Pros and Cons of Greenfield Seaport Devt

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Eromosele Abiodun posits that challenges such as modern infrastructure, integrated transportation system, incentives for investors, unfriendly tax policies and corruption have been the bane of Greenfield deep seaport development in Nigeria

Unstable government policies, lack of safety and security of funds are said to be some of the challenges hindering the development of Greenfield seaport in Nigeria. Others include comfort of investors, non-provision of adequate measures to ensure continuity, lack of infrastructure and efficient transport system.

While the above challenges cannot be ruled out, corruption has been the major obstacle. For instance, despite the yearly allocation of several billions of naira for the construction of a proposed Greenfield deep seaport at Ibaka in Akwa Ibom State by both the state government and the Nigeria Ports Authority (NPA) since 2011, the project has remained elusive, with no evidence of a port being built at the proposed site.

This is also the same situation with the $1.65 billion Lekki Deep Seaport, which is slated to be completed in 2019. Work is currently on-going at the Ibaka deep seaport in Akwa Ibom and the Lekki deep seaport in Lagos. Similarly, construction work is on at the Olokola deep seaport and Free Trade Zone between Ondo and Ogun, with a deep seaport being proposed for Badagry in Lagos. The deep seaports were conceived to improve the overall cargo handling capacity of Nigerian ports and thereby increase Nigeria’s gross domestic product (GDP).

The handling capacity of ports in Nigeria is put at 60 million metric tonnes, while demand and usage is about 100 million metric tonnes, and they are expected to rise with the increasing population, urban expansion and attendant demand for more markets.

The cargo throughput handled in the ports increased from 66,908,322 metric tonnes in 2009 to 74,910,282 metric tons in 2010, indicating a 12 per cent increase. According to global trends in port development, out of a total of 100 plus seaport developments being executed the world over, approximately 60 to 75 per cent of these are deep sea ports or terminals. The balance is mostly inland water way ports and jetties.

This clearly indicates that Nigeria needs better designed port facilities in tune with increased cargo traffic, for the global competition. Also, emphasis is shifting to larger and more economical vessels that require deeper harbour drafts. Global logistics trends have made the need for deep seaports more imperative.

The last two decades have witnessed a major shift in the exploration and production focus of international oil companies (IOCs), with deep offshore frontiers becoming more attractive and widespread. This has naturally affected the dynamics of crude oil carriage, just as more efficient means of petroleum products and liquefied natural gas (LNG) supply and distribution are sought from the downstream segment of the industry.

Crucially, logistics services for these new frontier developments define the core of operations, costs and efficiency, with bigger vessels infinitely more able to leverage on scales and further thereto, on costs. The foregoing defines today’s shipping and oil and gas reality in Nigeria, and paints the canvass for deepwater ports in bold relief.

Greenfield Development and GDP

To this end, the federal government has been inundated with calls to embark on policy measures that will encourage Greenfield port development in the country.
Doing so, experts said, would impact positively in the overall cargo handling capacity of the Nigerian ports and thus increase the country’s GDP.
Experts believe Nigeria need new better designed port facilities in line with increased cargo traffic nationally and globally, new and bigger marine vessels that need deeper harbor drafts.

Global logistics trends and practices, they stressed, have made the need for deep sea port more imperative.
“Nigeria should also have at least one port that can berth a Super Panamax Vessel”, said, Bello Ibrahim Gwandu, a former Managing Director, Nigerian Ports Authority (NPA), while giving reasons why Nigeria must develop Greenfield deep sea ports.
He added that as the largest importer and exporter of cargo in the West African sub-region, one of Nigeria’s deep sea ports should become a hub for west and central Africa because of increased maritime and general trade volumes of the country.

“The benefits of attaining a regional hub status include the potential to create directly and indirectly, approximately three to four million jobs over a five year period and a 70 per cent cut in vessel turnaround time as well as guaranteeing increased revenue from berthing charges to handling charges for the trans-shipment of cargoes. A deep sea port of draft not less than 35 Meters will almost guarantee Nigeria the regional hub status, which by volume of cargo alone sent or received from our ports, gives her the right to that status,” Gwandu stated.

