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Concerns over Deep Seaports Concession Deals

05 May 2013

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 Transport Minister, Senator Idris Umar

Francis Ugwoke
There is increasing anxiety that the already concluded trade agreements on the construction of deep seaports in the country may have been uneconomically negotiated against Nigeria, but in favour of the foreign firms handling the projects.

Among the concerns are the amount involved in the projects and the period in which the foreign investors have to recoup their investments under a Build, Operate and Transfer (BoT) lease arrangement.

It was gathered that members of the Senate Committee on Marine Transport are particularly worried about the lease period  granted some of the investors, including one of the  foreign firms, Tolaram Group,  and want to ensure that the mistake is not repeated in future negotiations.

There are deep seaport projects located at Ibaka, Akwa Ibom State, Calabar Deep Seaport, Badagry Deep seaport, Lagos, and more to be identified in future.

Indications are that the terms of agreement, including the lease period on the projects are yet to be concluded. Apart from Lekki Deep Seaport, a private operator, Grimaldi Group, had developed the Roll-on-Roll-Off (RORO) deep seaport and is currently running the seaport under a lease agreement.

It was gathered that the foreign company handling the Lekki Deep Seaport may have been granted 45 years lease period, a development that has infuriated members of the Senate Committee on Marine Transport.

A member of the Committee, Prof. Benedict Ayade, who spoke to THISDAY on the issue while claiming that he was not sure of the number of years as the lease period, however, expressed dismay over the agreement.

Our Correspondent could not reach the General Manager, Public Affairs, Nigerian Ports Authority (NPA), Capt. Iheanacho Ebubeogu, to confirm the lease period granted the lead operator in the Lekki project, as his mobile phone line could not be reached.

But Senator Ayade said such agreement must be condemned so that government will not make such mistakes in future negotiations, arguing that government could have taken up the projects by engaging a consultant to execute the projects for a fee since funding could not have been the problem.

He told THISDAY, “I don’t have the statistics before me, but I need to do a comparative analysis. But my worry is that 45 years is a whole lot for the volume of traffic for Nigerian ports. I feel worried about it because if one left it in the hands of Nigerian government, they will probably not be able to do that Lekki port. But also giving it to a multinational to execute also would not mean that Nigeria should be taken to the cleaner.  Forty five years! I am a bit worried about that investment volume which I understand is about $1.45bn which is 60 percent foreign inputs. Imagine also that that is not a figure that is completely out of the capacity of the Federal Republic of Nigeria to muster. More so, when that has to be done under a period of 3, 4 years. So, if you take that  external funding  which is the $800m  over a period of 3,4 years of the construction period because they expect that Lekki port starts functioning in 2016 it becomes clear that you are talking of approximately about $250m - $300m per annum.

“I think that is not difficult for the Federal Government of Nigeria. So my own take is that get a management team,  set it special purpose vehicle with public, state and federal government participation as equity holders,  set the fund, set up the  Lekki port  and allow it run with a multinational best practice operators to operate it. So that this belongs to Nigeria”.

Ayade said that except the government is careful, most important investments would be in the hands of multinationals.
He said  “at the  rate  which we  are structuring our concessions in the next 40, 60 years, our rail  lines will be owned  by multinationals, our deep seaports  will be  owned  by multinationals, almost everything  we have will be owned by multinationals (laughs).

“We cannot just continue like that as a nation. Yes, it is a process of building a modern Nigeria, but in doing so; we have to think of the sovereignty of Nigeria. We have to be sensitive to every other possibility that can come with it, including security. I am quite worried at the rate at which the new financing platform is equity participation. I think for a country like Nigeria, where finance is not even the core challenge, the  funding mechanism of states at this point in time, we must find a  way to ensure that the larger percentage of any shareholding is resident  in Nigeria. I think it is something I hold strongly and it is a point that must be noted going forward in further concessions”.

Ayade said that the Senate Committee would look at the issues as they affect concessions in the maritime sector, adding that while it has not power to revoke such contracts because of the conditions set in the agreement, it will ensure that future agreements will take care of such problem

Tags: Business, Nigeria, Featured, Transport Minister, Senator Idris Umar

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