Foreign vessels are restricted from
domestic carriage, towage or trading in Nigerian waters. Nigerian
local content policy requires that a large portion of oil and gas activ-
ity be domiciled in Nigeria and be managed by Nigerians.
No restrictions apply to foreign investors or creditors in the event
of foreclosure on the project and related companies. Nigeria has
entered into bilateral investment treaties with the United Kingdom
(1990), Italy (1990), France (1990), the Netherlands (1992), China
(1994), the Republic of Korea (1998). Romania (1998), Switzerland
(2001), Serbia and Montenegro (2002), Spain (2002), and Finland
(2005). Nigeria is also a signatory to the International Centre for
Settlement of Investment Disputes (ICSID) Convention.
10 Documentation formalities
Must any of the financing or project documents be registered or
filed with any government authority or otherwise comply with legal
formalities to be valid or enforceable?
Registration or filing is not required for validity of documents.
However, section 23 of the Stamp Duties Act provides that every
document must be stamped to be admissible in court.
Registration is required for the enforceability of certain kinds of
security documents (section 197(1) Companies and Allied Matters
Act, chapter C20, Laws of the Federation 2004). Pursuant to section
5, subsections (1) (d) and (2) of the Law Reform (Contracts) Law
of Lagos State, chapter L63, Laws of Lagos State of Nigeria 2005, a
guarantee shall not be enforceable unless it is in writing and is signed
by the guarantor or by any person duly authorised by him or her.
Notarisation of documents is not a legal requirement. However,
in the event of a dispute regarding the authenticity of a document
or its signatories, there is a rebuttable presumption of authenticity if
the document has been notarised (section 118, Evidence Act, chapter
E14 LFN 2004).
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11 Government approvals
What government approvals are required for typical project finance
transactions? What fees and other charges apply?
The project company must be incorporated at the Corporate Affairs
Commission. Where there are foreign shareholders, the company
must register with the Nigerian Investment Promotion Commission
and obtain a business permit. Expatriate quota must be obtained for
approved positions to be occupied by foreigners. The application fee
for a quota position is 25,000 naira, while the official fee for each
approved position is 10,000 naira.
The project company must register for tax and pensions (the lat-
ter is applicable if it employs more than five people). The project
company will require licences and permits from the regulator in the
relevant sector before it can commence business. Acquisition of land
for project sites and use of land as security require gubernatorial
consent, payment of stamp duty and registration.
Foreign capital and loans are to be brought into the country
through a local bank and a certificate of capital importation obtained
from the bank. Any transfer of technology from a foreign entity to the
project company must be approved and registered by the National
Office for Technology Transfer. The application fee is 20,000 naira,
while the official fee for registration ranges from 50,000 naira to 2.5
million naira.
12 Foreign insurance
What restrictions, fees and taxes exist on insurance policies
over project assets provided or guaranteed by foreign insurance
companies? May such policies be payable to foreign secured
creditors?
The Insurance Act Cap I17 LFN 2004 provides that no person shall
transact any insurance or reinsurance business with a foreign insurer
or reinsurer in respect of any life, asset, interest or other properties
in Nigerian businesses classified as domestic insurance unless with a
company registered in Nigeria, except where the National Insurance
Commission (NAICOM) is satisfied that by reason of exceptional
nature of the risk in or emanating from Nigeria or any other excep-
tional circumstances, such risk cannot be placed with an insurer or
reinsurer registered in Nigeria.
The NAICOM Insurance Policy Guidelines 2009 provides that
all insurable risks associated with oil and gas business are to be
placed 100 per cent with Nigerian insurers. Subject to the approval
of NAICOM, a Nigerian insurer may place part of the risks with
domestic insurers and reinsurers to their maximum capacities and
place the balance in the international market through an interna-
tionally established reinsurance arrangement. Nigerian insurance and
reinsurance companies dealing with foreign insurers are required to
file with NAICOM details of such foreign operators.
There is no restriction on the payment of insurance proceeds to
foreign secured creditors.
