Our client, a seasoned Nigerian investment company wanted to build a network of toll roads to serve the companies and people of Akamkpa in Cross River State. The company commenced negotiations for a 25-year concession agreement with the state government to build and toll this network of roads traversing the community.
While negotiations continued and based on an in-principle approval from the government, the company approached us to conduct a feasibility study and develop a business plan with a sensitized financial model for the project.
After conducting a tour of the community we sat down to agree a work plan with the client, which included:
- Conduct a road traffic study to measure the volume of types of vehicles that use the roads
- Develop an initial report on the feasibility of the project, to determine if it was wise to proceed
- Identify, shortlist and select the right contractor and technical partners.
- If the decision is positive develop a full business plan
- Identify potential investment partners and pitch to them
Our next visit to the community to conduct the traffic study was quite an adventure, as we were drawn into the epicenter of Akamkpa Community politics. We discovered it wasn’t enough for us to present a letter of authorization from the State Government to do our work.
We were “arrested” by the youth of the community and “arraigned” before the elders. After explaining our mission we were presented with a list of things we needed to provide to the community to “appease the gods”. We engaged an indigene of the community to negotiate on our behalf and promptly complied with the agreed requirements.
Thereafter it was smooth sailing – until it was not!.
Rumors started making the rounds that the government was planning to “make villagers pay to use their own road!” On the last day of our field study we were heading to the project site as usual when we heard that some youth had laid ambush for “those government agents”. We had to abort the trip and the study; and make do with the data we already had. Fortunately we had completed over 90% of the work.
Once back in Lagos we heaved a sigh of relief and faced the feasibility report. Contrary to our initial fears, the data at our disposal confirmed the viability of the project. They revealed that, because of the presence of many quarries in Akamkpa there was a huge daily traffic of heavy vehicles which, even at conservative tolling rates, would make the project more than worthwhile.
Even after applying some sensitivity tests, by varying traffic volumes and backing out small vehicles (because we suspected it would be tough to convince indigenous road users to pay tools), we could still see convincing viability indicators. Bolstered by these facts we went ahead with the full business plan and started wooing investors.
After more than 6 months of discussions and data sharing, we were finally able to secure an in-principle offer from the Overseas Private Investment Corporation (OPIC). They would confirm their interest when the government executes the concession agreement and offers some guarantees. We were able to attract OPIC because our client was dealing with USA-based contractors and technical partners.
We would be delighted to state here that this project was consummated as planned, but no! Just as we were finalizing things there was a cabinet shakeup in Cross River State. All but one of the commissioners handling the project were dropped. The new team refused to continue from where their predecessors left off, insisting on a fresh “due diligence” review.
As we speak (or write) our client is still trying to set the train back on track. So does this still qualify as a success story? We think so – we are proud that we were able to present a world-class proposal from Nigeria that met the high standards of the almighty OPIC. We are familiar with their requirements and have all their templates.
And we learnt a few lessons. An important one – be extra careful when you are dealing third world governments; a cabinet or regime change almost always means a policy shift!
Another lesson we are sharing with our client: learn when to move on. Life happens. Don’t spend too much time and money chasing after a failed deal.
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