According to him, Nigeria needs a deep sea facility that load and offload finished, refine liquid, powder and containerized cargo adding that bigger ships move cargo more efficiently than smaller vessels, so the economies of scale make it imperative that shippers will buy new bigger vessels, which have to dock somewhere, a deep sea port.

In a paper entitled, “Greenfield Port Development: Which Approach,” Gwandu urged the federal government to also consider reducing the approval process for public, private partnership (PPP) proposals.

He said PPP is best suited for port development because of capital layout required to develop ports and equip same and the broad range of engineering, engineering management and operational management expertise needed.

The government, he said, should promote the use of bi-lateral agreements from the private sector as a vehicle for infrastructure development and Nigeria achieving the regional hub status and assist willing investors where necessary to access loans locally and internationally to finance this type of developments.

SIFAX Proffers Solution
In his contribution on the way forward, the acting Managing Director, Ports and Cargo Handling Services Limited, a subsidiary of SIFAX Group, Mohammed Bulangu, identified areas that the government needs to address in order for the country to take advantage of the on-going Greenfield seaport development.

Bulangu pointed out these solutions while delivering a lecture titled: “Greenfield Development: Imperative for Port Development in Africa” at the African Day of Seas and Oceans hosted by the Nigerian Maritime Administration and Safety Agency (NIMASA) in Lagos recently.

According to him, there is an urgent need to find sustainable solutions to various impediments bedevilling the laudable projects.
These challenges, he stated include unstable government policies, lack of safety and security of funds invested by promoters, comfort of investors not guaranteed and non-provision of adequate measures to ensure continuity, lack of infrastructure, efficient transport system, among others.

“Looking at the port development projects Nigeria is embarking upon now- Greenfield ports at Lekki, the proposed port at Badagry and also the Olokola port on the borders of Ogun and Ondo states, one important missing link that can be observed is accessibility. On the completion of these ports, if some key and fundamental challenges, of which accessibility is the chief, are not addressed, serious environmental and economic issues will arise especially with the Lekki port.”

Bulangu further noted that all these challenges are surmountable if the government can guarantee safety and security of lives and investments put into the development of such Greenfield projects.
He added that there is an urgent need to deploy adequate security within the country’s territorial waters to check the activities of pirates and sea robbers.

Other areas that the Ports & Cargo boss suggested the government should attend to include: provision of modern infrastructure, integrated transportation system which includes good road network, efficient rail system and revitalisation of inland waterways for the movement of persons and goods, attractive incentives for investors, including friendly tax policies and streamlining of operational procedures for smooth service delivery.

He said: “With the continued increase in global sea-borne trade and vessel sizes deployed to many routes for economies of scale operation, the need for new ports development with deep draft and large stacking areas for transhipment and transit cargo are becoming imperative.

“New trends in maritime trade have also dictated that new port development takes into considerations a shift from its traditional roles as only destination of imports for the country and for its exports, but as hubs for connection and transhipment to other ports. Greenfield port development within supply chain now comes with activities such as cargo/warehousing, sorting, packaging, ship repairs, fuelling, discharge and many more.”

Experts Views

In the same vein, the Nigerian Port Consultative Council of Nigeria (NPCC) urged the federal government to complete the on-going deep seaport projects in the country as it will facilitate international trade expansion.
The Chairman of NPCC, Kunle Folarin, gave the advice in an interview with journalists in Lagos.

Folarin underscored the importance of infrastructure to the successful operation of the deep seaports.
He said: “Deep seaport development is critical to our ability to deliver on international trade. As it grows, the infrastructure to support this particular enterprise becomes a fundamental issue. Within the infrastructure, also, there should be a renewal and modernisation of the port system. The modernisation of the port system includes the basics, which are the civil areas of berth, the areas of telecommunication, and the area of power in the port system so that the port can work in a desired 24-hour regime.

“Without power, the equipment will not work to satisfaction; without power and illumination, all the working areas in the port and onboard the vessel would not be easily achieved. So still on infrastructure, he has to look at issue of the scanning machines. Although, done directly under him, it is a responsibility of the customs and that means the Ministry of Finance. Since the port is an operational area under his purview, he must also look at a critical infrastructure that is necessary to perform optimally in the port system.

