Why The PAVI FORT Agreement Makes Economic Sense But Needs Further Scrutiny (Economic Promise, Legal Questions)

–Balancing Development with Transparency and Value for Money

By Boniface D. Satu, MBA, MS – Infrastructure Financing & Financial Management Expert

Background

The Liberian Senate is currently holding public hearings on the proposed US$365 million road concession agreement between the Government of Liberia and PAVI FORT AL Associates, Inc., a Sierra Leonean consortium. The project aims to finance and pave five major road corridors, totaling approximately 255 kilometers, under a Build–Operate–Transfer (BOT) model. These corridors stretch from St. Paul Bridge to Bo Waterside, Klay to Tubmanburg, Madina to Robertsport, and Voinjama to Mendikorma.

Why the Project Makes Economic Sense

From an infrastructure development standpoint, the PAVI FORT concession targets one of Liberia’s deepest economic constraints poor road connectivity. Out of Liberia’s estimated 13,000+ kilometers of total road network, only about 10% is paved, 60% of the road network in poor condition according to the Word Bank Spartal Report on Liberia Road Sector verified by the Ministry of Public Works and World Bank transport assessments. This means roughly 11,500 kilometers remain unpaved or seasonally impassable, especially during the rainy season.

By paving key corridors from St. Paul Bridge through Bo Waterside, Tubmanburg, Robertsport, and Mendikorma the project could significantly expand Liberia’s paved network, reduce rural isolation, and enhance regional trade integration with Sierra Leone and Guinea.

Economically, the project offers four major benefits:

• Improved Market Access: Reduced transport time and costs for farmers, traders, and exporters moving goods to Monrovia and neighboring countries.
• Job Creation and Local Enterprise: Thousands of construction and service jobs, stimulating domestic industries in aggregates, fuel, and logistics.
• Regional Trade Integration: Connection to the Mano River Union and ECOWAS Trans-West African Coastal Highway, boosting trade volume and customs efficiency.
• Tourism and Coastal Development: The Madina–Robertsport corridor supports Liberia’s growing tourism and fisheries industries.

Regional Benchmarks

Across West Africa, countries have undertaken similar road projects through competitive international bidding, ensuring value for money and transparency. Liberia’s proposed cost of approximately US$1.43 million per kilometer fits within the regional average, but lack of open competition raises credibility concerns.

Why the Project Needs Scrutiny

The Public Procurement and Concessions Act (PPCA, 2010) mandates international competitive bidding for projects involving large-scale capital investment or international expertise (Section 97). Sole-sourcing is permissible only in cases of unique innovation, national emergency, or intellectual property exclusivity (Section 101) none of which apply here.

If PAVIPORT was selected without competitive bidding, it could constitute a violation of the Act and expose Liberia to inflated costs and limited performance guarantees.

Regional Strategic Importance

The proposed PAVIPORT corridors are not merely local roads they are regional economic arteries. They connect Liberia to Sierra Leone and Guinea, strengthening Mano River Union integration and aligning with ECOWAS’s 2050 Transport Master Plan. By facilitating smoother customs movement, cross-border commerce, and tourism, the roads could position Liberia as a central trade corridor between coastal and inland economies.

Learning from the Past

Liberia’s history offers a cautionary tale. The ‘Yellow Machine Saga’ and other opaque deals remind us that even well-intentioned infrastructure projects can lose credibility and value when transparency is compromised. The Senate’s oversight is therefore not an obstacle to progress it is a safeguard for fiscal integrity.

Policy Recommendations

• Reopen the procurement process under PPCC supervision through international competitive bidding.
• Publish feasibility studies, financing terms, and concession duration for public review.
• Conduct a Value-for-Money (VfM) audit comparing proposed costs to regional benchmarks.
• Disclose all sovereign guarantees and fiscal commitments in the National Budget.
• Mandate at least 30% local content participation by Liberian contractors and workers.

