Nigeria Infrastructure Report Q1 2013

BMI View: Investment continues to flow into the Nigerian construction sector. Following a political
agenda of economic reforms, the cabinet’s approval of the long-awaited final draft of the Petroleum
Industry Bill (PIB), and the continued unbundling and privatisation of the state-run Power Holding
Company of Nigeria (PHCN) confirm this. Thus, in line with our forecast, Nigeria continues to see
strong growth within its construction sector and we anticipate an annual average real growth of 8.2
%between 2013 and 2017. However, we also continue to highlight the persistent risks hampering the
implementation of major projects, ranging from deep-rooted corruption, violence perpetrated by militant
Islamists and retaliatory forces, and a vast yet still inefficient bureaucracy.
Key developments include:
? Nigerian infrastructure development company Bi-Courtney Highway Services (BCHS) has
begun its redevelopment of the Lagos-Ibadan Expressway at the Ibadan end. The US$559mn
project involves the reconstruction of both existing carriageways, as well as the addition of two
carriageways in each direction between the Lagos-Sagamu interchange. BCHS has been awarded
a 25-year concession contract to manage the expressway, which links Lagos with Nigeria’s
western states.
? Nigeria’s Minister of Aviation has announced the plan to construct a new international airport in
Abuja. The planned airport would thus join a fleet of already ongoing projects within the airport
transport subsector: we already note the US$683mn construction of five new terminals at five
different airports across the country awarded to China Civil Engineering Construction
Corporation, as well as the redevelopment of five existing terminals, approved by the
government in February 2011.
? Intels Nigeria was awarded a contract by the Nigerian government for Phase 4 of the Onne Port
Complex at Port Harcourt in Rivers State. The US$370.5mn project includes land reclamation,
the widening of the channel entry, the construction of three new berths and the Federal Ocean
Terminal, and the enhancement of existing facilities at the port. Intels, which has already
completed the first three phases of the project, will undertake the work in order to allow the port
to handle an increase in gas and oil shipments.
? Attempts to unbundle and privatise power utilities previously owned by the state’s Power
Holding Company of Nigeria (PHCN) have started to bear fruit. Nigeria’s state-run power utility
has been split into 6 generation and 11 distribution companies, and in September 2012 Nigeria
announced the winning bids for five state-owned electricity plants. The preferred bidders now
have six months to make full payment before the plants are handed over. Disposal of the
remaining generation company, Afam, has been delayed after some controversy.
? Preferred bidders for the 11 distribution companies were announced in October 2012.
? The Nigerian government and General Electric (GE)’s have signed an agreement to help
Nigeria to develop 10 GW of additional electrical-generating capacity, amid a push to privatise
the failing state-run Power Holding Company of Nigeria (PHCN). This provides some
optimism in terms of tackling the country’s epileptic power supply.
? Another step forward in restructuring the economy and realising Nigeria’s vast wealth is the
cabinet’s approval of the long-awaited final draft of the Petroleum Industry Bill (PIB), which we
think is likely to be passed towards the end of 2012. The PIB should bring more regulatory
certainty and could unlock billions of dollars in investments in the country’s oil and gas industry.
That said, some of its aspects remain highly controversial which could, yet again, delay its
ratification by parliament.
Nigeria continues to be rocked by persistent violence perpetrated by militant Islamists and retaliatory
forces, which threatens to escalate if not contained. Recently work on the Kano – Western bye-pass has
been stalled due to ongoing security threats.
Meanwhile, the removal of fuel subsidies spurred nationwide protests, including a general strike, putting
immense pressure on the government and eventually forcing it to partly back-paddle. However, to sustain
long-term growth the country will need to press ahead with the ambitious, and necessary, economic and
business environment reforms, and develop a plan to address the root causes of violence in the Niger
Delta and the Middle Belt.
Hence, while significant hurdles will need to be surmounted, we still expect that 2013 will see a strong
construction industry real growth of 10.0%, bolstered by investment and the consumer sector, as well as a
growing oil sector, fuelled by historically high prices.

