Nigerian Society of Engineers releases Communique on Economy and the Engineering Sector

PRESS CONFERENCE ON THE COMMUNIQUE FROM THE COUNCIL MEETING OF NSE

Introduction 

Gentlemen of the Press, I welcome you all to this Briefing session, which is yet another in the series of our regular interactions with the media and by implication, the general public.

On this occasion, we issue a Communiqué from the meeting held on 21st April, 2016 by the Council of the Nigerian society of Engineers at the National Engineering Center, CBD, Abuja.

As a major stakeholder in the growth and development project of Nigeria, the Nigerian Society of Engineers has an avowed commitment to collaborate with governments at all levels and key private sector players, in hastening the realization of Nigeria’s developmental goals. This is based on the strong connection of the engineering profession to agricultural, infrastructural and industrial development activities and trends.

Today, our attention is on some topical issues that are gaining traction in the ongoing debate in putting our national life back on the course of progress and prosperity. The subjects are as enumerated below:

NSE’s Position on the Nigerian Railway Corporation Reform Bill 2015
This submission covers the observations, comments and recommendations of the Nigerian Society of Engineers to the Public Hearing of the Senate (National Assembly) on the Nigerian Railway Corporation Act (Repeal and Enactment) Bill, 2015 as proposed by Senator (Dr.) Emmanuel Andy Uba, MFR (Anambra South), which held on Monday, April 25, 2016.

The Bill is a private member bill, which is different and separate from the Nigeria Railway Authority Bill 2015 submitted to the National Assembly by the Executive. The Executive bill had received expansive inputs from various stakeholders in the transport sector before the past Executive submitted it to the National Assembly.

In our opinion, the (Repeal & Enactment) Bill has not addressed the major constraint to the development of railway transportation in the country, which is the need to unbundle the Nigerian Railway Corporation as presently constituted to make allowance for the participation of the private sector and sub national governments in the running of railways.

Objectives –

We believe that the objectives of this Bill should be to promote and regulate the efficient and sustainable development and operation of the railway sector; facilitate the development of competitive markets for services in the railway sector; promote the provision of safe, reliable and efficient railway services; increase the network of railway services and accessibility to railway infrastructure nationwide; encourage and promote private sector, state and local governments participation in the provision of railway infrastructure, operation and services; and finally, ensure the provision of a conducive environment for the protection of the rights and interests of operators, customers and other institutions operating in the railway sector.

The Bill as presented still retains the monolithic structure of the existing Nigeria Railway Corporation without consideration for unbundling of the current system and institutionalizing Public-Private Partnership (PPP) in the spirit of international best practice in railway governance and management in Nigeria. Articles: 10(2) (i), 11&12 vests the power of concessioning railway infrastructure on the corporation.

In recent times, there have been arguments for the separation of infrastructure ownership and rail traffic (rolling-stock) operations. The current Bill does not give consideration to this, as it maintains the status quo whereby the owners of infrastructure are also the owners/operators of rail traffic operations.

Unbundling of Nigerian Railway Corporation –

Moreover, it is imperative to unbundle the Nigerian Railway Corporation into viable entities using time-tested PPP models as has been exemplified in other nations with long history of railway operations. Separate private companies under suitable PPP arrangement could be formed to take care of Infrastructure Network, City/Inter-city Passenger Train Operations, Freight Traffic Operations and Leasing/Maintenance of Rolling stocks. For adequate credit enhancement, it is advisable that the company that manages or builds the track, also operates the rolling stocks. To complement the present scenario, State Governments and Local Governments should be given the right under an enabling law to invest in railway business without hindrance. This Bill under consideration should be redrafted to effect this proposition. States and LGAs that desire to improve the sections of the rail network within their geographical area could form companies to operate the current system and also enlarge the rail network within their area of jurisdiction, alone or in conjunction with proximate States and LGAs.

Need for Nigeria Railway Regulatory Agency –

Another observation in the Bill is that, it does not provide for a Regulatory Body that will perform regulatory functions in the rail sector as we have for the telecommunication industry in the Nigerian Communications Commission (NCC), for example. The Bill rather provides that regulatory functions will be performed by the Nigerian Railway Corporation. Therefore, it is anything but international best practice.  There should be a distinction between who implements, who operates and who regulates.