The Final Word

Liberia needs roads but it also needs transparency. A US$365 million project must not only connect towns and markets; it must connect trust and accountability. If the Senate ensures compliance, the PAVIPORT concession could become a model of responsible infrastructure financing. If not, it risks becoming another missed opportunity.

8. Leveraging the National Road Fund (NRF) as a BOT Guarantee Mechanism

The National Road Fund (NRF) of Liberia was created to sustainably finance the country’s road network through road user-based revenues, including fuel levies, toll gate revenue, vehicle registration fees, and road user charges. These predictable inflows can be strategically leveraged as a guarantee mechanism under Build–Operate–Transfer (BOT) or Public–Private Partnership (PPP) models when ring-fenced from the Government of Liberia’s Consolidated Account.

1. Concept: Using Road Fund Revenues as a Fiscal Guarantor

By isolating (ring-fencing) the NRF’s revenue flows, the government can provide private investors and lenders with a dedicated, secured repayment mechanism without incurring new public debt. This approach has been successfully used in several African countries to attract private financing for infrastructure development while maintaining fiscal discipline. Similar financing model was introduced by the World Bank on the South Eastern Road Corridor (SECRAMP) Ganta to Tapitta Nimba County Road corridor 100km at 100m with investor participation leveraging the National Road Funds and the cash collateral and the World Bank as a guarantor. NRF was going to commit 8 million annually.

2. Why Ring-Fencing Matters

Currently, all revenues in Liberia flow into the Consolidated Fund, where competing priorities often cause delays and unpredictability in payments. By ring-fencing the NRF, Liberia can stabilize its infrastructure funding, improve credibility, and enhance private-sector confidence. Ring-fencing ensures that road revenues remain dedicated exclusively to infrastructure investment and maintenance.

Key advantages include:
• Enhanced creditworthiness for BOT and PPP projects.
• Predictable cash flow for long-term project sustainability.
• Reduced reliance on sovereign guarantees or public borrowing.
• Increased investor confidence through transparent financial management.

3. Application to the PAVI FORT Model

In the context of the PAVIPORT road concession, the NRF could commit a defined annual payment (e.g., US$20–25 million) as a guaranteed minimum revenue or annuity to support debt service and operational sustainability. An escrow account jointly managed by the NRF, Ministry of Finance, and PPCC could handle these transactions. This setup would ensure the concessionaire is paid from ring-fenced revenues rather than general government funds.

Such a structure mirrors successful models in Kenya, Ghana, and Senegal, where dedicated road funds have been used as credit enhancement tools to attract private investment under AfDB and World Bank–backed PPP frameworks.

4. Governance and Safeguards

To avoid misuse or fiscal slippage, a ring-fenced NRF BOT guarantee must include:
• Independent NRF Board oversight to ensure funds are used solely for road-related projects.
• Transparent audits by the General Auditing Commission (GAC) and Internal Audit Agency (IAA).
• Legal authorization exempting NRF BOT guarantees from annual appropriation bottlenecks.
• Mandatory parliamentary reporting on all guarantee commitments.

5. Policy Recommendation

The Government of Liberia and the Legislature should consider amending the National Road Fund Act to explicitly allow ring-fenced guarantee structures for approved PPP/BOT projects. Additionally, a Public Infrastructure Guarantee Unit (PIGU) could be established within the Ministry of Finance to oversee and manage BOT-related escrow and guarantee mechanisms.

If properly implemented, leveraging the NRF as a BOT guarantee can unlock new financing opportunities, accelerate infrastructure delivery, and restore public confidence in the management of Liberia’s road sector.

With discipline, transparency, and ring-fencing, Liberia can pave its roads not just with asphalt, but with trust.

About the Author

Boniface D. Satu, MBA, MS, is a governance and infrastructure specialist. He previously served as Fund Manager for Liberia’s National Road Fund, managing over US$100 million in road investments, and as Deputy Chief of Party for USAID/Cardno Emerging Markets at the Ministry of Public Works. He currently serves as Management Analyst III with the State of Delaware Department of Health and Social Services (DHSS) in the United States.