1. 1 Key Considerations for Financing PPP’s In Nigeria Ayuli Jemide, Lead Partner British Expertise/The CITYUK PPP roundtable 11 th February, 2013

2. 2 Let us assume for the next 15 minutes that I have just been appointed the CEO of a UK Financial Institution looking to lend money to Nigerian PPP projects. From experiential knowledge there are 3 things I will consider doing in financing PPP projects in Nigeria. Introduction

3. 3 1. Be an Early Bird on Projects.

4. 4 a)Supporting a bidder at the Procurement Stage is the best time to come on board. b) Being on the team negotiating the Concession Agreement is an opportunity to deals with the risk allocation and bankability issues from source. c) Avoid substantial delays from 2 nd guessing Lenders during project negotiations. Benefits for Early Birds

5. 5 2. 2. Change the approach to requests for Federal Government (FGN) Support Agreements.

6. 6 FGN Guarantees on PPP projects Typical Guarantees are Irrevocable Standing Payment Orders ( ISPO) for a liquidated sum Federal Account States Monthly Income ISPO Application Accountant General of Federation Monthly Deductions Trustees Bank for Bondholders

7. 7 Does this really work with PPP projects a)Irrevocable Standing Payment Orders for a liquidated sum are different from FGN support agreements for project contingent liabilities. b)There is currently no clear policy regarding ISPO (or FGN Support Agreements) for PPP projects.

8. 8 FGN Guarantees on PPP projects b) The process for obtaining FGN support agreements enlarge Long Stop Date for achieving CP’s and increase project costs. c) MIGA and other multilateral agencies are beginning to accept guarantees from sub sovereigns and their agencies – this may whittle the requirement for FGN support on some projects.

9. 9 FGN Guarantees on PPP projects d) There is a political risk with FGN support agreements on both state government or FGN projects. e) Some states generate more income internally than their Federal allocations. Others have absolutely no wiggle room on their Federal Allocations.

10. 10 FGN Guarantees on PPP projects f) There may be several less painful options: i)An ISPO or other collateral backed bank guarantee from a first class Nigerian bank with back-to-back guarantees from a UK bank? ii) A simple cash backed bank guarantee by Federal or State where the sum guaranteed can be afforded and set aside in an interest earning escrow account?

11. 11 3. Pay attention to Procurement process for every project.

12. 12 Procurement is the next big thing! a) Federal Public Procurement & Infrastructure Concession Regulatory Commission Acts have high procurement standards. b)Covers: Goods, Works and Services c)Some states have PPP laws and procurement laws. d)There are substantial overlaps on the procurement side with some laws: - ICRC vs BPP and BPE -BPE vs BPP

13. 13 Procurement is the next big thing! The risk of project cancellation is increased exponentially where the project has procurement flaws. Procurement laws are taken very seriously – Ask Chief Bode George for details!!

14. 14 Thank you for listening!