On Fuel Price Hike, Highway Maintenance and Toll Gates

INTRODUCTION

In the recent fuel price hike announced by Rasheed Gbadamosi's PPPRA and Nigeria's President Obasanjo, a N1.50 per liter charge was included to attain the new N40 per liter for petrol (PMS), N38 for kerosene (DPK) and N38 for diesel (AGO.)   If our national total daily fuel consumption were indeed 30 million per liter, that would rake in N45 million per day available for highway maintenance - or N16.425 billion annually.

That is a lot of dough.

THE NAIRA FIGURES WITH RESPECT TO ROAD REHABILITATION AND NEW CONSTRUCTION

Now if the money was to be employed to actually maintain our highways, how many kilometers would N16.425 billion maintain in terms of rehabilitation and resurfacing - rather than construction of new ones?

To answer that question, please visit with me another government site, another dividend of democracy and information technology, courtesy former Works and Housing Minister Tony Anenih: 

http://www.nopa.net/Works_and_Housing/messages/12.shtml
Federal Ministry of Works and Housing
Achievements of the Federal Highways Department
Posted April 13, 2002

QUOTE

COMPLETION OF PETROELUM (SPECIAL) TRUST FUND (PTF) ROADS PROJECTS

The Petroleum (Special) Trust Fund (PTF) which has been scrapped by Government has handed-over about 12,000 km of Federal roads and about 6,000 km of State and Local Government roads to the Federal Ministry of Works and Housing for completion.

Government has already awarded the Contract for the completion of the Rehabilitation of the Enugu - Port Harcourt dual carriage road in the sum of =N=5,100,000,000.00 with a completion period of twenty-four (24) months. Works will soon commence on the other road projects that require priority attention like the Onitsha - Enugu dualcarriage road, the Onitsha - Owerri and Port Harcourt - Warri East - West roads. In addition, Government has already approved the resumption of works on the Minna - Gwada - Sarkin Pawa - Kaduna road at the sum of =N=5,322,982,084.50 with a completion period of twenty four (24) months. The completion of the following projects were also approved:-

(i) Construction of the Argungu bridge at the cost =N=197,367,293.36 with a completion period of nine (9) months;

(ii) Rehabilitation of the Kaduna Refinery dual carriageway road at the cost =N=1,401,350,871.37 with a completion period of eighteen (18) months

(iii) Rehabilitation of the Jos - Bauchi road at the cost of =N=1,787,537,253.24 with a completion period of twelve (12) months.

UNQUOTE

At least there is a passing nod to Abacha/Buhari's PTF - but imagine planning on spending N1.4 billion on Kaduna refinery dual carriageway - and no fuel!

Moving on…

Now the Enugu-Port Harcourt dual carriage road (9% completed)  is 225 kilometers, yielding N22.67 million per kilometer; the Minna-Gwada-Sarkin Pawa - Kaduna road (60% completed) is 62.85 kilometers, or N84.69 million per kilometer;  the new Kaduna Refinery dual carriageway road (10% completed) is 12 kilometers, or N116.78 million per kilometer (the highest per kilometer in the nation); and the Jos - Bauchi road (6% completed) is 117.5 kilometers or N15.21 million per kilometer.  (See Table "ACHIEVEMENTS IN THE NATIONAL ROADS REHABILITATION / CONSTRUCTION PROGRAMME" http://www.nopa.net/Works_and_Housing/messages/tableFHD2.shtml )

On further inspection of the Table referred to, we see that rehabilitation costs vary from as low as N3 - 5 million per kilometer [eg. the 141 kilometer Rehabilitation of Umuahia - Ariam - Ikot Ekpene road through Abia and Akwa-Ibom States; the 104.8 kilometer rehabilitation of the Rehabilitation of Idah - Ayangba road & Dekina - Shintaku road in Kogi State (completed) and the 60 kilometer rehabilitation of the Rehabilitation of Tegina - Zungeru road in Niger State (15% completed)] to as high as roughly N102 - 117 million per kilometer [eg the 66 kilometer rehabilitation of Okigwe-Afikpo road in Ebonyi State (5% completed) or the 2.54 kilometer rehabilitation of the Adeniji Adele road in Lagos State (completed) as well as the aforementioned Kaduna Refinery dual carriageway ].

That is quite some variation per kilometer, which requires some pretty heavy explanation.

Again, according to the table, the total kilometers of roads rehabilitated and to be rehabilitated is 5,570 kilometers, with a total bill of N103.29 billion - or N18.54 million per kilometer for rehabilitation. That means that we can expect our annual N16.24 billion for highway maintenance via fuel surcharge to rehabilitate only roughly 880 kilometers, out of a total of 32,000 kilometers of existing federal road,12,000 kilometers of which are "good", according to Tony Anenih!  Government aims to rehabilitate 2,500 kilometers ANNUALLY, meaning that it must shell out roughly N46.36 billion annually.

