Nigeria’s PPP Reset: ICRC Tightens Safeguards Around Deals

By Toyeeb Iliasu

Nigeria’s Infrastructure Concession and Regulatory Commission (ICRC) is tightening safeguards around public-private partnership (PPP) projects, introducing a standard concession agreement, mandatory provisions for periodic contract reviews and stronger compliance monitoring in a bid to prevent a recurrence of controversial infrastructure deals.
The Director-General of the commission, Dr. Jobson Ewalefoh, disclosed this recently, explaining that lessons from past PPP failures had exposed weaknesses in risk allocation, contract drafting, inter-agency coordination and enforcement of contractual obligations.
According to him, many of the problems that have plagued infrastructure concessions in Nigeria stem from agreements that were poorly structured, inadequately understood or signed without sufficient provisions for managing unforeseen developments throughout the life of a project.
“PPPs are complex transactions,” Ewalefoh said, noting that projects often begin with assumptions and feasibility studies, but conditions can change significantly once agreements are signed and operations commence.
He argued that the critical issue is not necessarily that projects encounter difficulties, but whether the contracts governing them adequately anticipate those difficulties and provide workable mechanisms for resolving them.

Learning from past failures
Nigeria’s experience with privatisation and infrastructure concessions offers important lessons about the consequences of weak contractual frameworks.
Ewalefoh recalled that the power sector privatisation and some of the country’s early port concessions predated the establishment of the ICRC under its 2005 legislation. Consequently, several agreements were developed under earlier arrangements without the benefit of the standards and regulatory oversight subsequently introduced.
He said some inherited agreements lacked essential safeguards, including clear procedures for amendments when circumstances changed. Others did not adequately address force majeure events, disputes and the allocation of risks between government and private investors.
Such omissions can become costly when economic conditions shift, projects encounter operational difficulties or the parties disagree over their respective responsibilities.
The lesson, he explained, is that every PPP must be structured around the specific risks of its sector and the circumstances likely to arise over the concession period.
Risk assessment must therefore go beyond the assumptions underpinning the initial feasibility study. Contracts must also establish what happens when those assumptions no longer hold, who bears the resulting costs and how disagreements will be resolved.
“Even if a project will go wrong there should be safeguards in the contracts to address it,” Ewalefoh said.
He added that the commission now insists on periodic reviews and provisions allowing either party to trigger amendments where necessary. Such flexibility, however, must operate within clearly defined contractual procedures rather than leave agreements open to arbitrary changes.

A common framework for concession agreements
A major reform highlighted by Ewalefoh is the development of a model concession agreement intended to address inconsistencies in PPP contracts prepared by different ministries, departments and agencies (MDAs).
The commission approached the Federal Ministry of Justice to develop a uniform template that government institutions could adapt to individual projects, taking account of their distinct commercial, technical and operational requirements.
According to the director-general, the model agreement was launched by the Attorney-General of the Federation approximately four months ago.
The initiative is intended to improve the quality of contract drafting, clarify the distribution of risks and accelerate the ICRC’s review of proposed agreements.
Although a common template cannot eliminate every project-specific challenge, it provides a consistent starting point for negotiations and reduces the likelihood that essential contractual protections will be overlooked.
Another significant change concerns the use of memoranda of understanding (MoUs) to advance investment proposals without sufficiently developed contractual commitments.
Ewalefoh said the commission had encountered prospective investors who secured MoUs with government agencies while leaving the government exposed to substantial liabilities.
Under the new framework, he explained, MoUs no longer have a place as substitutes for properly structured PPP concession agreements.
The objective is to ensure that projects progress through a more rigorous contractual process, with clearly defined obligations and an appropriate assessment of the risks before commitments are made.

^Investor interest remains strong, but confidence matters*
Despite concerns about currency volatility, political uncertainty, financing costs and the wider business environment, Ewalefoh said Nigeria continues to attract proposals from investors seeking opportunities in infrastructure.
He attributed this interest to the country’s substantial infrastructure needs and the potential returns available to investors willing to finance and operate essential public assets.
However, he acknowledged that policy certainty remains central to investment decisions.
Investors committing substantial foreign capital must have confidence in the rules governing their investments, including the management of foreign exchange and the repatriation of capital and returns in accordance with applicable regulations.
He pointed to the foreign-exchange reforms introduced by President Bola Tinubu at the beginning of his administration as an important development in addressing investor concerns.
Ewalefoh also highlighted the growing capacity of domestic financial institutions to support major infrastructure projects.
As an example, he cited the Zungeru hydropower project, saying approximately $700 million was raised locally to finance it. The project illustrates the potential for domestic capital to support infrastructure development and reduce exclusive dependence on foreign financing.
Nevertheless, he acknowledged that progress in the investment environment does not mean all barriers have disappeared.

From signing contracts to enforcing them
Beyond contract design, the ICRC chief identified weak coordination among government agencies as a continuing challenge.
Infrastructure projects frequently require approvals, services and cooperation from multiple institutions. Where agencies operate independently or pursue conflicting objectives, investors can face delays, uncertainty and additional costs.
He called for better communication, closer collaboration and a shared understanding of government investment priorities.
More importantly, Ewalefoh said the commission intends to strengthen monitoring and compliance with PPP agreements, an area in which he acknowledged that lapses have occurred.
In his assessment, signing a contract is only the beginning. The expected benefits of a concession will not materialise unless both government and private partners fulfil their commitments.
Private investors must deliver the infrastructure, services and performance levels they have agreed to provide, while public institutions must honour their own contractual responsibilities.
The commission therefore plans to give greater attention to ensuring that parties are held accountable for their obligations.
This focus is particularly important because weak enforcement can undermine even well-drafted agreements, encouraging parties to avoid commitments without facing appropriate consequences.

Turning the infrastructure deficit into an opportunity
Nigeria’s enormous infrastructure deficit remains a major challenge, but Ewalefoh views it primarily as an investment opportunity.
The need for roads, power, ports and other essential infrastructure creates a substantial market for private capital, provided projects are commercially viable and supported by credible contractual arrangements.
The reforms outlined by the ICRC suggest a shift towards treating PPP governance as a continuous process rather than a one-off approval exercise.
Standardised concession agreements, clearer risk allocation, provisions for periodic review, restrictions on reliance on MoUs and stronger compliance monitoring represent important steps towards improving accountability.
Ultimately, however, the success of these safeguards will depend on their consistent application across government institutions and throughout the life of each project.
For Nigeria, the challenge is no longer simply to attract investors willing to finance infrastructure. It is to structure agreements that protect the public interest, distribute risks fairly and ensure that promised investments translate into reliable infrastructure and better services for citizens.
Ewalefoh’s message is that past failures should not discourage private participation. Rather, they should compel government to build stronger contractual foundations, improve coordination and enforce the commitments on which successful partnerships depend.

*Iliasu is a public affairs analyst