Lekki Deep Sea Port as Game Changer for Nigeria

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  • Rivers Port faces shutdown
  • Closure could lead to congestion of Apapa ports

Eromosele Abiodun

With the imminent closure of Rivers Port in Port Harcourt, Rivers State, due to its certification as unfit for further operation, threatening to worsen the congestion in the Apapa, Lagos ports, the Lekki Deep Sea Port when it comes on-stream, promises to offer succour for the maritime community in the country.

The federal government, THISDAY reliably learnt is considering decommissioning the Rivers Port, which serves the South-south and South-east business concerns, following the outcome of a study by a consultant, commissioned by the Nigerian Ports Authority, Messrs Cares Limited, which said the port, having ended its lifespan, had become unsafe for use.

And unwilling to take a soft loan offered by a Chinese firm to redevelop the port, THISDAY learnt that the federal government might shut it down.

But the signing of a financing agreement Thursday for the construction of the Lekki Deep Sea Port in Lagos yesterday promised to increase the capacity of the country to handle its imports and export in real time.

Over the years, efforts to develop Deep Sea ports in Nigeria have not yielded any positive results as unstable government policies, lack of safety and security of funds invested by promoters hindered the development of Greenfield seaport in the country.
The Deep Sea ports 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.

These 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 tonnes in 2010, indicating a 12 per cent increase. According to global trends in port development, out of over 100 seaport development projects being executed in the world, approximately 60 to 75 per cent of these are deep sea ports or terminals. The balance is mostly inland waterway ports and Jetties.

This clearly indicates that Nigeria needs better designed port facilities in tune with increased cargo traffic, for the country to be globally competitive.

Also, as 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.

Nigeria is not far from achieving the dream of developing a deep sea port though.

Very recently, Tolaram Group, the parent company of the Lekki Port LFTZ Enterprise Limited, successfully concluded negotiation and signed off a $629 million (N226.44 billion) loan facility agreement with China Development Bank (CDB) for the construction of the Lekki Deep Seaport.

The development of Lekki Deep Sea Port was conceptualised on the basis of a significant gap in projected demand and capacity. Market studies indicate that the demand for containers in Nigeria is expected to grow at 12.9 per cent up to 2025.
However, given the expansion constraints on the existing infrastructure, the capacity in Lagos is incapable to meet the growing demand.

The capacity shortfall for container terminal facilities in Lagos is projected to be 0.8 million Twenty-foot Equivalent Units (TEUs) in 2016 going up to 5.5 million TEUs in 2025. The strategic location, optimised layout, and modern facilities provide Lekki Port a distinct competitive edge over any other port facility in the West Africa region.

When completed, the multi-purpose port would cover an area of 90 hectares with three container berths, long dry bulk berths, and three liquid berths. Initially, the port would handle close to 1.5 million TEUs of containers annually, and this would be upgraded to 2.5 million TEUs in the future.

The channel would be dredged to 14 meters depth, which would be deepened to 19 metres as traffic grows while the breakwater, which protects the vessels from the waves, is 1.5 kilometres long.

The agreement, according to a source close to Tolaram Group, is a major step towards the financial close on the funding for the construction of Nigeria’s first deep seaport project, estimated to gulp over $1.6 billion.

The loan facility, the source added, would enhance massive construction work at the site and would also ensure timely completion of the port project, which has gone far with the ongoing construction of breakwaters at the port site.

The port project is jointly financed by a consortium of six banks, which include the African Development Bank (AFDB), the European Investment Bank (EIB), Standard Chartered Bank (SCB), RMB, Africa Finance Corporation (AFC) and Standard Bank.
Lekki deep seaport is jointly owned and developed by the Tolaram Group, the Nigerian Ports Authority (NPA) and the Lagos State Government as equity investors.

Tolaram, which has the concession to build and operate the port for 45 years, appointed the China Harbour Engineering Company (CHEC), the world’s biggest marine engineering company, as the Engineering, Procurement, and Construction (EPC) contractor to oversee the design, construction and commissioning of the port project under the supervision of an American project management consultant known as Louis Berger Group.

However, as Nigeria moves closer to achieving its dream of owning a deep sea port, it is expected that the project will tackle the challenges that may arise from the decreasing capacity of the river ports across the country to handle cargoes as a result of their various stages of collapse and the humongous amount needed for their reconstruction.

Rivers Port Faces Shutdown

Meanwhile, the federal government may be forced to decommission the Rivers Port, located in Port Harcourt, Rivers State, following the report of a consultant commissioned by the Nigerian Ports Authority (NPA), which declared that the facility having reached the end of its lifespan is no longer safe for operation.

If this happens, it could result in port congestion as the Apapa ports would remain the only viable alternatives from importers from the South-South and South-East and surroundings as the other ports in the area, such as Onne, is privately owned.

Documents obtained by THISDAY revealed that the port, which was last rehabilitated in 1960, was constructed in two stages starting from 1912 with the development of berths 1 to 3 and subsequently berths 4 to 8 in 1923.

