The Role of Feasibility Studies in PPP (Public-Private Partnership) Projects in Nigeria

Nigeria’s infrastructure deficit is massive. Roads, power, ports, water, housing. The list goes on.

Government resources alone cannot close this gap. So Nigeria has turned to Public-Private Partnerships. PPPs bring private capital and expertise to public infrastructure projects.

But here is the catch. A PPP project without a proper feasibility study is like building a house without a foundation. It might look good at first. But it will eventually collapse.

Let me explain why feasibility studies matter and how they determine whether Nigerian PPP projects succeed or fail.

Understanding feasibility studies: a foundational definition

According to Wikipedia, a feasibility study is “an assessment of the practicality of a project or system. A feasibility study aims to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture, opportunities and threats present in the natural environment, the resources required to carry through, and ultimately the prospects for success.”

Wikipedia. Feasibility Study. https://en.wikipedia.org/wiki/Feasibility_study

In PPP projects, feasibility studies go even further. They examine technical and financial viability, legal frameworks, risk allocation, market demand, environmental sustainability, and social impact.

These studies determine whether a project should proceed, be redesigned, or be abandoned altogether.

The Nigerian PPP landscape: current framework and recent developments

Nigeria’s PPP framework is governed by the Infrastructure Concession Regulatory Commission (ICRC) Act of 2005. The Commission itself was established in 2008. The ICRC’s objective is to accelerate investment in national infrastructure through private sector funding.

The regulatory framework covers power generation and transmission, roads and bridges, ports, railways, gas and petroleum infrastructure, water supply, solid waste management, educational facilities, transport systems, housing, and healthcare facilities.

Recent developments in 2024 and 2025.

In October 2024, the Budget 2025 circular directed all Ministries, Departments, and Agencies to comply with the National Policy on Public-Private Partnership of the ICRC. This reinforces the mandatory nature of proper feasibility assessment protocols.

In February 2025, the Federal Executive Council approved the concession of the Kashimbila Integrated Cargo and Agro-Allied Airport in Taraba State under a PPP arrangement. This multi-sectoral project highlights the importance of comprehensive feasibility studies that address multiple sectors simultaneously.

The Federal Government has opened conversations with the International Finance Corporation on utilising Nigeria’s capital market to fund infrastructure development through PPPs. This signals a move toward more sophisticated financing mechanisms that require robust feasibility studies.

The Federal Government announced it will consider using private sector funds through PPPs for key projects in the Ministry of Innovation, Science and Technology. This expansion into new sectors emphasises the need for specialised feasibility studies.

In July 2024, Dr. Jobson Oseodion Ewalefoh was confirmed as the Director General of ICRC. His six point policy direction aims to accelerate infrastructure development, bridge infrastructure gaps, stimulate the economy, and boost investor confidence. All of this depends heavily on credible feasibility studies.

Source: Infrastructure Concession Regulatory Commission (ICRC), Nigeria. https://icrc.gov.ng/

The critical components of PPP feasibility studies in Nigeria

Technical feasibility assessment.

Technical feasibility determines whether the proposed solution is practically achievable. It examines infrastructure design alignment with identified needs, engineering requirements, availability of technical expertise, geotechnical conditions, technology selection, and construction methodology.

For Nigerian projects, technical feasibility must account for local conditions. Terrain challenges. Climate factors. Security considerations in certain regions. Availability of skilled labour.

Legal and regulatory feasibility.

Nigeria’s legal framework for PPPs has evolved, but challenges remain. The study must assess compliance with the ICRC Act and National Policy on PPP. It must review sector specific regulations, land acquisition and property rights, required licenses and permits, contractual enforceability, and dispute resolution mechanisms.

The legal assessment must confirm that the project structure complies with all applicable laws. This is particularly important given Nigeria’s federal structure, where both federal and state regulations may apply.

Financial and economic viability.

Financial analysis components include capital expenditure estimates, operating and maintenance cost projections, revenue generation potential, debt to equity ratio, financial internal rate of return, payback period, cash flow projections, sensitivity analysis, and foreign exchange risk assessment.

Economic analysis components include economic cost benefit analysis, economic internal rate of return, economic net present value, job creation potential, impact on GDP, and contribution to national development goals.

Given Nigeria’s economic environment, feasibility studies must pay special attention to currency risks, inflation projections, and the impact of oil price volatility on government revenues.

Market and demand analysis.

Accurately forecasting demand determines whether a PPP project will be commercially viable. The study must assess current and projected demand, population growth, user willingness and ability to pay, competitive analysis, market capture rates, demand elasticity, seasonal variations, and the impact of economic conditions.

For Nigerian projects, demand analysis must account for the informal economy, income levels, and cultural factors. Over optimistic demand projections have been a common cause of PPP failures globally.

Risk assessment and allocation.

Effective risk identification, quantification, and allocation between public and private partners is fundamental. Risk categories include construction risks like delays and cost overruns. Financial risks like interest rate changes and currency fluctuations. Demand and revenue risks. Political and regulatory risks. Force majeure events. Operational risks. Environmental and social risks. Contractual and legal risks.