Nigeria Infrastructure Report Q1 2013

BMI Industry View ........................................................................................................................................... 5
SWOT Analysis ............................................................................................................................................... 7
Nigeria Infrastructure SWOT ................................................................................................................................................................................ 7
Market Overview ............................................................................................................................................. 8
Competitive Landscape .............................................................................................................................................................................................. 8
Table: EQS Data ................................................................................................................................................................................................... 8
Market Overview ........................................................................................................................................... 10
West Africa Competitive Landscape ......................................................................................................................................................................... 10
Table: Domicile and Number of Contractors In West Africa, 2011 ..................................................................................................................... 10
Building Materials ......................................................................................................................................... 16
Africa ....................................................................................................................................................................................................................... 16
Cement Forecasts..................................................................................................................................................................................................... 22
Table: Nigeria Cement Production and Consumption Data, 2010-2016.............................................................................................................. 22
Table: Nigeria Cement Production and Consumption Data, 2015-2021.............................................................................................................. 22
Industry Forecast Scenario .......................................................................................................................... 23
Table: Nigeria Construction And Infrastructure Industry Data, 2010-2016 ........................................................................................................ 23
Table: Nigeria Construction And Infrastructure Long Term Forecasts, 2015-2021 ............................................................................................ 24
Construction and Infrastructure Forecast Scenario ................................................................................................................................................. 26
Transport Infrastructure............................................................................................................................... 30
Table: Nigeria Transport Infrastructure Industry Data, 2010-2016 .................................................................................................................... 30
Table: Nigeria Transport Infrastructure Long Term Forecasts, 2015-2021 ........................................................................................................ 32
Transport Infrastructure Outlook and Overview ...................................................................................................................................................... 34
Major Projects Table - Transport............................................................................................................................................................................ 37
Table: Major Projects - Transport ..................................................................................................................................................................... 37
Energy and Utilities Infrastructure ............................................................................................................... 43
Table: Nigeria Energy and Utilities Infrastructure Industry Data, 2010-2016 .................................................................................................... 43
Table: Nigeria Energy and Utilities Infrastructure Long Term Forecasts, 2015-2021 ........................................................................................ 43
Energy and Utilities Infrastructure Outlook and Overview ...................................................................................................................................... 44
Major Projects Table - Energy and Utilities Infrastructure .................................................................................................................................... 48
Table: Major Projects - Energy and Utilities ..................................................................................................................................................... 48
Residential/Non-Residential Construction and Social Infrastructure ...................................................... 51
Table: Nigeria Residential and Non-residential Building Industry Data, 2010-2016 .......................................................................................... 51
Table: Nigeria Residential and Non-residential Building Long Term Forecasts, 2015-2021 .............................................................................. 51
Residential/Non-Residential Building Outlook and Overview .................................................................................................................................. 52
Major Projects Table - Residential/Non-Residential Construction and Social Infrastructure .................................................................................. 58
Table: Major Projects - Residential/Non-Residential Construction and Social Infrastructure ............................................................................ 58
Risk/Reward Ratings .................................................................................................................................... 59
Nigeria's Risk/Reward Ratings ................................................................................................................................................................................ 59
Rewards .............................................................................................................................................................................................................. 59
Risks .................................................................................................................................................................................................................... 59
Sub-Saharan Africa Risk/Reward Ratings ................................................................................................................................................................ 60
Table: Sub-Saharan Africa Infrastructure Risk / Reward Ratings ....................................................................................................................... 62
Company Monitor ......................................................................................................................................... 63
Julius Berger Nigeria Plc. .................................................................................................................................................................................. 63
Setraco Nigeria Limited ...................................................................................................................................................................................... 64
Global Overview ............................................................................................................................................ 65
Methodology ................................................................................................................................................. 72
Industry Forecasts ................................................................................................................................................................................................... 72
Construction Industry ......................................................................................................................................................................................... 73
Data Methodology .............................................................................................................................................................................................. 73
New Infrastructure Data Sub-sectors .................................................................................................................................................................. 73
Construction ....................................................................................................................................................................................................... 74
Capital Investment .............................................................................................................................................................................................. 75
Construction Sector Employment ........................................................................................................................................................................ 76
Infrastructure Risk/Reward Ratings ......................................................................................................................................................................... 76
Table: Infrastructure Business Environment Indicators ...................................................................................................................................... 77
Project Finance Ratings ........................................................................................................................................................................................... 78
Table: Design And Construction Phase .............................................................................................................................................................. 79
