Nigeria’s New PPP Model Agreement: Better Draft, Same Old Failures

The Infrastructure Concession Regulatory Commission deserves real credit. Sounds like praise singing, right? It’s far from that. This is because the April 2026 Model PPP Agreement, Nigeria’s first standardised concession template, is a serious document. It is well-structured, legally coherent, and reflects genuine stitutional effort. For a country that has spent two decades watching PPP transactions collapse under the weight of bespoke, poorly negotiated contracts, this is not a small achievement.

But here is what needs to be said plainly: the ICRC reforms are welcome, but we are fixing the process of a broken model, not fixing the model itself.

The stated purpose of this agreement is to speed up the financial close. That is not a reading between the lines. It is confirmed by the document’s own architecture. My argument and the evidence of three decades of PPP failure across Nigeria and the wider developing world are that financial close is the wrong target. We need to optimise for delivery.

What the Document Gets Right

Before the critique, intellectual honesty requires credit where it is due. The model agreement is more sophisticated than its critics may assume at first reading.

The document includes a review committee under Clause 22.3, a genuinely bilateral governance structure that convenes representatives of both parties to assess performance, evaluate risk allocation, and determine whether adjustments are needed to preserve project sustainability. Clause 6.2.9 provides for the financial model to be updated over time to reflect approved variations, refinancing, changes in assumptions, and, critically, actual project performance. This means the agreement does contemplate that reality will diverge from the base case and provides a mechanism for the model to track that divergence.

Where the Architecture Falls Short

The problem is not that these provisions are absent. It is that they are structurally insufficient for the task they are supposed to perform, and the document’s foundational hierarchy reveals why.

Start with Clause 5.3.3. It lists the conditions precedent that cannot be waived by either party under any circumstances: financial close, the direct agreement, performance security, and legal capacity. Stakeholder consultations can be waived. Environmental clearances can be waived. Land access can be waived. Financial close cannot be achieved. This is not an administrative detail. It is a statement of what this agreement treats as non-negotiably foundational, and it is the lender’s milestone, not the public’s.

Clause 6.2 then anchors every economic variable in the agreement to the base case financial model as agreed at that same financial close. Tariffs, revenues, concession fees, compensation, adjustment mechanisms – all of it is determined by reference to a model built to satisfy lenders in year one. Clause 6.2.9 does allow updates to reflect actual performance but then delivers a proviso that quietly contains the entire concession: “provided that any such update shall not alter the underlying economic equilibrium of the project except as expressly permitted under this agreement.” The thermometer can record the fever. The medicine is limited to what was pre-authorised at financial close. A demand shock in year eight, a government policy shift in year twelve – these can be recorded in an updated model, but the response available to the parties is bounded by assumptions designed for lenders, not for long-term delivery.

The Review Committee faces an analogous constraint. Clause 22.1 provides that “the Parties may undertake a structured review at agreed intervals pursuant to modalities agreed by the Parties”. ” The word “may” is doing enormous work. There is no mandatory trigger. No minimum frequency. No obligation on either party to convene unless they mutually agree to do so. The committee is available. The obligation to use it is not.

Then there is the payment mechanism, the single most important provision for delivery outcomes. Clause 6.2.8(b) says the concessionaire shall pay “concession fees or a revenue share, depending on the payment mechanism and structure of the agreement, as set out in Schedule X.” Schedule X is blank. A placeholder. The mechanism that determines whether a private party is incentivised to deliver services or merely to occupy the concession has been left entirely to future negotiation. In practice that means it will be shaped by whoever commands the table, and in Nigeria’s current investment climate, that is the lender’s advisers, working from a bankability brief.

This is not a critique of the drafters. They produced a technically competent document within the parameters they were given. The problem is the parameters.

Why This Pattern Produces Failure

Nigeria does not need to look far for evidence. The MMA2 concession, the Build Operate Transfer agreement for the Lagos domestic terminal, signed in 2003, reached financial close cleanly. By every metric the new model agreement is designed to improve, it was a success. What followed was two decades of restrictive clauses, an extended dispute with the grantor, and a settlement only finalised in May 2026, mediated by the very commission that has now produced this template. Twenty-three years from signature to resolution is not a transaction problem. It is a model problem. No amount of pre-close process efficiency would have prevented it, because the defect was not in how long it took to get to the table. It was in what was agreed once everyone sat down and what was absent from the agreement when performance began to diverge from the base case, and neither party had a binding obligation to address it together.

