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Legal Issues With Railway Public Private Partnerships In Nigeria

Legal Issues With Railway Public Private Partnerships In Nigeria. CWC NIGERIA INFRASTRUCTURE CONFERENCE ABUJA, November 18, 2009. Ayuli Jemide, Lead Partner. 1. 4/1/2014. 3 Major Issues. Relevant Legislations Issues arising from the NRC Act 3. Key Railway Assets .

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Legal Issues With Railway Public Private Partnerships In Nigeria

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  1. Legal Issues With Railway Public Private Partnerships In Nigeria CWC NIGERIA INFRASTRUCTURE CONFERENCE ABUJA, November 18, 2009 Ayuli Jemide, Lead Partner. 1 4/1/2014

  2. 3 Major Issues Relevant Legislations Issues arising from the NRC Act 3. Key Railway Assets AYULI JEMIDE, Lead Partner, 2 4/1/2014

  3. Relevant Legislations The Constitution Nigerian Railway Corporation Act 1955 Infrastructure Concession Regulatory Commission Act 2005 Utilities Charges Commission Act, 1992 Railway Bill (Pending Legislation) 4. National Transport Commission Bill (Pending Legislation) AYULI JEMIDE, Lead Partner, 3 4/1/2014

  4. Constitution AYULI JEMIDE, Lead Partner, 4 4/1/2014

  5. 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? AYULI JEMIDE, Lead Partner, 5 4/1/2014

  6. Nigerian Railway Corporation Act 1955 Vests all Railway Infrastructure in NRC from a “Vesting Day” AYULI JEMIDE, Lead Partner, 6 4/1/2014

  7. 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. AYULI JEMIDE, Lead Partner, 7 4/1/2014

  8. 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. AYULI JEMIDE, Lead Partner, 8 4/1/2014

  9. 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 AYULI JEMIDE, Lead Partner, 9 4/1/2014

  10. Nigerian Railway Corporation Act 1955 Is there a Framework for State or private persons to construct and operate a Railway in Nigeria? AYULI JEMIDE, Lead Partner, 10 4/1/2014

  11. 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” AYULI JEMIDE, Lead Partner, 11 4/1/2014

  12. This is currently the only window for States and private proponents to establish green-field railway infrastructure. NOTE: Railway Bill would expand thiswindow considerably when passed into Law. AYULI JEMIDE, Lead Partner, 12 4/1/2014

  13. Some Issues With The Window 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. AYULI JEMIDE, Lead Partner, 13 4/1/2014

  14. Some Issues With The Window Does the NRC “consent” include the right to sub-delegate 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? AYULI JEMIDE, Lead Partner, 14 4/1/2014

  15. 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 AYULI JEMIDE, Lead Partner, 15 4/1/2014

  16. 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? AYULI JEMIDE, Lead Partner, 16 4/1/2014

  17. Some Issues With The Window • 4. Can the “Primary Enforcer” model work in Nigeria? • Primary Enforcer means delegation of the right to enforce as distinct from the right to regulate • Note that Section 58 entitles the Minister to make Bye-Laws for regulation of railway operations AYULI JEMIDE, Lead Partner, 17 4/1/2014

  18. 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? AYULI JEMIDE, Lead Partner, 18 4/1/2014

  19. 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 AYULI JEMIDE, Lead Partner, 19 4/1/2014

  20. 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 AYULI JEMIDE, Lead Partner, 20 4/1/2014

  21. Railway Assets Tracks - Are they in place? - Who owns them? - Is there a need for rehab or expansion? AYULI JEMIDE, Lead Partner, 21 4/1/2014

  22. Railway Assets Right of Way - Commercialisation opportunities can increase PPP viability - Some countries have used their Railway Right of as Tourism assets AYULI JEMIDE, Lead Partner, 22 4/1/2014

  23. Railway Assets Stations- - Shall we treat them as real estate? - How can they be used as deal sweeteners? AYULI JEMIDE, Lead Partner, 23 4/1/2014

  24. Railway Assets 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 AYULI JEMIDE, Lead Partner, 24 4/1/2014

  25. Railway Assets 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? AYULI JEMIDE, Lead Partner, 25 4/1/2014

  26. Railway Assets Operational Licences/Approvals – What needs to be obtained? - What is transferable at beginning and end of concession? AYULI JEMIDE, Lead Partner, 26 4/1/2014

  27. Railway Assets Intellectual Property - Patents, Trademarks, etc Are they transferred? When? How? AYULI JEMIDE, Lead Partner, 27 4/1/2014

  28. Conclusion Railway Concessions are not a one size fits all. Every transaction is tailor made! AYULI JEMIDE, Lead Partner, 28 4/1/2014

  29. THANK YOU FOR LISTENING! AYULI JEMIDE, Lead Partner, 29 4/1/2014

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