PPP Policy Framework –

For the proposed Nigerian Railway Corporation Act to be virile and efficient, a Public-Private Partnership (PPP) policy framework should be put in-place to guide administrators on the PPP arrangement and implementation guidelines to be adopted in the restructuring of the Nigeria Railway Corporation. This PPP framework should be specific to the Railway Industry.

In modern railway administration, as supported by international best practices, the responsibilities for safety, security, accidents and investigation are no longer vested in the Inspector of Railways. Rather these issues come under a Railway Safety Regulatory Agency that will be separate from the proposed Nigerian Railway Corporation. This body will be responsible for investigating the causes of accidents and for making recommendations based on lessons learnt.

The Bill should therefore, be redrafted to include consideration for Nigerian Content. The interest of Nigerians and Nigeria as they concern economic participation, professional inclusion and capacity building should be enshrined in the Bill. The era of state-owned rail systems had long passed. Many of the items in the bill did not capture a rail system that would be imbued with the best commercial and sustainability inputs required. The ownership and competition faced by state-owned railways have forced them to restructure in order to cope with the future. The experience of countless countries such as the UK, Germany, Argentina, South Africa are there for us to draw from. Privatization, commercialization or Structural Reforms are the way to go.

Recommendations –

The Nigerian Society of Engineers, having reviewed the proposed Nigerian Railway Corporation Act (Repeal and Enactment) Bill 2015 recommends as follows:

1. In other to achieve efficient operations and management in the Corporation, the core of the membership of the Governing Board should be Engineers. Specifically, the Vice Chairmen, Managing Director and at least three (3) of the four (4) Executive Directors should be qualified Engineers.
2. We recommend that a Railway Research and Development Institute be set up and fashioned along the line of the Korean Rail Research Institute or the Chinese Academy of Railway Sciences. It should aim at Training, Capacity Building, Research and Development for the railway transportation sector. The institute should be reasonably autonomous.
3. The Nigerian Railway Authority Bill proposed by the executive which made ample provisions for private sector participation and the institutionalization of a regulatory agency in the transport sector should be considered and subjected to further review and enactment.
4. The Nigerian Society of Engineers will participate actively in the review of the Nigerian Railway Authority Bill with a view to establishing a slim government organization saddled with the responsibility for regulation and safety, while operation and development are left to the private sector and sub national government.
5. An Accident Investigation Bureau should be established to consist of Civil/Structural department to handle issues on rail tracks and bridges, Mechanical Engineering department to cater for investigations concerning equipment and maintenance and Electrical Engineering department to handle issues and investigations concerning signals and communications.

Conclusion –

We have made the above critique and recommendations in order to support the efforts of the Federal Government of Nigeria in repositioning the Nigeria Railway Corporation for national, regional and global relevance. It is our desire to work with the Senate Committee on Land Transport to achieve a workable bill that will transform the railway sector in Nigeria by deploying international best practices in railway governance and management.

Nigerian Content Development under the Nigerian-Chinese Bi-Lateral Agreements
The Nigerian Society of Engineers (NSE) applauds President Muhammadu Buhari’s genuine concern for the growth of Nigeria and we believe that the recent visit to China to solicit Chinese government’s partnership and support in the efforts towards achieving growth and prosperity will yield maximum benefits in the long run.

However, we want to offer a few professional suggestions which we strongly believe will aid in achieving the desired benefits from the efforts. They are thus:

1. We need to apply Nigerian Engineering Resources strategically in policy formulation as well as implementation.
2. We must watch how some International Lenders or Donors tend to work against the participation of local professionals in the very important infrastructure projects being financed by them. In this regard, Mr. President, special note is taken of the Nigerian Railways Rehabilitation and Expansion Projects, as well as the Airport Terminal Buildings at the major airports. These projects do not appear to include any space for local participation as advocated by Engineers Against Poverty (EAP), Engineers without Frontiers (EwF) and other multilateral donors.
3. Since our country must pay back borrowed funds for these projects, we must endeavour to benefit beyond the completed infrastructure from the transactions, to the advantage of shoring up technology acquisitions and, by implication, Local Content Development.

It is notable that the performance of the local industry is not in doubt anytime an enabling environment is provided. Examples abound in the achievements of the late ‘70s to middle ‘80s and more recently in the execution of the PTF projects under Mr. President’s guidance.