The study should include a detailed risk matrix. Identify each risk. Assess likelihood and potential impact. Determine the party best placed to manage it. Propose mitigation strategies.

In Nigeria’s context, political and regulatory risks often require particular attention, along with security risks in certain regions.

Environmental and social impact assessment.

Sustainability considerations are increasingly important. The study must include environmental impact assessment, climate change resilience, resource efficiency, social impact on local communities, resettlement requirements, stakeholder engagement, and alignment with Sustainable Development Goals.

Nigeria’s commitment to the UN’s 2030 Agenda for Sustainable Development means that PPP projects must demonstrate how they contribute to achieving the SDGs.

Institutional and procurement considerations.

The study must assess the institutional capacity of the government agency, availability of technical and financial advisory support, proposed PPP structure such as BOT or BOOT or concession, procurement process and timeline, competitive market assessment, Value for Money analysis comparing PPP to traditional procurement, required government support mechanisms, and contract management framework.

If capacity gaps exist, the study should recommend capacity building measures or the engagement of transaction advisors.

The PPP project lifecycle: where feasibility studies fit

Phase one: Project identification and screening. Potential PPP projects are identified based on national development priorities. A preliminary screening assesses whether the project is suitable for PPP delivery. A high level pre feasibility study may determine if the project warrants a full study.

Phase two: Detailed feasibility study. Once a project passes initial screening, a comprehensive feasibility study is conducted. This is the primary phase where the full feasibility study is developed. The study culminates in a recommendation on whether to proceed, redesign, or abandon.

Phase three: Project structuring and approval. Based on the feasibility study findings, the project is structured in terms of risk allocation, payment mechanisms, and contractual framework. The feasibility study serves as the foundation document for project structuring decisions and provides the evidence base for approval by ICRC and the Federal Executive Council.

Phase four: Procurement and contracting. The project goes to market through a competitive procurement process. The feasibility study informs the preparation of tender documents, provides baseline data for bidders, and establishes performance standards.

Phase five: Implementation and monitoring. The private partner constructs and operates the infrastructure. The government monitors performance. The assumptions and projections in the feasibility study provide benchmarks for monitoring actual performance.

Common challenges in conducting feasibility studies for Nigerian PPPs

Limited capacity and expertise.

Many MDAs lack internal technical capacity to prepare detailed feasibility studies. There is often insufficient expertise in financial modeling, risk assessment, and PPP structuring.

Impact: Poorly conceived projects, unrealistic assumptions, inadequate risk identification, project delays or failures.

Solutions: Engage qualified external consultants. Invest in capacity building. Leverage ICRC’s technical support. Partner with development institutions like the World Bank and IFC.

Data availability and quality.

Reliable data on demand patterns, user behaviour, cost benchmarks, and economic indicators is often scarce or outdated.

Impact: Inaccurate projections causing commercial failure or costly renegotiations.

Solutions: Invest in primary data collection. Collaborate with statistical agencies. Use international benchmarks adjusted for local conditions. Build databases of PPP project experiences.

Optimism bias.

Project sponsors tend to present overly optimistic scenarios to secure approvals. Inflated demand projections. Underestimated costs.

Impact: Projects that appear viable on paper become financial burdens when actual performance falls short.

Solutions: Apply optimism bias adjustments. Require independent review. Use conservative assumptions. Conduct sensitivity analyses. Learn from past project outcomes.

Political and policy uncertainties.

Changes in government, policy reversals, and political interference can undermine feasibility study assumptions.

Impact: Investors demand higher returns for political risk or avoid PPP projects altogether.

Solutions: Strengthen legal and contractual protections. Ensure bi partisan support for major projects. Establish stabilisation clauses in PPP agreements. Maintain consistency in PPP policy.

Inadequate stakeholder engagement.

Feasibility studies sometimes fail to consult affected communities, users, and other stakeholders.

Impact: Community resistance, legal challenges, and social conflicts that derail projects.

Solutions: Conduct thorough stakeholder mapping. Implement meaningful consultation early. Address community concerns. Establish grievance mechanisms.

Environmental and social safeguards compliance.

Meeting international environmental and social standards can be complex and time consuming.

Impact: Project delays, increased costs, reputational damage, loss of financing.

Solutions: Integrate environmental and social assessments from the earliest stages. Engage qualified specialists. Align projects with international standards like IFC Performance Standards.

Best practices for conducting feasibility studies in Nigerian PPP projects

Start with clear objectives and scope. Define the problem the project is intended to solve, the expected outcomes, and the scope of analysis. This ensures the study addresses the right questions.

Adopt a phased approach. For complex projects, conduct a preliminary feasibility study before committing to a full study. This allows early identification of fatal flaws.

Assemble a multidisciplinary team. Include experts in engineering, finance, law, economics, environmental science, social development, and PPP structuring. A multidisciplinary approach ensures all critical aspects are examined.

