A Tripod Of Deep Seaports And Viability Appraisal

Nigeria is set to witness an influx of deep seaports initiated by state governments as well as other private sector investors. While this can be seen as a commendable development as a means to reduce the pressure on the existing ports and curb the disadvantages from their draught limitations, there is an increased concern about the viability of these projects as some are simply white elephant projects by corrupt state governors and some other ports are sited for political considerations order than the viability of the project.

There are indications that the proposed Bakassi Deep Seaport  have been dropped from the port development master plan by the Federal Government because the promoters have not been able to establish its viability.

However, the Federal Government of Nigeria has identified only three deep seaports in its port development master plan. They include the Lekki Deep Seaport, Badagry Deep Seaport and Ibom Deep Seaport.

The Director General of Infrastructure Concession and Regulatory Commission (ICRC), Dr. Aminu Diko revealed that the Commission would not approve the Bakassi Deep Seaport if the promoters do not prove its viability, adding that they had not done it as at the time the government approved only three deep sea ports in the country.

This write-up aims to study the viability of these ports with special considerations on the location, draught level, host community, market and industrial opportunities and availability of other facilities link railways, road and batches.

Lekki Deep Seaport and Badagry Deep Seaport are both located in Lagos, the commercial hub of Nigeria while operators have seen the Badagry deep seaport as one that would create a monopoly in future because of the peculiarity of the owners.

Badagry Deep Seaport is owned by APM Terminals, a major stakeholder in global shipping and terminal operations across the globe. The fear is that this shipping bigwig may stifle the patronage of other competing ports in the country in order to enhance its productivity.

Lekki Deep Seaport is the only port which has received financial support from the Federal Government as the Managing Director of NPA, Ms Hadiza Bala-Usman has confirmed that the organization had already paid 4.4 per cent of its level of equity in the Lekki project. However, it  has a snag, which is lack a major link road to mainland to avoid congestion on the access road which will amount to repeating the mistake of  Apapa match-box. It is obvious however that there is no rail link to the project.

Meanwhile, the Managing Director during a media conference to mark her 100 days in office, said that NPA was planning to scale down the level of the 20% shareholding it has in the Lekki deep seaport project as the Authority considers its level of equity in the project to be too high.

The deep seaport is a $1.5 billion public-private partnership project involving  the Federal Government represented by NPA , the Lagos State Government and the Tolaram Group, a Singaporean investor which is promoting it  and a shareholder’s agreement to this effect was signed in December 2012 by the three parties.

MMS Plus also understood that the 20 per cent stake of the NPA in the project represented about $118 million while the 4.4 per cent the Managing Director stated has been paid amounted to about $5million.

Usman explained that NPA has so many projects in which she needed to invest so much money; saying that the prevailing economic situation would not allow the body to want to invest so much money in such a project despite that it was a laudable one.

According to her, the amount that would be realized from the cut in the investment in the deep seaport would afford the NPA the opportunity to use the money in other areas of its operations meant for the development of the Nigerian seaports.

The past management of the NPA had taken up its current level of equity in the multi-billion naira project due to its belief that it will to create thousands of jobs and significantly reduce the present congestion in Nigerian premier port, Apapa Quay, Lagos.

The project is also expected to be an eye-opener that will attract other investors as well as inspire the construction of other proposed deep seaports, like the Badagry deep seaport, Olokonla port in Ogun state, Ogidigben port in Delta state, and the Ibom deep seaport in Akwa Ibom State, lead to economic growth to the country and serve as a hub of West and Central Africa.

The Minister of Transport, Rt. Hon. Rotimi Amaechi, had told our correspondent in Accra, Ghana earlier that the Federal Government would divest its 20% stake from the Lekki Deep Sea port so as to create a level playing –field for all the competing deep sea ports in the country, a development that pushed the Ibom Deep Sea Port promoters to restructure the project equity holding structure to 80 per cent and 20 percent, for private sector and Akwa Ibom State, respectively.

Although the three deep seaports would be significant upgrade on the existing ports in Nigeria, the Ibom deep seaport edges out the others as it is ideally located to serve the West and Central African Region (JDZ Sao Tome, Equatorial Guinea, Cameroun, Angola, Gabon, Congo, Chad, Niger). Ibom offers proximity to markets to minimize feeder transit and cost, large gateway market size to attract direct vessel services, sizeable transshipment cargo hinterlands for feeder shipping network connection, etc.