The gains included;

• Shoring up the hitherto collapsing Engineering Consulting Industry in Nigeria and hence, putting engineers and other associated professionals countrywide back to work.
• General reduction in the hitherto very high infrastructure project Construction Procurement Costs.
• The much talked about technology acquisition in the various infrastructure areas.

This approach is recommended and considered to even be more appropriate in the current situation of our country. We trust that the above shall enhance Mr. President’s determination to actualize the Nigerian dream of rapid infrastructural development at affordable cost.

Using Africa’s Funds to Finance Africa’s Infrastructure
Many developing African countries should be in a position to finance infrastructural development wholly in spite of competing needs and financial constraints, if available public funds are judiciously, frugally and patriotically utilized, and private capital mobilized.

Policy-Based Finance for Infrastructure & Industry

In this regard, financial tools that developed and most developing nations apply for developing and maintaining their infrastructure and industry ought to be applied by African countries without further delay. Such tools include:

• Policy-based finance created and controlled by the National Governments, made available on a revolving commercial basis to prioritized projects through Development Banks. It was noted that Japan set aside about 50% of their general account (about 8% of GDP) in this regard to spur development.
• Policy-based credit provided from funds generated from Central Bank’s skillful use of her discount rates; deposit money banks, funds mobilized from external borrowing, excess crude oil and other minerals earnings.
• Strategic use of pension funds. 

Nigerian Infrastructure Report Card 2015: Way Forward
The 2015 Nigerian Infrastructure Report Card, which used inputs of professional Engineers and other stakeholders from across the country as a basis, scored the infrastructure position of our country as “E2” meaning a score of 2.08 out of 5. This means that the present condition of our national infrastructure across all sectors is a threat to public safety.

Arising from a meeting held between our Society and officials of the Federal Ministry of Budget and National Planning, we are recommending as follows:

1. The Nigerian Society of Engineers will continue to undertake this initiative on a biannual basis, independent of government funding. This will involve continuous updating of the Report Card and promotion of the adoption and application of the package by relevant parties. However, we are open to support from external multilateral agencies that are well established in upholding the principles of good governance.
2. The Nigerian Society of Engineers (NSE) seeks closer collaboration with Federal Ministry of Budget and Planning in promoting harmonization of National capacity building programmes to ensureenhanced planning, execution and management of major NIIMP programmes and projects. 
3. The Federal Ministry of Budget and Planning in partnership with NSE should champion National Capacity Development and strengthening of public institutions and personnel in both public and private sector in order to enhance infrastructure procurement and management in Nigeria.
4. As part of our token contribution to National Development, NSE has resolved to set up three specialized bureaus as below –
1. An Engineering Manpower Planning Bureau to identify and highlight the demand     level of professional engineering and other technical personnel, the supply level and subsequently, to establish the demand/supply gap.
2. A Cost Indices/Infrastructural Scorecard Bureau. This will constantly review rates of engineering materials as may be required for project estimates and also seek to revise/review the infrastructural Scorecard report biannually, the next edition being due in 2017.
3. An Engineering Accreditation Bureau to review and recommend on curriculum development, training and accreditation issues in engineering faculties in universities and other technical institutes.

NSE’s Engagement with Ministry of Labour and Employment –

In continuation of our regular interactions with government, we recently met with the Hon. Minister of Labour and Employment. Highlights of discussions at the meeting include:

1. NSE is desirous of working in synergy with the Ministry. The Society is focused on persuading government to set up industries to produce/manufacture goods rather than import them.
2. NSE wishes to partner with the Ministry in undertaking the issuance of periodical certificates to factories and industrial houses in respect of compliance with safety standards & regulations to ensure that a safe, healthy working environment is guaranteed for workers as well as institute good manufacturing practice.
3. The Ministry of Labour & Employment is an Industrial Engineering Ministry, and it is key to structuring and manning industrial activities. It is therefore the responsibility of the Ministry to undertake inspection of factories, industrial facilities including equipment such as Pressure Vessels, Boilers etc. 

With our array of experienced and accomplished professionals as well as a history of affiliations and collaborations with international counterparts, we are ready to make positive contributions that are capable of hastening the realization of Nigeria’s developmental goals. This is based on the strong connection of the engineering profession to agricultural, infrastructural and industrial development activities and trends. We are optimistic that this is a move that could eventually deliver the turning point in the economic fortunes of our nation.

Thank you for listening.
Engr. Otis Anyaeji, FNSE, FAEng
President