Public-Private Partnerships & Concessions

Public-Private Partnerships & Concessions

Quick Answer: PPPs and concessions in Nigeria are governed by the Infrastructure Concession Regulatory Commission Act 2005, which allows MDAs to grant concessions to qualified private proponents to finance, build, operate and maintain federal infrastructure, subject to FEC approval, open competitive bidding, and ICRC custody of the executed agreement.

The ICRC Act 2005

The Infrastructure Concession Regulatory Commission (Establishment, etc.) Act, 2005 (enacted 10 November 2005) is the principal PPP legislation. Part I (§§1-7) permits any Federal MDA to enter into a concession with a qualified private proponent for the financing, construction, operation, or maintenance of infrastructure. Section 2 requires MDA priority projects to be submitted to the Federal Executive Council for approval before contracting; §3 prohibits any guarantee, letter of comfort, or undertaking without FEC approval. Section 4 mandates open competitive public bidding advertised in at least three national newspapers, with award to the bidder with the most technically and economically comprehensive bid. Direct negotiation (§5) is reserved for exceptional cases (a single qualified bidder), and the concession duration is as specified in the agreement (§6).

What "infrastructure" and "concession" cover

Under the Act, infrastructure includes power plants, highways, seaports, airports, dams, railways, water supply, telecommunications, housing, education and health facilities, solid waste management, and other projects approved by FEC. A concession is a contractual arrangement where the proponent undertakes construction (including financing), operation, and maintenance, and recovers its investment through user charges or payments over the concession term (§§6-7).

The ICRC and its functions

The Infrastructure Concession Regulatory Commission (ICRC) is established by Part II (§14), headquartered in Abuja, with a Governing Board comprising a part-time Chairman, the Attorney-General, the Minister of Finance, the Secretary to the Government of the Federation, the CBN Governor, one person from each geopolitical zone (at least two women), and the Director General (§15). Members are appointed by the President, subject to Senate confirmation, for a renewable four-year term. Section 20 requires the ICRC to take custody of every concession agreement, monitor compliance with its terms, and ensure efficient execution.

The PPP lifecycle (six stages)

1. Project Identification — the MDA proposes a project from the priority infrastructure list.
2. Feasibility Assessment — an Outline Business Case (OBC) is prepared, and the ICRC issues a Certificate of Compliance.
3. Approval — the FEC approves the project and the procurement method.
4. Procurement — competitive tender, or Swiss challenge / direct / unsolicited proposal where justified.
5. Implementation — financial close and construction.
6. Operations & Monitoring — the ICRC monitors performance against agreed KPIs.

PPP/concession vs outright procurement

The distinction matters for the exam:

• Outright procurement (PPA 2007) — government pays the contractor from appropriation; ownership transfers to government on completion.
• PPP/concession (ICRC Act) — the private proponent finances and operates, recovering its investment over the concession; ownership typically reverts to government at the end of the term (e.g., port terminals, toll roads, independent power projects).

Value-for-money assessment

A value-for-money assessment is required before a PPP is approved — the Outline Business Case must show the PPP delivers better risk allocation, lower lifecycle cost, or higher service quality than conventional procurement. The ICRC PPP Regulations 2014 and the National Policy on PPP operationalise this test. Notable Nigerian concessions include the NPA port terminal concessioning from 2006, toll roads (Lagos-Ibadan, Abuja-Lokoja corridors), and power privatisation under the NIPP. The supporting legal framework includes CAMA, the DMO Act, the CBN Act, the NIPC Act, the Land Use Act, and sector-specific regulators (NERC, NPA, NIMASA, FAAN, NRC).

Risk allocation and the concession term

The defining feature of a sound PPP is optimal risk allocation: each risk is borne by the party best able to manage it. Construction risk typically sits with the private proponent; demand/revenue risk may be shared; regulatory and political risk sits with government; and force majeure risk is shared through insurance. The concession term is long (commonly 20-30 years for transport and power) to allow the proponent to recover investment while keeping the asset in public ownership at handback. The Outline Business Case must demonstrate that handback conditions — asset condition at the end of the term — protect the public interest.

Unsolicited proposals and Swiss challenge

The ICRC framework allows unsolicited proposals (§5 context): a private party may propose a project the government had not identified. Where accepted, government may use a Swiss challenge — inviting competing bids against the original proposer, who has a right of first refusal at the best competing price. This balances innovation with transparency.

Why PPP matters for the COMPRO candidate

PPP and concession questions test whether the candidate understands that the PPA 2007 governs outright procurement (government pays, owns on completion) while the ICRC Act 2005 governs concessions (private party finances and operates, ownership reverts at handback). Mixing the two regimes is a common error. Remember: a contract for goods or works below ₦5bn is a PPA matter; a 25-year port terminal lease is an ICRC matter.

PPP vs conventional procurement at a glance