Chris Agabi and Olumide Bajulaiye
10 July 2009
interview
Lagos — Ex-President Olusegun Obasanjo had introduced fuel tax to maintain roads. It generated condemnation. But an infrastructure developer/investor, Obadina Olugbenga, the vice chairman/CEO Ancient International says fuel tax may just be one innovative way to maintaining our roads. He spoke to our correspondents in Lagos.
Excerpts:
What is your line of business at Ancient International?
At Ancient International our focus is on real estate, transportation and energy. Obviously before now some of these where the exclusive preserve of the government. We believe some of these infrastructures are better designed, developed and managed by the private sector. We set out to address infrastructural investment and development. We started out in Nigeria but our outlook is the emerging markets anywhere in the world where we find the right opportunities. What is driving us is the infrastructure gap between the developing countries and the developed countries. What makes the difference is that there is sustainable infrastructure in developed countries compared to developing countries. We therefore figured out there are some things that had gone into the development of infrastructure in the so called developed nations which is not present in some developing nations. And at the onset we set ourselves out to unravel what exactly went into the development of those infrastructures. You also need to understand that when those infrastructures were been developed we didn't have access to the kind of technology and machinery we have today yet, those infrastructures have endured through ages. What we found out is that in Ancient times, it took more than just machineries and technologies to build infrastructure - what we call 'soft quality' was key. Soft quality like passion, execution, integrity - the pure desire to succeed, the pure desire to see a long lasting facility. It is all of these that played principal roles in the building of those infrastructures much more than technology, money and machinery and that is where we derived the name Ancient International. We felt that even though we are setting out to build future infrastructures in emerging economies we need to build them using the soft attributes that characterised past infrastructures in developed economies.
Basically Ancient International is an infrastructure investment and Development Company with strong focus on real estate, transportation and energy. What we have done in recent time is to structure the organisation along that line. We have Ancient International Lands (addresses real estate development); Ancient International Port and Ways (addresses transport development) and Ancient International Energy (addresses energy business). We are working on and also bidding for a couple infrastructure projects. Most of our projects are funded by private funds; one key thing we do is convince them to invest in our projects. The ability to convince them to buy into our projects is predicated on how we structure our projects and that is our core competence - introducing innovative thinking into proposed projects. We define proposed projects of the future to meet investment requirements of financiers today. And I can tell confidently, that there is no project we have taken to investors that were declined. Our competence is we identify projects projects with socio-economic impact, structure them in a way that the projects will be feasible technically and financially on a sustainable basis.
The financial turmoil has devastated businesses, what is the impact of the crunch on real estate and what are the possible escape routes for the property industry?
The success of what we do is our ability to raise funds to executive our innovative projects on a sustainable basis. Long term funding is not as available as before. With low funding now we would have to sit down and re-strategise. As an investment expert, I would ask; where is the money at this time? Where are the financiers? We will then innovatively structure projects that will delight investors. That is the cutting edge in this meltdown saga. Agencies that are funding at the moment have strong appetite for Export Credit Agencies (ECA) finance. The ECAs are particular about the contractors and the countries the equipments will be purchased from. So now we will look at the ECAs and design/structure our projects factoring in their preferred contractors even at the risk of additional cost.
Should government hands off road construction/maintenance because of the challenge we face in maintaining them?
There is no country in the world that government hands off road. But in advanced countries most new roads are developed by the private sector in partnership with government. That is why the large construction companies there have become the largest infrastructure owners in the world. Over time they have moved from construction companies to private funded initiative (PFI). Governments abroad now prefer to give roads on concession rather than by contracts. My take on roads in Nigeria is that government should do a traffic study on the roads and give viable ones up for concession. The amount of traffic a road generates determines its viability financially. The public owns the infrastructures not government; government just manage, so government cannot just give them out carelessly. I don't mind the fact that government is being careful and they are taking their time to do concessioning. We are bidding for the Apapa Expressway. Take traffic on Apapa Express road for instance, the traffic is so high that tolling it guarantees profit but if you toll it, you may just increase traffic at those toll points. But we believe that there are several models that have worked elsewhere and would work in Nigeria as well without inconveniencing road users.
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