Dabiri: Lekki Port Will Reposition Nigeria as Regional Hub in Maritime Business

Biodun Dabiri is a titan in the Nigerian banking & finance sector and has worked as a chartered accountant, an investment banker, a corporate finance specialist, a stockbroker, as well as a pension fund manager. As a result of his extensive experience, he is an asset to many companies where he sits on their board. He is the Lagos State Government nominated director on the Lekki Port board where he serves as chairman. He spoke to Ugo Aliogo recently on Lekki Port. Excerpts

Nigerians are excited that Lekki is finally coming on stream. What impact will the Port have on the Nigerian economy when completed?

Before the Board of Lekki Port was constituted, I spent some time with the original promoters of the project (Tolaram) to understand the complexities of the project especially from the financing and stakeholder management perspectives. I could see that truly, this was a unique infrastructure development endeavor, the type of which rarely succeeds in developing countries from a financing and economic contribution perspective. Being one of the single largest infrastructure investments in Nigeria with State and Federal Government equity contribution, it was clear to us that it had to be financed on a non-recourse, project finance basis, with financing principally from the international market thus freeing both Lagos State and the Federal Governments from any addition to its foreign debt profile. We were conscious of this financing model in structuring the deal.

The economic impact for Nigeria is significant with high employment potential (about 170,000 jobs will be created from port operations alone). Substantial revenues will be generated in local and foreign currency from taxes, royalties, and duties. All these, in addition to other direct and ancillary business employment and revenues, have been projected to be valued at more than $400 billion in the medium term, giving financial viability assurance throughout the 45-year concession. For Lagos State, Lekki Port is located strategically to also serve the Lekki Free Trade Zone, which is the flagship of the Lagos State Government’s industrial development initiative.

What is Lagos State Government’s shareholding in Lekki Port?

Currently, Lagos State has 20 per cent. Initially, it was 18.15 per cent but given the expanded role that Lagos State was going to play in the ensuing scenario, we negotiated this amongst key promoters to 20 per cent. The Federal Government through the Nigerian Ports Authority reduced its shareholding from 20 per cent to 5 per cent while the balance is now held by international investors, Tolaram and China Harbour Engineering Company.

It is pertinent to mention that Tolaram has been in Nigeria for about 40 years and promoting Lekki Port is their biggest footprint in infrastructure development. The Chairman, Mohan Vaswani, the patriarch of Tolaram must be recognized for his vision and steadfastness in the Nigerian project.

China Harbour Engineering Company (CHEC) came into the picture much later but their contribution towards moving Lekki Port from the drawing board to the construction stage has been phenomenal. We had to cede significant interest to CHEC in exchange for facilitating the much-needed debt finance from China Development Bank. This move was necessary given the over 10-year funding lag that the project had suffered. In addition, CHEC themselves made a cash injection of $221 million towards their shareholding, surprisingly right in the middle of the 2020 pandemic lockdown.

Apart from being a shareholder, successive Lagos State Government from Ashiwaju Bola Ahmed Tinubu, Babatunde Fashola, Akinwunmi Ambode, and now Babajide Sanwo-Olu have supported the development and growth of the project from the conception stage through to the start of construction especially during the height of the COVID-19 pandemic.

I recall that Governor Sanwo-Olu personally got involved in liaising with the Federal Government and getting key approvals from the Federal Ministry of Aviation and the Nigerian Immigration Service in bringing in the Chinese technical experts as well as the new management team of Lekki Port from Beijing during the lockdown of 2020. This has no doubt kept the project timeline on course.

Do you see the birth and eventual commercial operation of Lekki Port leading to an improved port system in Nigeria?

Lekki Port will be a game-changer. Economic and business models have shown that it will bridge the significant gaps in our country’s marine infrastructure, especially in Lagos. The current expansion constraints on our existing port infrastructure have a somewhat invisible but significant drag on the country’s ability to expand its economy.
Without mincing words, these constraints can only be dealt with properly and sustainably with technology, more contemporary thinking, and management skills if economic growth is not to be compromised.