13 Foreign employee restrictions
What restrictions exist on bringing in foreign workers, technicians or
executives to work on a project?
Any company seeking to employ foreigners must obtain an expatri-
ate quota and work permits from the Nigerian Immigration Service.
Generally, apart from the position of chief executive officer of a
foreign-owned company, foreign workers, technicians or executives
will not be permitted to work on a project if the Nigerian Immigration
Service is satisfied that there are enough qualified Nigerians to fill
management and technical positions.
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14 Equipment import restrictions
What restrictions exist on the importation of project equipment?
Generally, most equipment can be imported. However, certain items
may be prohibited by the minister of finance, from time to time.
15 Nationalisation and expropriation
What laws exist regarding the nationalisation or expropriation of
project companies and assets? Are any forms of investment specially
protected?
The Nigerian Investment Promotion Commission Act Cap N117
LFN 2004 provides that no enterprise shall be nationalised or expro-
priated except where acquired by the government in the national
interest or for a public purpose and under a law that makes provision
for payment of fair and adequate compensation and guarantees the
investor access to the courts.
Nigeria is a signatory to several investment treaties and agree-
ments, such as the Multilateral Investment Guarantee Agency
Convention, the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards and the Treaty on the International Centre
for the Settlement of Investment Disputes. (See question 9 for a list
of bilateral treaties to which Nigeria is a party).
Although these laws and international treaties protecting foreign
investment are in force, licences and permits granted by the gov-
ernment may be revoked in accordance with existing regulatory
regime.
16 Fiscal treatment of foreign investment
What tax incentives or other incentives are provided preferentially
to foreign investors or creditors? What taxes apply to foreign
investments, loans, mortgages or other security documents, for the
purpose of effectiveness or registration?
There are no preferential taxes or incentives to foreign investors and
creditors. However, pioneer status may be granted to certain types
of industries upon application to the minister of finance. A company
with pioneer status is entitled to a tax holiday of three years, which
may be renewed for a further two years. Dividends received by share-
holders are also exempted from withholding tax.
Mortgages and other security document require stamping, gover-
nor’s consent and registration at the CAC and Lands Registry, where
applicable.
17 Government authorities
What are the relevant government agencies or departments with
authority over projects in the typical project sectors? What is the
nature and extent of their authority? What is the history of state
ownership in these sectors?
The Stamp Duties Office is responsible for stamping documents. The
Corporate Affairs Commission deals with the registration of compa-
nies and security instruments. All companies with foreign sharehold-
ing are required to register with the Nigerian Investment Promotion
Commission (NIPC) and obtain a business permit.
Ministers and other agencies exercise regulatory, advisory, super-
visory and administrative powers over various sectors. Their func-
tions include issuing (and revoking) licences to operators, providing
regulations for operations in these sectors, implementing government
policies and generally overseeing operations in the sectors. Regulators
include:
• the minister of mines and steel development (mining);
• the minister of petroleum, the Nigerian Sao-Tome Joint
Development Authority Zone, the Department of Petroleum
Resources (oil and gas);
• the minister of power, the Nigerian Electricity Regulatory
Commission (power);
141
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• the minister of transport and the Nigerian Maritime
Administration and Safety Agency (maritime);
• the minister of transport (rail);
• the minister of aviation (aviation);
• the minister of works and the Federal Road Management Agency
(roads); and
• the minister of information and communications and the
Nigerian Communications Commission (telecommunications).
Historically, the federal government has been the major participant
in these sectors. However, in the past 10 years, key public enterprises
have been privatised and commercialised. Concessions are being
granted mainly to operators in the transport and road sectors.
18 International arbitration
How are international arbitration contractual provisions and awards
recognised by local courts? Is the jurisdiction a member of the ICSID
Convention or other prominent dispute resolution conventions? Are
any types of disputes not arbitrable? Are any types of disputes subject
to automatic domestic arbitration?
