Transcript Legal Issues With Railway Public Private Partnerships In

CWC
NIGERIA INFRASTRUCTURE CONFERENCE
ABUJA, November 18, 2009
Legal Issues With Railway Public Private
Partnerships In Nigeria
Ayuli Jemide,
Lead Partner.
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3 Major Issues
1. Relevant Legislations
2. Issues arising from the NRC Act
3. Key Railway Assets
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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)
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Constitution
Exclusive List
Concurrent List
Residual List
Federal Roads
Maritime
Aviation
Mines & Minerals
Railways ?
Nuclear Energy
Electric Power
Industrial,
Commercial &
Agric Dev.
Education
Urban planning
Transportation
State Roads
Water
Housing
Health
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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?
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Nigerian Railway Corporation Act 1955
o Vests all Railway Infrastructure in NRC
from a “Vesting Day”
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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.
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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.
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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. S17
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Nigerian Railway Corporation Act 1955
•
Is there a Framework for State or private
persons to construct and operate a
Railway in Nigeria?
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Nigerian Railway Corporation Act 1955
•
S29 – “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”
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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.
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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.
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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?
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Some Issues With The Window
3.
What would be a PPP under the ICRC
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
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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?
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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
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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?
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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
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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
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Railway Assets
1. Tracks
- Are they in place?
- Who owns them?
- Is there a need for rehab or expansion?
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Railway Assets
2. Right of Way
- Commercialisation opportunities can increase
PPP viability
- Some countries have used their Railway Right of
as Tourism assets
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Railway Assets
3. Stations
-
- Shall we treat them as real estate?
- How can they be used as deal sweeteners?
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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
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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?
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Railway Assets
6. Operational Licences/Approvals
–
What needs to be obtained?
- What is transferable at beginning and end of
concession?
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Railway Assets
7. Intellectual Property
- Patents, Trademarks, etc
Are they transferred? When? How?
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Conclusion
Railway Concessions are not a one size fits all.
Every transaction is tailor made!
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THANK YOU FOR LISTENING!
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