The capacity shortfall for container terminal facilities in Lagos, which was projected to be 0.8 million TEUs (Twenty-Foot Equivalent Units) in 2016 is going to increase to up to 5.5 million TEUs in 2025. This means that industry and commerce are slowed down to the extent of the time required to process the excess shipments.
However, with the strategic location, operational flexibilities, optimized layout, and modern facilities that will be provided at the Lekki Port, a distinct competitive edge over any other port facility in the West African region will be established and hence reposition Nigeria as a regional hub in the international maritime business.

Given other challenges associated with the port system in Nigeria, do you see Lekki Port navigating them to deliver a business-friendly experience to investors and other users?

To provide berthing for larger vessels, which is the growing global trend in the containership sector, Lekki Port is being equipped with the best infrastructure and terminal facilities and services to attract and maintain large volume shipping line customers. Facilities at the port will include purposely designed marine infrastructure such as container, dry bulk, and liquid terminals, making it a truly multi-purpose port. In addition to this, the container terminal will be operated on a sub concession by Lekki Freeport Terminal, which are experts in managing container terminals. It is a subsidiary of CMA CGM the French global giant in maritime shipping and logistics. CMA CGM is already preparing for the commencement of operations at the Lekki Port and the objective as I understand it, is to ensure that all port users experience a world-class standard of service, which will translate to unlocking value for the investors who have supported the project through the years by standing steadfast despite the challenges due to the peculiarities of our country.

There are fears that Lekki Port may suffer the same challenges many ports in Nigeria face. What are you doing to prevent such re-occurrence, given that cargoes are usually evacuated by road? The Minister of Transportation has said that there is no plan to link the port with the rail network; how do you think this will affect the cargo evacuation?

Lekki Port as conceptualized is governed by a special purpose vehicle, which has Lagos State and the Federal Government (NPA) as its shareholders. These are the two most important partners to take on this challenge of road infrastructure and His Excellency; Mr. Governor has been working hard to ensure that before the port goes into full operation, the road infrastructure will have been augmented to cope with the increased traffic.

With regards to rail, the management of Lekki Port has always stressed the importance of rail connectivity for the port and in fact, President Muhammadu Buhari recently instructed that the port be connected to the railway network. During his last inspection visit to Lekki Port, I understand that the Minister of Transport stated that studies will commence to confirm the best configuration to link the port to the national railway network. I think this is an encouraging first step, which can be continued by successive administrations.

How significant is the role of technology in the commercial operation of Lekki Port?

Lekki Port project has been designed and is now being constructed in line with global best practices by CHEC, which is one of the largest marine engineering contractors in the world. In addition, we have Louis Berger as part of the WSP Group, equally one of the largest multi-disciplinary infrastructure consulting firms in the world as the project management consultant. They are responsible for contract management, design review and construction supervision thus guaranteeing efficient quality control. It is being built as a modern port with state-of-the-art equipment like Rubber Tyred Gantry cranes (RTG) which are mobile gantry cranes used in intermodal operations to stack containers and Ship to Shore (STS) cranes. The port will be equipped to handle inter-modal transportation scenarios that very few ports in Africa can handle. In-built technology to facilitate the screening and processing of shipments within 48 hours will be provided and with the highly computerized terminal operating system having a technological interface with the regulatory agencies, we expect a more efficient, seamless service to the end-user. These will be a novelty in Nigeria.

The Minister of Transportation, Rotimi Amaechi was particularly concerned about the completion date when he visited the project site last year. In specific terms, tell us the completion date and how soon can we expect activity at the port?

The Minister expressed such concern over 8 months ago. But he visited in January this year and was very excited at the progress. The management team led by Du Ruogang, the MD of Lekki Port has pushed hard to ensure the rapid progress of the construction work. As of the end of January, the progress of the construction was at 81% which is in line with the planned schedule and commended by the minister given the backdrop of the global pandemic.

Considering where we were at the Board’s inception, we are extremely satisfied with our achievement in terms of progress and reasonably confident that we can begin to see port operations in the last quarter of 2022.