It was constructed with a total quay length of 1,288 kilometres for evacuation of agricultural products and mineral resources.
THISDAY gathered that following continued concerns raised by terminal operators on the state of the quays, the NPA had commissioned a consultant, Messrs Cares Limited, to carry out a comprehensive condition survey of the infrastructure and proffer solution.
The consultant’s report confirmed deteriorated structures and need for prompt reconstruction.
The consultant, having reviewed the existing state of the quay structures, said there was a reduced functionality in the capacity of the port structure.

It stated that the present condition of the quay structures has exceeded its useful lifespan and carrying out further maintenance on it would be uneconomical.

According to the consultant, the structural integrity of the quay substructure is doubtful thereby impacting negatively on the ability to dredge alongside the berths.

It, therefore, recommended the development of new port upstream of the existing port at an estimated cost of $1 billion.
It, however, recommended two other options, which are either to redevelop only berths 1 to 8 of the existing quay line at an estimated cost of $127 million (N45.72 billion) or redevelopment of berths 1 to 8 by extending the quay line 20M into the channel at an estimated cost of $131 million (N47.16 billion).

But the consultant warned that though this option has the advantage of increasing quay apron and increased depth, 20 metres seaward will encroach on the approach channel and cause obstruction for safe navigation.

Following the report, the NPA wrote a letter to the Minister of Transportation, Mr. Rotimi Amaechi, requesting approval for China Harbour Engineering Company Limited’s offer for a soft loan to develop the port’s infrastructure.
But the minister in a letter to the NPA dated December 31, 2018 declined the offer for a loan, saying that the federal government is not in favour of accessing any loan for port infrastructure development.

In a bid to avoid total shutdown of the facility, the NPA in another letter dated, October 16, 2019, appealed to the minister to approve that the NPA proceed with realising one of the options provided by the consultant, which is to redevelop only berths 1 and 8 along the existing quay line at an estimated cost of $127 million (45.72 billion).

This option, NPA stated, has the advantage of cost and possibility of achieving deeper depth along the quay line.
The NPA in the letter, which was obtained by THISDAY stated: “Your letter reference PRS/ABJ/03341/166 of December 31, 2018, on China Soft Loan For NPA Infrastructure Development (under reference), you indicated that the federal government is not in favour of accessing any loan towards ports infrastructure development as contained in our earlier request.

“However, it is considered proper to draw the attention of the minister to a letter from the Office of the Vice-President of the Federal Republic of Nigeria, with reference SH/OVP/DCOS/Misc/0600 dated January 29, 2019 and addressed to the Managing Director of China Harbour Engineering Company (Nigeria) Limited, which was made available to our office through the company vide its letter reference CHEC-NG-LGS-2019-018 of May 27, 2019.

“Kindly recall that we had earlier expressed that the loan, if approved and accessed will assist the authority to complete the rehabilitation of the ports. It is necessary to state that the federal government realised the socio-economic importance of rail lines in the country, which prompted the huge investment in rail development. This significant feat is currently being achieved through Direct Foreign Investment Loans (DFIL) and the port believes that if approval is granted to access similar though much smaller loan for ports infrastructure development, the nation will gain tremendously in the long run.”

NPA added, “It is pertinent to mention that the main thrust and strength of the rail transport system is for easy evacuation of cargo to achieve efficiency and engender increase in revenue generation for economic growth. So, there is a need for improved port infrastructure to be developed to provide the requisite synergy in infrastructural development for both the port and rail to have optimal value creation for the benefit of the citizens.

“It is our considered opinion to restate that the authority deserves to invest massively in port infrastructure. However, it is understandable that construction is capital intensive and paucity of funds will hinder ports from this important investment. The loan if approved and accessed will contribute immensely towards the realisation of investment in the ports to engender efficient and effective ports operation.”

It was gathered the minister had not responded to NPA’s latest letter.
But a senior official of the NPA told THISDAY that the agency will have no option than to decommission the Rivers port following the expert warning that its continued use in the state will endanger lives.

He said: “We have done our part. The experts have given us their recommendation and we have communicated this to the minister. But due to paucity of funds it is unlikely that the government will embark on that kind of project at this time. It is highly unlikely.”

Also, the Managing Director of NPA, Hadiza Bala-Usman, had alluded to this in an interview with THISDAY, while responding to enquiries about the need to dredge the Rivers and Calabar Ports.

She said: “It does not make economic sense spending humongous amount to dredge River Port to 8 or 9 metres when ports in neighboring countries have depth of 17 to 18 metres.

“So, we believe that the Calabar channel as it is, is long; it is also a huge cost; we are having N50 billion cost of dredging it. And we think it is not cost-effective to invest that kind of money when you do the cost-benefit analysis and look at the revenue that needs to come in. In totality, what we need to do as a country is to work towards having deep seaports. The deep seaports are the future.

“They are ports that are 17, 18 metres draft. And that is where you need to be. So, why would you invest to dredge a channel to 10 metres, when the world channels are been built to 17 metres draft. So, we should focus on getting deep-sea ports in the country, and those other ports could be used for other activities; probably for fishing or smaller vessels that come in. So, that investment cannot be justified when the future is 17 metres.”