CWC NIGERIA INFRASTRUCTURE CONFERENCE ABUJA November 18 2009

CWC NIGERIA INFRASTRUCTURE CONFERENCE ABUJA, November 18, 2009 Legal Issues With Railway Public Private Partnerships In Nigeria Ayuli Jemide, Lead Partner. 11/28/2020 1

3 Major Issues 1. Relevant Legislations 2. Issues arising from the NRC Act 3. Key Railway Assets 11/28/2020 AYULI JEMIDE, Lead Partner, 2

Relevant Legislations 1. The Constitution 2. Nigerian Railway Corporation Act 1955 3. Infrastructure Concession Regulatory Commission Act 2005 4. Utilities Charges Commission Act, 1992 5. Railway Bill (Pending Legislation) 4. National Transport Commission Bill (Pending Legislation) 11/28/2020 AYULI JEMIDE, Lead Partner, 3

Constitution Exclusive List Concurrent List Residual List Federal Roads Maritime Aviation Mines & Minerals Railways ? Nuclear Energy Electric Power Industrial, Commercial & Agric Dev. Education 11/28/2020 Urban planning Transportation State Roads Water Housing Health AYULI JEMIDE, Lead Partner, 4

Nigerian Railway Corporation Act 1955 Does the NRC Act provide a proper framework for NRC to engage in a PPP with any private Sector proponent? 11/28/2020 AYULI JEMIDE, Lead Partner, 5

Nigerian Railway Corporation Act 1955 o Vests all Railway Infrastructure in NRC from a “Vesting Day” 11/28/2020 AYULI JEMIDE, Lead Partner, 6

Nigerian Railway Corporation Act 1955 NRC has the following exclusive rights: 1. Right to Sell, Lease or Dispose of Property. i. e “operating leases” of railway assets. 2. Right to Enter into Maintenance or Repair Contracts. 3. To Enter into Agreements for any Service. 11/28/2020 AYULI JEMIDE, Lead Partner, 7

Nigerian Railway Corporation Act 1955 4. To Enter into Agreements for the Payment, Collection or Apportionment of Rates, Fares or Charges. 5. Right to Set Fares. 6. To Carry on Any Business necessary or desirable for its purposes. 11/28/2020 AYULI JEMIDE, Lead Partner, 8

Nigerian Railway Corporation Act 1955 • NRC has a general rights to delegate its powers or duties under the NRC Act to “any person” subject to the approval of the Minister. S 17 11/28/2020 AYULI JEMIDE, Lead Partner, 9

Nigerian Railway Corporation Act 1955 • Is there a Framework for State or private persons to construct and operate a Railway in Nigeria? 11/28/2020 AYULI JEMIDE, Lead Partner, 10

Nigerian Railway Corporation Act 1955 • S 29 – “Construction of Railways by Persons other than the Corporation” “It shall be unlawful for any person without the consent of the Corporation to construct or operate a Railway for public carriage of passengers or goods within Nigeria” 11/28/2020 AYULI JEMIDE, Lead Partner, 11

This is currently the only window for States and private proponents to establish green-field railway infrastructure. NOTE: Railway Bill would expand this window considerably when passed into Law. 11/28/2020 AYULI JEMIDE, Lead Partner, 12

Some Issues With The Window 1. No framework for granting consent: - Tenure? Fees? Who owns Railway at end of tenure? – Lagos Light Rail project may set some precedents to go by in the months to come. 11/28/2020 AYULI JEMIDE, Lead Partner, 13

Some Issues With The Window 2. Does the NRC “consent” include the right to subdelegate the railway operations? It has been suggested that: - NRC consent should contain a right to sub-delegate or - NRC should co-sign any Concession agreement between a State and subsequent Concessionaire? 11/28/2020 AYULI JEMIDE, Lead Partner, 14

Some Issues With The Window 3. ICRC What would be a PPP under the Act? a) NRC co-signs a subsequent Concession Agreement between the State entity/private entity and a subsequent concessionaire? b) NRC gives consent to a private person c) NRC gives consent to a State Government d) NRC engages the private sector to provide a service 11/28/2020 AYULI JEMIDE, Lead Partner, 15

Some Issues With The Window 4. Who should regulate? States or NRC? - Are the current NRC regulations adequate for an Urban Mass Transit Railway system in year 2009? - Does NRC have the manpower to regulate Urban Mass transit? - Should NRC pass separate regulations for Urban Mass Transit or for each State transaction? 11/28/2020 AYULI JEMIDE, Lead Partner, 16

Some Issues With The Window 4. Can the “Primary Enforcer” work in Nigeria? model Primary Enforcer means delegation of the right to enforce as distinct from the right to regulate o Note that Section 58 entitles the Minister to make Bye-Laws for regulation of railway operations 11/28/2020 AYULI JEMIDE, Lead Partner, 17

Some Issues With The Window 5. Would Lenders in their Security package not be very interested in entering into “Direct Agreements” with NRC rather than the State entity? 11/28/2020 AYULI JEMIDE, Lead Partner, 18

Railway Assets Asset structure of components of the railway assets determine deal mechanics: - Transaction structure Financing Tenure of Concession Allocation of Risks Insurance mechanics Handover and Buy back mechanics 11/28/2020 AYULI JEMIDE, Lead Partner, 19

Railway Assets BOT Assets owned by Concessionaire for a Concession period Management or Service Concession – Concessionaire owns no railway asset Lagos Light Rail Model - Govt owns the tracks & Stations, whilst concessionaire owns the rolling stock 11/28/2020 AYULI JEMIDE, Lead Partner, 20

Railway Assets 1. Tracks - Are they in place? - Who owns them? - Is there a need for rehab or expansion? 11/28/2020 AYULI JEMIDE, Lead Partner, 21

Railway Assets 2. Right of Way - Commercialisation opportunities can increase PPP viability - Some countries have used their Railway Right of as Tourism assets 11/28/2020 AYULI JEMIDE, Lead Partner, 22

Railway Assets 3. Stations - - Shall we treat them as real estate? - How can they be used as deal sweeteners? 11/28/2020 AYULI JEMIDE, Lead Partner, 23

Railway Assets 4. Rolling Stock – Is Concessionaire providing some or all? - If they exist what value is placed on them? - Serviceable condition? - Shall we provide for Buy back? - Whole life costing is essential 11/28/2020 AYULI JEMIDE, Lead Partner, 24

Railway Assets 5. Personnel – - Existing at the time concession commences? Engaged by Concessionaire? How are they transferred in both situations? At the beginning and at end of concession period? - What liabilities do they come with at each point. - Should they be a contractual obligation to train Nigerian personnel during the concession period? 11/28/2020 AYULI JEMIDE, Lead Partner, 25

Railway Assets 6. Operational Licences/Approvals – What needs to be obtained? - What is transferable at beginning and end of concession? 11/28/2020 AYULI JEMIDE, Lead Partner, 26