Table: Commissioning And Operating Phase - Commercial Construction.......................................................................................................... 80
Table: Commissioning And Operating Phase - Energy And Utilities .................................................................................................................. 81
Table: Commissioning And Operating Phase - Transport .................................................................................................................................. 82BMI Industry View ........................................................................................................................................... 5
SWOT Analysis ............................................................................................................................................... 6
Pakistan Food Industry SWOT .............................................................................................................................................................................. 6
Pakistan Drink Industry SWOT ............................................................................................................................................................................. 7
Pakistan Mass Grocery Retail Industry SWOT ..................................................................................................................................................... 8
Business Environment ................................................................................................................................... 9
BMI's Core Global Industry Views ............................................................................................................................................................................ 9
Table: Core Views .............................................................................................................................................................................................. 17
Asia Pacific Risk/Reward Ratings ............................................................................................................................................................................ 18
Table: Food & Drink Risk/Reward Sub-Factor Ratings, Q113 (score out of 10) ................................................................................................. 18
Table: Asia Pacific Food & Drink Risk/Reward Ratings, Q113........................................................................................................................... 22
Pakistan Food & Drink Risk/Reward Ratings .......................................................................................................................................................... 23
Macroeconomic Outlook .......................................................................................................................................................................................... 24
Table: Economic Activity .................................................................................................................................................................................... 26
Industry Forecast Scenario .......................................................................................................................... 27
Consumer Outlook ................................................................................................................................................................................................... 27
Food ......................................................................................................................................................................................................................... 29
Food Consumption .............................................................................................................................................................................................. 29
Table: Food Consumption Indicators - Historical Data & Forecasts, 2010-2017 .............................................................................................. 30
Canned Food ...................................................................................................................................................................................................... 31
Table: Canned Food Value/Volume Sales - Historical Data & Forecasts, 2010-2017 ........................................................................................ 31
Drink ........................................................................................................................................................................................................................ 32
Hot Drinks .......................................................................................................................................................................................................... 32
Table: Hot Drinks Value/Volume Sales - Historical Data & Forecasts, 2010-2017............................................................................................ 33
Soft Drinks .......................................................................................................................................................................................................... 34
Table: Soft Drinks Value/Volume Sales - Historical Data & Forecasts, 2010-2017 ........................................................................................... 35
Mass Grocery Retail ................................................................................................................................................................................................ 38
Table: Mass Grocery Retail Sales - Historical Data & Forecasts, 2010-2017 .................................................................................................... 39
Table: Grocery Retail Sales By Format - Historical Data & Forecasts .............................................................................................................. 39
Trade ........................................................................................................................................................................................................................ 40
Table: Trade Indicators - Historical Data & Forecasts, 2010-2017 ................................................................................................................... 40
Food ............................................................................................................................................................... 41
Key Industry Trends And Developments .................................................................................................................................................................. 41
Unilever Pakistan's Sales Outlook Looking Brighter .......................................................................................................................................... 41
No Pickup In Food CPI Despite Grains Rally..................................................................................................................................................... 41
Pakistan A Fledgling But Growing Force On Global Halal Scene ...................................................................................................................... 44
Market Overview ...................................................................................................................................................................................................... 46
Food Processing ................................................................................................................................................................................................. 46
Leading Players .................................................................................................................................................................................................. 47
Confectionery ...................................................................................................................................................................................................... 47
Trade................................................................................................................................................................................................................... 47
Agriculture .......................................................................................................................................................................................................... 48
Dairy ................................................................................................................................................................................................................... 48
Organics ............................................................................................................................................................................................................. 51
Drink ............................................................................................................................................................... 52
Key Industry Trends And Developments .................................................................................................................................................................. 52
PepsiCo Establishes Strong Presence ................................................................................................................................................................. 52
Tea Sector Not Realising Full Potential Yet ........................................................................................................................................................ 52
Beer Increasingly Popular .................................................................................................................................................................................. 53
Market Overview ...................................................................................................................................................................................................... 53
Soft Drinks .......................................................................................................................................................................................................... 53
Hot Drinks .......................................................................................................................................................................................................... 53
