The 1st Key Element of The 7 Point Agenda - Critical Infrastructure

THE KEY ELEMENTS OF THE 7-POINT AGENDA:

The key elements of the program are the constituent parts or sub-programs which must interface seamlessly to ensure their effect is fully felt at the expected impact points. It must be borne in mind that success in each individual category will translate to the overall success of the 7-POINT AGENDA. Essentially, clearer and fuller understanding, buy-in and support of all Nigerians towards attaining success implementation of these constituent parts are central to its success.

The 1st key element is of the 7-Point Agenda – Critical Infrastructure
This refers to infrastructure that support improved levels of efficiency and effectiveness in goods and service delivery. They include electricity, transportation (road, rail, etc), national gas distribution and telecommunication. The development of these sectors will accelerate Nigeria’s development as a modern economy and as an industrialized nation by 2020.

Its sub sectors are as follows:-

- Power / Energy
- Mass Transportation
- Telecommunications
- National Gas Infrastructure

The provision of critical infrastructure is vital to President Yar’Adua’s determination to make his tenure as the take-off phase of Nigeria’s Vision 20:20. The sub-sectors of electricity, transportation, telecommunications, waterways and the national gas grid distribution are prioritized in the 7-point agenda due to their cross-cutting significance to the Nigerian economy.

1.1 Power

Currently there are numerous problems within the power sector. The problems can be attributed to a number of issues and challenges. These issues can be categorized in two broad categories, technology-related and reform related.

(a) Technology Related

The technology related issues point to inadequate electricity production and supply infrastructure, insufficient gas supply, limited investment and funding, inappropriate pricing, poor management, unclear ownership, and conflicting goals and objectives.

(b) Reform-Related

Reform related issues, in contrast relate to the inappropriate implementation and co-ordination of initiatives and government programs, unsuitable industry structure and ineffective regulation brought about by the consequences of the 2001 electricity reform program.
As such, the failure to provide adequate and reliable electricity justifies the evolution of initiatives to transform the industry. Central to the transformation of this sector are the following:

· attracting private investors to invest in the industry;

· clearly defining the roles and involvement of the private and public sector in power

generation, transmission and distribution;

· improving transmission and distribution networks to support generation capacity, and;

· Increasing the overall power generation capacity through diversification and the installation of gas distributions grids. This will also include the replacement of existing plants and other activities.

1.2 Transports

The thrust of the transport policy is the attainment of an efficient inter-modal system that effectively links the different modes of transport. Improved transport will not only bring down the cost of doing business, but subsequently speed-up the growth rate of the Gross Domestic Product (GDP) in the country. Under the 7-point agenda, improvements to the transport sector focuses on rail road and marine transport.

1.2.1 Rail Transportation

The issues identified below form the basis for the strategy for rail transportation.

(a) Narrow Guage Vs. Standard Guage – the continued debate on gauge has been a major impediment to clear and focused FG interventions in the railway sector. The administration aims to resolve the issue by addressing the matter in a holistic manner. Any further investment in rail transportation will need to be in line with existing feasibility studies undertaken and be viable.

(b) Tracks and Rolling Stock – the major impediment to effective and efficient rail operations is inadequate tracks and rolling stock. This growing gap will be closed through concessioning of the Nigerian Railway Corporation (NRC).

(c) Expansion of the Railways- Apart from the Itakpe – Ajaokuta-Warri line (329km) and the Eleme-Onne Port (19km), which remain incomplete, Nigeria has not added anything of significance to the railway system since 1964.

The 7-point Agenda proposes some expansions as priority projects to link the Federal Capital Territory to the railway system and also to the three major ports. The seaports in Lagos and Port-Harcourt shall be linked to the railway while feasibility studies shall be commissioned on the possibility of linking major airports with the railway to reduce congestion in intra-city transport. As stated above, the major policy framework for implementing the transformation of the railway sub-sector is concessioning of the Nigerian Railway Corporation (NRC). The Action Plan, which commenced this year, is to change the legal and the regulatory frameworks, followed by the restructuring and concessioning of NRC and finally, rehabilitation and expansion of the railways.

