Infrastructure upgrades: Port facilities will be given a boost to expand transit shipment, increase volumes and limit evasion

Given the expansion plans at both Abidjan and Tema ports in nearby Côte d’Ivoire and Ghana, the rollout of several new public-private partnership (PPP) facilities offers vital potential to significantly improve operations at Nigeria’s ports. Indeed, the picture in recent years is one of improving infrastructure and port capacity. “Soft infrastructure at Nigeria’s ports is no longer the bottleneck it once was,” Glenn MacArtney, head of trade and marketing at shipping firm Maersk, told OBG. “While average dwell time is now 16-17 days, companies with organised, educated logistics teams can move goods through the ports in as little as five days.” Building on this, the new planned facilities target two ports in or near Lagos, and several in the Niger Delta region.

More generally, the PPP structure typically looks for equity participation of 20% each for the federal government and relevant state government, and a 60% stake for the private sector partner.

LEKKI PORT: The biggest and most advanced greenfield port project under way in Nigeria is at Lekki, about 60 km to the east of Lagos’s central business districts of Lagos Island and Victoria Island. This $1.5bn PPP, with Tolaram Group of Singapore, will use $900m in debt financing. The plan calls for the deepest draught in West Africa, at 16 metres, and will be capable of handling ships of up to 8000 twenty-foot equivalent units (TEUs). That makes it able to accommodate WAFMAX ships, newer and larger vessels than those currently calling on ports in West Africa.

The port is envisioned with a container berth, a dry bulk berth and a liquid berth. International Container Terminal Services of the Philippines won the concession for the container terminal, and port officials told OBG that bids to operate the other two berths were expected by September 2013. Tolaram’s holding amounts to 61.9%, according to a shareholders’ agreement from December 2012, with the federal government holding 20% through the National Ports Authority and the Lagos State government retaining the remaining 18.2%. The port is being built under a 45-year build-operate-transfer arrangement.

BIGGER PICTURE: The project is part of a larger effort to develop Lekki that also includes two free zones. The special-purpose vehicle created to own the project, Lekki Port LFTZ Enterprise, hired China Harbour Engineering in May 2012 to develop the new facility, from design to commissioning.

The 220-ha free zone, called the Lagos Free Trade Zone, is being heavily marketed towards oil and gas, agribusiness and petrochemicals ventures. Tolaram subsidiary Eurochem is planning a facility called Viva Methanol at the site, with an annual capacity of at least 2.5m tonnes of methanol. According to port officials, limited existing capacity at Nigerian ports and demand projections underline the need for the new project. The goal is to start with a capacity of 1.5m containers per year and expand to 4.5m. The initial figure is roughly two-and-a-half times the container volume of 642,000 TEUs seen in 2012. Officials ultimately hope to establish Lekki as a regional port servicing the West Africa region.

BADAGRY: A complex with similar facilities to those in development at Lekki is envisioned at Badagry, in Nigeria’s south-west corner near its border with Benin. Plans for Badagry Port include $1.3bn in spending in the first phase, according to local media reports. Overall the plan includes container and roll-on/roll-off capacity as well as oil and gas supply services, an oil refinery and an adjacent free trade zone. Phase one includes two berths at a depth of 14.5 metres, and a container terminal with a capacity of 1m TEUs.

The project is the creation of a consortium of the federal government, the Lagos State government and five private sector partners: APM Terminals, to which operations at some of Lagos’s terminals have been concessioned; Orlean Invest, a domestic logistics provider; Oando, an energy company with interests in upstream and downstream production and services; Terminal Investment, which is a container-terminal operator; and Macquarie Bank of Australia, which also has stakes in the Lekki-Epe Expressway PPP. The proposed site is 55 km west of central Lagos; 180 km from Ibadan, a major city just north of Lagos; and 50 km from Cotonou, Benin. It will have direct access to the Benin-Lagos Expressway, which is currently being expanded from four lanes to 10. The Lagos State government also plans to run a metro line in the median of the expressway to increase passenger access. Longer-term plans include barge and rail links to the potential port. Tendering for construction works is slated to be completed by the end of 2013, and construction completed in 2016 followed by a soft opening.

OTHER PORTS: Outside the Badagry-Lekki axis in the south-west, there are several new port proposals in the south-east, including the Ibaka Deep Sea Port in Akwa Ibom State and Olokola at the border between Ondo and Ogun states, alongside planned facilities in Ogidigbe in Delta State, and Agge in Bayelsa State. Ibaka Deep Sea Port is currently the closest to breaking ground. Preparations have reached a relatively advanced stage: a steering committee at the federal level has been inaugurated, and state officials have submitted a due diligence report conducted by Dutch firm Maritime & Transport Business Solutions.

A 5580-sq-metre site has been set aside for the project, according to the National Ports Authority, and various governments and public agencies involved are targeting a 2015 opening. Plans so far call for a draught of over 17 metres, one of the deepest in the West African region, which would allow for ships carrying 10,000 TEUs to dock there. Private sector partners had not been announced as of late summer 2013, but media reports indicated that the China Civil Engineering Construction Company (CCECC), a publicly owned Chinese company, presented potential architectural designs to the host state Akwa Ibom’s governor, Godswill Akpabio. The first phase of the project was estimated to cost $3bn, a visiting CCECC representative told local media in June 2013. At Olokola, the port project is backed by Dangote Group, one of the largest industrial conglomerates in Africa. Dangote’s future plans include an $8bn, 400,000-barrel-per-day oil refinery that would be located in a free zone at the same site as an anchor tenant. Olokola is often mentioned as a site for potential infrastructure upgrades and commercial projects in Nigeria, including a liquefied natural gas train, because of its location close to most of Nigeria’s major onshore oil-producing areas and its offshore fields as well.

New port infrastructure would not only help the overall experience of moving maritime cargo in and out of the country, but also aid it in pursuing other goals, including expanding transit shipment, increasing volumes and limiting evasion. The Port of Cotonou, in neighbouring Benin, is the main alternative to shipping through Nigeria, and around 75% of goods unloaded at the Benin port are bound for Nigeria. Authorities have in the past closed the land border between the two countries, citing the need for Benin to do more to cut down on cross-border smuggling.

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The Report: Nigeria 2013

Transport chapter from The Report: Nigeria 2013

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