Alcoholic Drinks ................................................................................................................................................................................................. 54
Mass Grocery Retail ..................................................................................................................................... 55
Key Industry Trends And Developments .................................................................................................................................................................. 55
Multinational Investment Outside Wholesale Not Forthcoming ........................................................................................................................... 55
Market Overview ...................................................................................................................................................................................................... 55
Leading Players .................................................................................................................................................................................................. 56
Competitive Landscape ............................................................................................................................... 58
Table: Key Players In Pakistan's Food & Drink Sector ..................................................................................................................................... 58
Table: Key Players In Pakistan's Mass Grocery Retail Industry ......................................................................................................................... 59
Company Profiles ......................................................................................................................................... 60
Food ......................................................................................................................................................................................................................... 60
Hilal Confectionery ............................................................................................................................................................................................. 60
Nestlé Pakistan ................................................................................................................................................................................................... 62
Unilever Pakistan ............................................................................................................................................................................................... 64
Drink ........................................................................................................................................................................................................................ 66
Murree Brewery .................................................................................................................................................................................................. 66
Coca-Cola Beverages Pakistan Limited (CCBPL) .............................................................................................................................................. 68
Tapal Tea ............................................................................................................................................................................................................ 70
Mass Grocery Retail ................................................................................................................................................................................................ 72
Utility Stores Corporation (USC) ....................................................................................................................................................................... 72
Demographic Outlook .................................................................................................................................. 74
Table: Pakistan's Population By Age Group, 1990-2020 ('000) .......................................................................................................................... 75
Table: Pakistan's Population By Age Group, 1990-2020 (% of total) .................................................................................................................. 76
Table: Pakistan's Key Population Ratios, 1990-2020 ......................................................................................................................................... 77
Table: Pakistan's Rural And Urban Population, 1990-2020 ............................................................................................................................... 77
Risk/Reward Ratings Methodology ............................................................................................................. 78
Table: Rewards ................................................................................................................................................................................................... 78
Table: Risks ........................................................................................................................................................................................................ 79
Weighting ................................................................................................................................................................................................................. 79
Table: Weighting................................................................................................................................................................................................. 79
BMI Food & Drink Industry Glossary ........................................................................................................... 80
Food & Drink........................................................................................................................................................................................................... 80
Mass Grocery Retail ................................................................................................................................................................................................ 80
BMI Food & Drink Forecasting & Sourcing ................................................................................................. 82
How We Generate Our Industry Forecasts .............................................................................................................................................................. 82
Sourcing .............................................................................................................................................................................................................. 83BMI Industry View ........................................................................................................................................... 7
SWOT Analysis ................................................................................................................................................ 9
Pakistan Oil and Gas SWOT ................................................................................................................................................................................. 9
Industry Forecast Scenario ........................................................................................................................... 10
Oil And Gas Reserves .............................................................................................................................................................................................. 10
Table: Pakistan Proven Oil & Gas Reserves And Total Petroleum Data - Historical Data And Forecasts, 2010-2016 ..................................... 10
Table: Pakistan Proven Oil & Gas Reserves And Total Petroleum Data - Long-Term Forecasts, 2015-2021 .................................................... 11
Oil Supply And Demand ........................................................................................................................................................................................... 12
Table: Pakistan Oil Production, Consumption And Net Exports - Historical Data And Forecasts, 2010-2016 .................................................. 12
Table: Pakistan Oil Production, Consumption And Net Exports - Long-Term Forecasts, 2015-2021 ................................................................ 13
Gas Supply And Demand ......................................................................................................................................................................................... 14
Table: Pakistan Gas Production, Consumption And Net Exports - Historical Data & Forecasts, 2010-2016 .................................................... 14
Table: Pakistan Gas Production, Consumption And Net Exports - Long-Term Forecasts, 2015-2021 ............................................................... 15
LNG .................................................................................................................................................................................................................... 18
Refining And Oil Products Trade ........................................................................................................................................................................ 19
Table: Pakistan Refining Production And Consumption - Historical Data & Forecasts, 2010-2016 .................................................................. 19
Table: Pakistan Refining Production And Consumption - Long-Term Forecasts 2015-2021 .............................................................................. 19
Revenues/Import Costs ....................................................................................................................................................................................... 20
Key Risks To BMI's Forecast Scenario ............................................................................................................................................................... 20
Country Oil & Gas Risk/Reward Ratings ..................................................................................................... 21
Pakistan Upstream Rating - Overview ............................................................................................................................................................... 21
Pakistan Upstream Rating - Rewards..............................................

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