Ibom deep seaport also offers dedicated terminals and facilities for container and cargo handling, an integrating of the port to the Ibom Industrial City Development, shortest unencumbered two-way access channel to the deep sea from shoreline and the project site is designated within the Free Trade Zone.

However, a maritime expert who is a stakeholder at the Ibom deep seaport said “the federal government recognized that we did not have sufficient capacity in the existing ports, so they opened up and allowed the private sector as well as state governments to attempt to develop ports. Out of these developments, three have been cited in the ports master-plan; Ibom Deep Seaport, AP Mollar Port Badagry and the Lekki port.”

“I’m very pleased that our port is in the master-plan and so we concentrate on its development. Our strategy is not to de-market any other port development let alone that of Cross River which is a sister state. We are not de-marketing them because the bidding and commercial attractiveness of our project does not depend on the advancement of the port project in Cross River State.

“Again, we would have been worried if the Federal Government was investing in any of these ports but we now know that they are going to be funded by the private sector. Any private person who wants to engage in port development would look very well at the economic and commercial viability of the project before they invest. We know the story of the Calabar port that the site of the port was not driven by commercial exigency. The original plan was for the port to be sited somewhere else. It was the Federal Government that sited the port so it did not put the commercial aspect, engineering and environmental issues into consideration.

The source continued: “The one of Bakassi is up the Cross River upstream and the same development we have in the Calabar port would also be there. We found out that the current has a degree of sediment in that part of the Cross River and it was so much that it would be very difficult to maintain the cost of the capital and maintenance dredging. The plan was that it would be the second river port in Cross River State. It cannot be a deep sea port for the simple reason which is that the Cross River State does not have access to the sea. After the decision of ceding Bakassi to Cameroon, the whole region is part of Cameroon and not Cross River state anymore.”

The source also added that the proposed location of the Bakassi port is by the river and the distance from there to the deep sea is about 80km. She posited that investors would need to factor the cost of taking vessels down to the Bakassi port as a result of the draught, also noting that the international customary law on freedom of the sea when innocent passage is guaranteed in any shipping interest does not apply to Bakassi as a river port.

“The innocent passage is not guaranteed at Bakassi and you have to take permission from Cameroon and if there is a problem of competition because that region belongs to Cameroon and they are trying to develop their ports, the investor who is going to Cross River would not be able to because we don’t have that universal passage law. These are some of the technicalities. From the policy part of it, I would write to the Federal Ministry of Transportation that Ibom has a good advantage”.

When asked why the Federal Ministry of Transport (FMOT) allowed the Cross River State Government to go ahead with the advertorial on “Expression of Interest” when they had concluded their viability appraisal, the Director of Procurement in the FMOT, Mr. Shehu Aliyu, said the action was informed by the government’s policy of promoting the establishment of many ports as possible to help decongest the Lagos port.

However, the Governor of Cross River State, Prof. Ben Ayade, recently stated the reason for the proposed Bakassi Deep Seaport, saying: “it is actually not a port that will be competing with the existing Calabar Port of Nigerian Ports Authority. It is strategic in the region because it has 16 meters draught and located in a sensitive location with support coming from the Far East”.

He said the port had attracted 100 Chinese firms that are ready to come and establish bonded warehouses, start construction and manufacturing.

He added that the people of Cross River State have emotional attachment to the deep sea port because they are “a people who by no fault of theirs have become refugees in their own ancestral homes, the people who have been denied all rights that nature gives to humanity. So, Bakassi Deep Seaport is to provide an economic base for them and President Buhari is at the forefront of pushing for the realization of the seaport in Bakassi.

The Governor disclosed that they had secured some Mexican partners who were ready to develop a vast Banana plantation, saying “There is no way we can evacuate these bananas to Europe unless we have a functional inland water ways that can support it, so I see a synergy between the Calabar port and the Bakassi Deep Seaport”.

Since the primary benefit of a deep seaport is its capability to handle larger vessels, this capacity brings with it many advantages to the nation’s maritime industry and fall-out of economic gains and Nigeria is already a dominant market for ships bound for West and Central Africa regions, a deep seaport will increase Nigeria’s chance to attain regional shipping hub statusa.

By Kenneth Jukpor