Nigeria is a party to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards 1958 (New York
Convention). This has been domesticated in the Arbitration and
Conciliation Act, chapter A18 LFN 2004. Foreign awards are recog-
nised as binding and enforceable in Nigeria. The party that applies for
enforcement must supply the original or certified copy of the award
and the arbitration agreement. Where the award is not in English, a
certified translation of the award must also be supplied. Section 52
of the Arbitration and Conciliation Act set out the grounds on which
an award will not be enforced. This section re-enacts the grounds
provided by the New York Convention.
Nigeria acceded to the International Centre for Settlement
of Investment Disputes (ICSID) Convention and the New York
Convention on 23 August 1965 and 17 March 1970, respectively.
All matters except matters of a criminal nature are arbitrable.
The Trade Disputes Act, chapter T8 LFN 2004, provides that all
trade disputes must be referred to the Industrial Arbitration Panel.
19 Applicable law
Which jurisdiction’s law typically governs project agreements? Which
jurisdiction’s law typically governs financing agreements? Which
matters are governed by domestic law?
Generally, parties are free to choose the law governing their agreements.
Most foreign parties adopt English law. Security Instruments and tech-
nology transfer agreements are usually governed by Nigerian law.
20 Jurisdiction and waiver of immunity
Is a submission to a foreign jurisdiction and a waiver of immunity
effective and enforceable?
Generally, Nigerian courts observe the provisions of any choice of
jurisdiction clause included in a contract except where illegal or con-
trary to public policy. Nigerian law recognises that sovereign, diplo-
matic and consular immunity may be waived.
21 Bankruptcy
What entities are excluded from bankruptcy proceedings and what
legislation applies to them? What processes are available to seize the
assets of a business outside of court proceedings?
No entity is excluded from bankruptcy proceedings. Creditors rely
on the insolvency provisions in the Companies and Allied Matters
Act, chapter C20, LFN 2004, while the Bankruptcy Act chapter B2,
LFN 2004 applies to individuals.
142 Getting the Deal Through – Project Finance 2010
A creditor is required to obtain an order of court to seize the
assets of a business. However, a creditor with a floating charge over
all the assets and undertaking of a debtor may enter into possession
of a charged property or appoint a receiver or manager over such
property, if so authorised under the security instrument. A lessor who
retains title can take possession of the charged property.
22 Title to natural resources
Who has title to natural resources? What rights may private parties
acquire to these resources and what obligations does the holder
have? May foreign parties acquire such rights?
The Constitution of Nigeria 1999 vests the federal government
with title over all minerals, oil and gas in, under or upon any land
in Nigeria, its territorial waters and its exclusive economic zone.
Private parties may only acquire rights to win and carry away natu-
ral resources. Foreign parties may acquire such rights through local
subsidiaries operating in Nigeria.
The holders of rights to win and carry away natural resources
are required to observe all applicable laws and regulations, and pay
rents, royalties and taxes when due. They are required to minimise
and manage environmental impact resulting from activities, and
rehabilitate and reclaim the land to its natural or predetermined state
or to such state as the applicable laws or regulations may specify.
They are also required to compensate occupiers of land affected
by their activities for any disturbance to their surface rights or any
damage done to crops, fishing, economic trees and buildings. Where
the land is acquired by the government for mineral extraction pur-
poses, the rightholder must pay compensation to the landowner.
Where the land is acquired for mining purposes, the occupiers of land
retain the right to graze livestock upon or to cultivate the surface of
the land insofar as the grazing or cultivation does not interfere with
mining operations in the area.
23 Royalties on the extraction of natural resources
What royalties and taxes are payable on the extraction of natural
resources, and are they revenue- or profit-based?
Royalties are payable to the federal government in respect of oil pro-
duced from concessions. They are production-based and are fixed in
accordance with the location of the field. Royalties may be paid in
foreign currency or, subject to the direction of the minister, wholly
or partly in petroleum.
The royalty rate for onshore production is 20 per cent; royalties
for shallow onshore production from areas with water up to 100
metres deep is 18.5 per cent; royalties for production from areas up
with water up to 200 metres deep is 16.5 per cent.