On the other hand, the table also shows that total kilometers of NEW roads built or to be built during the prescribed period is 1,006 kilometers, with a total bill of N94.41 billion - or roughly N93.87 million per kilometer.  Our surcharge will build only 173 kilometers of new roads!

But what other other relationship is there between crude/refined products in the country and our highways?     To answer that question,

QUOTE

3.6 PROBLEMS ENCOUNTERED SO FAR

3.6.1 One of the major constraints this administration encountered in the road rehabilitation programme is the acute scarcity of bitumen and its high price. Bitumen is one of the most important component of the road building materials required for the actualisation of the strategic road programme. Without bitumen the entire road programme will be frustrated and stalled. It will be recalled that bitumen was produced at the Kaduna Refinery which has been out of order long before the inception of this administration. All the bitumen presently utilised in the country for road construction works is imported. This condition prevailed at the inception of the PTF road programme and the former Military regime promptly stepped in and allowed special imports to overcome the problem. Government has initiated a programme for the exploitation of the huge bitumen deposits in Ondo State to reduce the quantity of imported bitumen.

3.6.2 Another major problem encountered is the scarcity of diesel and other fuels. This resulted in the highway contractors procuring the products at prices far above the official pump prices. However with the repairs of the refineries, the supply and distribution of these petroleum products is improving to normal.

UNQUOTE

So we see that we have a CIRCUITOUS problem - high cost of road construction because of lack of diesel and other fuels (from all the refineries), as well as bitumen (which used to come from Kaduna Refinery at no more than 1.796 metric tonnes per day at maximum capacity; production of refinery bitumen ended in Kaduna in mid-1997). Yet a surcharge on the same refined products to carry out highway maintenance is in effect!

The economics maze can certainly make one lose his hair.

HIGHWAY TOLL GATES - OFFICIAL AND UNOFFICIAL

An example is sufficient to make my point here.  The distance between Akure and Abuja is roughly 700 kilometers.  There are only two official toll gates along this entire length - each charging a ridiculous N20.00 or thereabout per vehicle.  Thus you require 900,000 passes at such toll gate to be able to rehabilitate one kilometer of road!

That is a tall order.

However, with a highway maintenance fee of N1.50 being added for the new price regime, vehicles with fuel efficiency, 20 - 30 miles per gallon (or 8.5 - 12.76 km per liter) in effect are paying an additional N83 - 124 as they go from  Akure to Abuja. (At those fuel efficiencies, N1.5 per liter is equivalent to 12 kobo to 18 kobo per mile).

I once counted 42 police "wetin-you-dey-carry" stops between Akure and Abuja, half of who demand bribes openly from commercial vehicles, who promptly coughed up N20 each time.  Payment at these unofficial tollgates thus add to  un-recouped "highway maintenance" of up to N400!

Maybe between Akure and Abuja - and by implication in other routes in the country - the N600 total highway fee charges to the commercial vehicles (who also pay annual local government highway fees for each LG they go through) could be officially spread evenly throughout the journey to all vehicles at several additional toll gates (say past certain major town), and the police at those check points have their salaries officially enhanced without bribe taking?

And how might we ensure that all monies collected at the tollgates are returned?  Just install mechanical (or possibly electro-mechanical) devices to automatically count the number of liftings of gates bars!

There you have it.

SO WHAT IS TO BE DONE?

With respect to highway maintenance, we see that there is actually an intimate relation between it and our fuel crisis - in terms of subsidy and in terms of our ability to actually carry out the maintenance. 

So what is to be done?

1. Remove the highway maintenance surcharge on fuel of N1.50 per liter.  It does not help any in this our highway maintenance situation, and it just aggravates the citizenry.

2. Get the refineries to work so that bitumen, diesel and other fuels are readily available so as to make highway maintenance less expensive - not to talk of making it cheaper to move around and run our factories.

3. Speed up the development of tar-sand bitumen in south-western Nigeria, particularly in Ogun, Ondo and Edo States. Bitumen estimated reserve in this belt is about 42.7 billion tonnes, equivalent to 30 - 40 million barrels of oil (almost twice our crude oil reserve) if used as an alternative energy source.  More importantly for oil-and-gas-rich Nigeria, asphalt binder can be derived from bitumen for road construction.  Natural bitumen and natural asphalt (also called tar sand or oil sand) are virtually identical, and conventional hot mix asphalt HMA (a mixture of asphalt 0.5 - 1%, sand, aggregate and other materials) needed is roughly 35 - 70 metric tonnes of asphalt per 100 kilometer length of road per inch road thickness per meter road width.  We have more than enough asphalt to tar all of Nigeria solid.

4. Increase the number and toll amounts at the official toll gates at all of our highways significantly, and DIRECTLY apply the money for two things:

a. To rehabilitate the highways
b. To enhance the pay of specifically the police who are on the highways, thereby dissuading them from taking bribes. 

Think about it - and once again please check my numbers.

Have a great week.