Benchmark against comparable projects. Research similar projects in Nigeria, Africa, and other developing markets. Learning from precedents helps avoid repeating past mistakes.

Conduct robust sensitivity and scenario analysis. Test the project’s viability under optimistic, base case, and pessimistic scenarios. Examine sensitivity to key variables like demand, costs, interest rates, and currency fluctuations.

Ensure independent quality review. Have the feasibility study reviewed by independent experts not involved in its preparation. Independent review enhances credibility with investors and lenders.

Maintain transparency and documentation. Clearly document all assumptions, methodologies, data sources, and limitations. Transparency builds trust with stakeholders.

Plan for flexibility and adaptability. Circumstances may change between the feasibility study and project implementation. Build flexibility into the project structure where appropriate.

The impact of quality feasibility studies on PPP success

For government entities. Better decision making based on evidence. Risk mitigation reducing disputes and failures. Value for money ensuring taxpayer resources are used efficiently. Enhanced credibility attracting serious investors.

For private investors. Informed investment decisions aligned with criteria and risk appetite. Reduced transaction costs by relying on government prepared analysis. Clearer risk profiles for accurate bidding. Bankability making projects attractive to lenders.

For the economy and society. Accelerated infrastructure delivery. Economic growth through job creation and productive capacity. Improved service delivery meeting user needs. Sustainable development through environmental and social considerations.

Where to start tomorrow

Do not begin a PPP project without a proper feasibility study.

Define your project objectives clearly. What problem are you solving?

Assemble the right team. Engineers, financiers, lawyers, economists, environmental specialists.

Collect your data. Primary and secondary. Local and international benchmarks.

Test your assumptions. Run sensitivity analysis. Challenge optimism bias.

Engage your stakeholders early. Communities, users, regulators.

Get an independent review. Have someone outside your project challenge your conclusions.

Change plan. Build flexibility into your project structure.

Final word

Feasibility studies are not bureaucratic hurdles. They are the foundation of successful PPP projects.

A well-executed feasibility study provides the analytical foundation for sound decision making, realistic risk allocation, and successful project implementation.

As Nigeria continues to expand its use of PPPs to address the massive infrastructure deficit, the quality of feasibility studies will increasingly determine the success of this endeavour.

Government institutions must invest in the capacity to prepare high-quality studies. Private investors should demand comprehensive feasibility analysis before committing resources.

Understanding and applying best practices in feasibility analysis is not optional. It is the foundation upon which sustainable, successful PPP projects are built.

CALL TO ACTION

About Stonehill Research

Stonehill Research specialises in providing comprehensive research and analytical services for infrastructure projects, public-private partnerships, and development initiatives. Our team of experts offers feasibility study services, project evaluation, and strategic advisory support to both public and private sector clients.

Our Services Include

PPP feasibility study preparation and review. Technical, financial, and economic viability assessment. Risk identification and allocation analysis. Environmental and social impact assessment. Market and demand forecasting. Institutional capacity assessment. Value for Money analysis. Independent quality review of feasibility studies.

Why Choose Stonehill Research?

Deep Nigerian Expertise. We understand the local regulatory environment, infrastructure challenges, and PPP landscape.

Multidisciplinary Team. Our team includes experts in engineering, finance, law, economics, and environmental science.

Rigorous Methodology. We use international best practices adapted for Nigerian conditions.

Independent Perspective. We have no vested interest in project approval. Our conclusions are objective.

Contact Us

For inquiries about our services or to discuss your PPP project needs, please contact us:

📧 Email: info@stonehillresearch.com
📍 Address: Suite 7, 2nd Floor, St Elizabeth Plaza, 77, Okumagba Avenue, Warri, Delta State, Nigeria

Schedule a Consultation. Let us help you build the analytical foundation your PPP project needs.

Stonehill Research – Your Partner in PPP Feasibility Excellence

REFERENCES

Wikipedia. Feasibility Study. https://en.wikipedia.org/wiki/Feasibility_study

Infrastructure Concession Regulatory Commission (ICRC), Nigeria. https://icrc.gov.ng/

Federal Ministry of Budget and Economic Planning, Nigeria. Budget 2025 Circular on PPP Compliance. October 2024.

Federal Executive Council, Nigeria. Kashimbila Integrated Cargo/Agro-Allied Airport Concession Approval. February 2025.

International Finance Corporation (IFC), World Bank Group. Public-Private Partnership Resources. https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/ppp

World Bank. Public-Private Partnerships Reference Guide, Version 3. https://ppp.worldbank.org/public-private-partnership/

United Nations Industrial Development Organization (UNIDO). COMFAR III Expert – Financial Analysis Tool. https://www.unido.org/

PPP Knowledge Lab. A Joint Platform of Major Multilateral Development Banks and Key International Organizations. https://pppknowledgelab.org/

African Development Bank (AfDB). Public-Private Partnerships in Africa. https://www.afdb.org/