1.2.2 Road Transportation

The current issued and challenges relating to road transportation include:

· the over-reliance on the road networks;

· the poor maintenance of roads, inadequate investment in road transportation and;

· a multiplicity of agencies with conflicting objectives

Concession of commercially viable road network, as a way of attracting private sector investment and participation, will be the central theme of the sector. Issues pertaining to pricing, institutional arrangement and establishment of a Road Fund are considered important elements for the transformation of the industry.

1.2.3 Marine Transportation

The needs, objectives and nature of the proposed transforming of the marine industry form the focus of strategy. The model is centered on concessioning infrastructure and marine routes.
In order to achieve private sector participation, it is considered that viability of the navigable rivers is tackled.

1.2.4 Inter-Modal Transportation

Inter-modal systems – approaching transportation of people and cargoes from an economic perspective means the development of an integrated inter-modal transport system. The transport system with the constituent arteries, i.e. road networks, waterways and railways will link all the sea ports and airports together. The role the railway system is expected to play in the inter-modal system is in the haulage of low value, bulk commodities, containers and petroleum products.

1.3 Telecommunications

The impediments to efficient delivery of high quality service include the inadequacy of infrastructure backbone, dearth of fixed lines, weak or non existent regulations to deal with anti-competition behaviors, lack of rural telephony coverage and inability to meet universal service obligation, as well as the decisive resolution of the ownership and control of SAT-3 that links Nigeria to parts of Africa, Europe and Asia.

Strategies that will be used to improve telecommunication services in the country include:

· Enactment of Anti-trust law

· Effective regulation

· Infrastructure upgrade by the national operators

· Incremental expansion into rural areas

· Decisive resolution of ownership and use of SAT-3; and

· Effective utilization of the universal Access Fund.

1.4 National Gas Infrastructure

As gas reserves decline and the importance of gas in the industrialized nation’s increases, the resultant rising gas prices in the international market continues to create an opportunity for the export of Liquefied Natural Gas (LNG). This has resulted in a disproportionate focus by gas producers in the country on LNG projects thereby creating a significant shortfall in the availability of gas for rising domestic utilization, which threatens the economic aspirations of the nation. Gas demand is forecast to grow from the current level of 5 bcf/d to about 20 bcf/d by 2012. Projected growth in the domestic sector is the most visible, growing from less than 1bcf/d in 2007 to about 8bcf/d by 2012.

The energy requirement to sustain an aggressive GDP growth drive is enormous. Currently, demand (export and domestic) for natural gas far outstrips supply, which is driven by growth in the power sector and other gas based industries such as fertilizers, cement, methanol, LNG etc. these industries, unable to compete in high gas cost locations, have expressed strong interest in relocating to Nigeria. However, Nigeria needs to demonstrate the availability and affordability of gas or risk losing these industries to competing nations.

There are a number of challenges facing the gas sector including

(a) Inflexible industry structure: the industry is dominated by a few key upstream players. The five big international oil companies (IOCs) namely; Shell, Chevron-Texaco, Exxon-Mobil, Addax and British Petroleum, operate over 90% of the total gas reserves in the country. These companies have a dominant downstream interest, primary in LNG exports. The consequence of this structure is a preferential focus on gas supply to LNG export projects.

This has complicated access to gas for third party downstream investors who require the gas for domestic downstream uses, but have no access to upstream gas supply. Some intervention is required, if the opportunity is to be preserved.

(b) Infrastructure Optimization: the existing infrastructure in the country is inadequate to handle future demand. The issues with infrastructure include:

i. proliferation of processing plants

ii. infrastructure capacity

iii. pipeline connectivity and redundancy

iv. Pipeline optimization.

Nigeria will therefore embark on overcoming these challenges by installing a National Gas Distribution Grid taking off from the Niger Delta Regional Gas Grid. The latter will be a well thought out strategy to make the region the natural location of a buoyant petrochemical industry linked to the world markets by sea, and to the home market though an effective intermodal system of transport.