The royalty for deep offshore production under a production
sharing contract in areas with water from 201 to 500 metres deep
is 12 per cent; 8 per cent for areas of water depth from 501 to 800
metres; and zero per cent for production in areas of water depth
above 1000 metres.
The inland basin has a flat rate of 10 per cent. Royalty rates for
production from marginal field operations vary subject to a sliding
scale of the volume of production, and range from 2.5 per cent to
18.5 per cent for production below 5,000 barrels per day to produc-
tion between 15,000 and 25,000 barrels per day.
All companies engaged in mining activities are subject to a cor-
porate tax of 30 per cent assessed on taxable profits. An 85 per
cent petroleum profits tax is chargeable on the profits of companies
involved in petroleum exploration. Oil companies operating petro-
leum sharing contracts in the deep offshore area and inland basins
are taxed at a flat rate of 50 per cent on the chargeable profits. No
royalties have been prescribed for mining operations.
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24 Export of natural resources
What restrictions, fees or taxes exist on the export of natural
resources?
A mineral title holder who intends to export solid minerals must reg-
ister with the Nigerian Export Promotion Council, obtain an export
clearance from the Ministry of Mines and Steel Development and
comply with other custom requirements. Requirements for obtain-
ing an export clearance include evidence of payment of royalty and
inspection of the minerals to be exported by an officer of the Mines
Inspectorate Division.
Crude oil sales are regulated by the federal government. Any
person wishing to export crude oil or crude oil products must obtain
an export permit from the Department of Petroleum Resources.
25 Environmental, health and safety laws
What laws or regulations apply to typical project sectors? What
regulatory bodies administer those laws?
The major environmental, health and safety laws and regulations are
the National Environmental Standards and Regulation Enforcement
Agency (Establishment) Act 2007 and the Environmental Impact
Assessment Act. Other subsidiary legislation includes the National
Environmental Protection (Effluent Limitation) Regulations,
the National Environmental Protection (Pollution Abatement in
Industries and Facilities Generating Waste) Regulations, the National
Environmental Protection (Management of Solid and Hazardous
Waste) Regulations, and the Harmful Waste (Special Criminal
Provisions, etc) Act. In the mining sector, the principal legislation is
the Minerals and Mining Act, together with the aforementioned laws
and regulations.
The National Environmental Standard and Regulation
Enforcement Agency (NESRA) is the key regulator on matters of
environmental standards, regulations, rules, laws, policies and guide-
lines within Nigeria. The agency is subject to the directives of the
minister for the environment. Other regulators include the Mines
Environmental Compliance Department, which oversees environmen-
tal matters for the mining sector, and the Department of Petroleum
Resources, which is responsible for the oil and gas sector.
26 Project companies
What are the principal business structures of project companies?
What are the principal sources of financing available to project
companies?
Project companies are usually limited liability companies incorpo-
rated in Nigeria. The principal sources of financing available to
project companies include bonds, equity and loans.
27 Public-private partnership legislation
Has PPP enabling legislation been enacted and, if so, at what level of
government and is the legislation industry-specific?
The federal government of Nigeria and some state governments are
exploring the option of private sector participation in infrastructure
development. To achieve this, legislation has been enacted to create
the enabling environment for efficient public-private partnership in
the execution of these infrastructure projects. The different tiers of
government have also enacted legislation to regulate pubic procure-
ment and the award of contracts by government. This legislation
includes the following.
Federal legislation
• The Infrastructure Concession Regulatory Commission Act
2005 enables private sector participation in the financing, con-
struction, operation or maintenance of identified infrastructure
projects of the federal government through concessions.
www.gettingthedealthrough.com
Update and trends
Infrastructure project financing through bonds
There are indications of a shift by the government from funding
infrastructure with public funds to accessing the capital market
through long-term bonds. The Lagos state government recently
floated a 50 billion naira bond (which was oversubscribed) for
infrastructure development in the state. Other states that have
issued bonds include Imo State (18.5 billion naira) and Kwara
State (30 billion naira). The Securities and Exchange Commission
recently disclosed that it had received applications from two
states to issue bonds worth a total of 56 million naira to finance
infrastructure developments in the states. The federal government
has indicated that it may opt for bond financing for its road
projects across the country.