“The terminal operators working in the port system; the haulage contractors supplying trucks for evacuating and delivering cargo into the port must also modernise and provide the infrastructure to deliver optimally in the port. The railways must have the necessary equipment, which include wagons-such equipment that will allow for the evacuation of cargo from the port, particularly containers and tanks. So it will relieve the road network of the stress and the investment that it will demand.”

He stressed the need for Nigeria to focus on how to take advantage of the volume of cargoes via international trade.
The NPCC boss said this could be done when indigenous shipping companies transport cargoes for Nigerian shippers from the various ports of origin,
He said it was critical and important that Nigeria takes part in industrial trade in countries such as North and South America, Middle East, Sub-Sahara Africa, Asia and others.

Folarin also called for the use of information technology in the operation of the seaports.
He spoke of the need to look at port charges and determine whether the charges were commensurate with the services provided at the ports.

On her part, the Chairperson of Ibom Deep Seaport Implementation Committee, Mrs. Mfon Ekong Usoro, who was the pioneer Director General of NIMASA and the current the Secretary General of the West and Central Africa Memorandum of Understanding on Port State Control, believes deep seaport drives industrialisation and economic activities in the community.

“So there is going to be a synergy between both activities. As we speak, to investors (shipping lines, terminal operators) are interested in knowing the economic and commercial activities in the state where the seaport is located.

“When they know that there is a vehicle plant, a big mall, a petrochemical factory, power plant etc it immediately engenders interest. In point of fact, one of the shipping lines asked a question concerning availability of mega-sized malls because they bring in consumables and commodities from Asia for traders and supermarkets,” she said.

She added: “We cited the vibrant markets in Akwa Ibom and Abia, mentioned Tinapa, but it is even better to say we have Shoprite in Uyo. As Shoprite sets up shop in Uyo, they come with their anchor tenants. We have the big mall, we have large markets in Aba, Onitsha and also in Akwa Ibom that are driving the demand for the deep seaport.

“On the aspect of this drive towards agriculture, some of the terminals will be for dry cargo such as grains, rice etc. It will serve the farmers better to know that there is a deep seaport next door and an agriculture cluster in the industrial city; remember we are working on Ibom Industrial City which is integrated with the port.”

Lagos Akwa Ibom State’s Effort
Meanwhile, despite several challenges, the Akwa Ibom State Government has vowed that the multi-billion naira Ibaka Deep Sea Port project will be completed in less than three years.

The State Governor, Mr. Udom Emmanuel, disclosed this recentlyin Uyo during a media chat.
“Latest by April 2018 we should be able to have a deep sea port,” he said.
If this is achieved, it would be six months ahead of the December 31, 2019 deadline, which Emmanuel gave the 10-member Technical Committee on the actualisation of the project during its inauguration in early June.

The governor described the Ibaka Deep Sea Port project conceived by his immediate predecessor, Senator Godswill Akpabio, as the only one in the country that has both Federal Executive Council and Presidential approvals.
He described it as a very significant project which will help to unlock the non-oil potential of Akwa Ibom in the face of dwindling returns from crude oil, in which the state is a major producer.

“We are quite on tract. Every single step we set for the project, we are achieving it,” the governor added.
On his part, Governor Akinwunmi Ambode of Lagos State recently disclosed that the $1.65 billion Lekki Deep Seaport will be completed in 2019.
The governor stated this during the formal unveiling of the Office of Overseas Affairs and Investment, otherwise known as Lagos Global in Lagos, Southwest Nigeria.

Ambode said that the efforts put in place so far have ensured that the state remains the desired business haven, attracting massive Foreign Direct Investments (FDI) such as the $1.65 billion Lekki Deep Seaport.

He assured that the seaport would be completed in 2019 and that upon completion, it would be the deepest seaport in Sub-Saharan Africa, adding that the Badagry Creek Industrial Park, a $1.3billion investment meant for completion in 2018 and the $12 billion Dangote Refinery and Petrochemical Park were among other investments coming to the State.