According to World Bank research, 30% to 55% of infrastructure PPPs in developing economies are formally renegotiated within their first ten years because the original commercial terms prove unworkable. Agreements optimised for financial close produce forecasts everyone knows are fiction, agreed to because the alternative is no deal at all. The risk does not disappear. It sits dormant until a demand shock or a change of government forces an ad hoc renegotiation the original contract never anticipated. The public absorbs the loss. The lenders, protected by their step-in rights and their base-case financial model, are largely insulated.

What a Delivery-Optimised Agreement Would Contain

The Resilient PPP Framework I have been developing proposes a three-tier risk architecture as an alternative to the binary risk transfer that characterises conventional concession design. Risk should not be allocated entirely to whichever party is least equipped to absorb it. It should sit with the party best positioned to manage it, with shared corridors for the volatility that neither party can control alone and a sovereign backstop that is planned rather than improvised.

Applied to the ICRC model agreement, three specific changes would make a material difference.

The first is converting the discretionary review committee into a mandatory bilateral governance obligation. The Review Committee in Clause 22.3 is a useful structural provision, but its optionality is its weakness. A delivery-optimised agreement would trigger mandatory convening when defined performance thresholds are breached, with both the grantor and the concessionaire under a binding duty to attend, disclose relevant performance data, and respond within specified timeframes. The obligation must run in both directions. Grantor inaction has been Nigeria’s dominant historical failure mode, permitting delays, tariff freezes, and payment defaults, but concessionaire distress that goes unaddressed until the project is beyond recovery is equally a governance failure and equally preventable. A concessionaire whose absorptive capacity is eroding in year six needs a mechanism that compels joint engagement before the project reaches the sovereign backstop. The committee exists. Make it mandatory.

The second is a demand risk corridor to replace wholesale demand risk transfer. The model agreement’s Change in Law provisions in Clause 14 deal intelligently with discriminatory regulatory change, but they do not address the more common scenario: demand that falls persistently below financial model assumptions because the underlying forecast was over-optimistic. A corridor mechanism would define a band within which demand risk sits with the concessionaire, as it should, and activate a pre-agreed adjustment protocol tariff revision, term extension, or structured grantor support when demand falls outside that band. The 6.2.9 update mechanism is a necessary but insufficient component of this: it records the deviation without specifying the response. A corridor completes the architecture. This is not a subsidy. It is a planned response replacing an unplanned bailout.

The third, and most structurally important, is embedding social value metrics directly in the payment mechanism rather than deferring them to a compliance schedule. The model agreement references KPIs in Schedule X, another placeholder. But even when those KPIs are eventually populated, the current architecture places them outside the payment mechanism. A concessionaire is incentivised for availability and usage, not for whether the asset serves the users it was built for. Embedding measurable social value conditions, local employment thresholds verified independently, service access standards for underserved users, and community access provisions directly into how payment is calculated aligns commercial incentives with public purpose. Without this, every PPP remains one change of government away from being recast as a giveaway, because the public has no contractual stake in what the private party is actually incentivised to deliver.

The Version 2.0 Conversation

The ICRC has stated that the model agreement is subject to periodic review and update. That is the right instinct. The question is what the review process will optimise for.

If the next version is evaluated by how quickly transactions reach financial close, the current architecture will be preserved and refined. If it is evaluated by how many concessions from the 2026 cohort are still performing to original specification in 2036, delivering the services they promised to the users they were built for, without ad hoc renegotiation or political crisis, the conversation will be different.

Nigeria is not short of signed PPP agreements. It is short of PPP agreements that delivered what they promised. The distinction matters enormously for a country facing a multi-trillion naira infrastructure deficit and a reform window that will not stay open indefinitely.

The ICRC has built something worth building on. The governance bones are there. The review architecture exists. The financial model update mechanism is in place. What the next version needs to do is convert optionality into obligation, record-keeping into response, and compliance into incentive. That is the distance between a better-drafted version of the same problem and an agreement genuinely designed for delivery. Financial close is a milestone. It is not the destination.

Tosin Lucy Ajakaiye is an infrastructure transaction advisory professional specialising in PPP structuring, project finance, and construction risk management. She is the author of Construction Standard Forms, a newsletter on construction contract standards with over 2,400 subscribers, and a researcher working on resilient PPP frameworks for African infrastructure markets.

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