Takeovers of local banks
There is speculation about the further recapitalisation and
possible mergers or takeovers of local banks by foreign investors
looking to establish a presence locally and regionally following the
announcement by the CBN Governor Lamido Sanusi that he will
remove the 10 per cent shareholding ceiling hitherto imposed on
foreign capital in Nigerian banks.
First state arbitration court
The Lagos state government recently passed the Lagos state
Arbitration Law and the Lagos State Court of Arbitration Law 2009
to establish the first state court of arbitration in Nigeria with the
aim of making Lagos an international arbitration centre.
• The Public Procurement Act 2007 regulates all public procure-
ment and award of contract procedures.
• The Public Enterprises (Privatisation & Commercialisation) Act
chapter P38 Laws of the Federation 2004 provides for the priva-
tisation and commercialisation of certain public enterprises and
establishes the National Council on Privatisation and the Bureau
of Public Enterprises.
• Utilities Charges Commission Act chapter U17 Laws of the
Federation 2004 regulates price fixing between concessionaires
and regulators in respect of utility authorities or agencies.
Lagos state legislation
• The Lagos State Roads, Bridges and Highway Infrastructure
(Private Sector Participation) Development Board Law, Cap
L90, Laws of Lagos State 2005 provides for the establishment
of a board with the primary objectives of identifying key social
infrastructure needs in Lagos state and entering into agreements
with the private sector for the construction of identified projects
to meet such needs.
The Lagos state government is also proposing to pass the following
legislation:
• the Lagos State Infrastructure Development Law of 2008 Bill
for the establishment of infrastructure development board and
public private resource centre to coordinate all pre-existing and
future PPP arrangements within the state;
• a Bill for a Law to establish the Lagos State Procurement Board
and other connected matters for the regulation of all state pro-
curements and ensure fair, competitive, efficient and transparent
standards for the procurement and disposal of public assets and
services; and
• the Lagos State Private Partnerships Bill 2009 for the establish-
ment of a PPP office in the state, and development of public
infrastructure through PPPs.
143
nigeria ǼLEX

28 PPP – limitations US$381 30-year Lekki-Epe Toll Road Concession

What, if any, are the practical and legal limitations on PPP
transactions?
The absence of a robust and developed legal and regulatory frame-
work limits PPP activity.
29 PPP – transactions
What have been the most significant PPP transactions completed to
date in your jurisdiction?
The most significant PPP transactions to date have been:
The MMA2 Terminal BOT Concession
A concession by the federal government to Messrs Bi-Courtney for
the development of the Lagos Airport Terminal 2 and its ancillary
assets, on a BOT basis. It is the first major PPP project in Nigeria in
the aviation sector. The concessionaire has estimated the cost of the
project at 5 billion naira.
89.5 billion naira, 25-year Lagos-Ibadan Expressway Concession
A concession by the federal government to Messrs Bi-Courtney for
the reconstruction, expansion and modernisation of the Lagos-Ibadan
Expressway, on a BOT basis.
A concession by the Lagos state government to Lekki Construction
Company for the upgrade and creation of new infrastructure, the
development of 20km of coastal road, and provision of ancillary
services on a BOT basis.
US$60 million 25-year Lagos Roll-On-Roll-Out Terminal
concession
A concession by the federal government to Grimaldi Group for the
operation of a 42-acre port terminal including vehicle handling, stor-
age and logistics, and the provision of terminal services to importers,
exporters and carriers, on a BOT basis.
Proposed 25-year Lagos State Urban Rail Concession
Proposed concession for the construction of the first light rail system
in Lagos state.
Proposed e188 million Rivers State Monorail Concession
A proposed concession for the construction and operation of a mono-
rail in Port Harcourt, Rivers state, estimated at e188 million.

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