How Lekki Port will boost economy
With the financial muscle of the China Development Bank (CDB) behind it, the Lekki Port in Lagos is set for smooth sailing. When completed, an estimated 170,000 direct and indirect jobs will be created there. Besides, about $361 billion will be realised during the 45-year concession, including over $201 billion in taxes to the Federal and state governments, writes MUYIWA LUCAS.
The Lekki Deep Sea Port in Lagos Free Trade Zone on completion will boost the nation’s maritime trade in addition to lifting its ranking in port development globally. It will also provide an estimated 170,000 direct and indirect jobs beside helping to boost the Gross Domestice Product (GDP).
With the huge economic potential of the port, which will be among the top ports on the continent, the future of maritime in Nigeria is rosy. The port will host three container berths, one dry bulk berth and three liquid berths with a draught of 16.5 metres that will take larger vessels.
Lekki port will boost the nation’s port system, which lags behind the likes of Singapore, which ranks as one of the world’s leading maritime capitals with seven per cent of its Gross Domestic Product (GDP) from maritime, and South Africa, which has a port system comparable to those of developed economies in sophistication, regulation and technology; hence the widespread inefficiencies in the region.
Nigerian ports are rated among the most expensive in the world in terms of doing business. This is due to a combination of several factors, including poor infrastructure, inefficiency and corruption. The Lekki port on completion will change the narrative of Nigerian maritime.
Stakeholders have, over the years, insisted that the sector has remained largely untapped, pegging the potential from the sector at less than five per cent. Though there has been several attempts to rejuvenate the sector by successive administrations to meet global standard, the industry is still faced with many challenges, which include inadequate financing, deficit in maritime/port infrastructure, inefficiencies in terminal operations, lack of transparency and sharp practices. In the whole sector, the ports remain the biggest goldmine that can impact greatly on the economy.
Realising these inadequacies and determined to make a change, the Federal Government, in 2000, came out with policies that led to far-reaching reforms in the sector. These policies were rooted in the economic objectives of opening up space to increase the participation of private investment and initiative in the economy, thereby promoting a public-private sector-led economic growth.
As the economy continues to grow, trade volumes rose and the dependency of the economy on the ports, especially the Lagos ports of Apapa and Tin Can Island, which accounts for 85 percent of cargo traffic, became too heavy.
This led to the idea of a plan that would see to the development of Greenfield ports along Nigeria’s 853 kilometre coastline to match the country’s trade demand. One of these is the development of a deep seaport in Lekki-Epe area of Lagos State, known as Lekki Port.
Under the arrangement, an International Consortium-Lekki Port Investment Holding Inc. (Tolaram Group) holds a 75 per cent equity, while the Federal Government through Nigerian Ports Authority (NPA) and the Lagos State Government, shares the remaining equity at five and 20 per cent.
The project, being executed on a Build-Own-Operate-Transfer (BOOT) basis, under a 45-year concession, has the NPA as its port regulator. This arrangement, stakeholders say, will ensure that adequate legal and regulatory framework, as well as incentives, would be put in place in line with the concession agreement to avoid inconsistency and policy shifts.
The Lagos State Government has reiterated its commitment to play a key role in facilitating the ancillary works vital to the success of the port, such as enhancement of road infrastructure connections to the hinterland. With this, the chaotic situation in the Lagos ports, which has led to huge delays in clearing of goods from the ports and the parlous state of the port roads along the axis, will not be repeated in the Lekki Port.
According to the Chief Financial Officer (CFO), Lekki Port Investment Holding Inc., Binay Saraf, one of the unique features of the new facility, is that it would cover a large area, close to 90 hectares, within the Lagos Free Trade Zone.
Besides, it will have a draught capacity of 16.5 metres. With this, the country will be able to accommodate and berth the biggest vessels, which is impossible at the moment, due to draught constraints. At 12.5metres, Apapa port has the deepest draught in the country and Cotonu port, in the Republic of Benin, has 16m- draught capacity.
Saraf further revealed that the facility would be equipped with the latest super Post-Panamax Ship-to- Shore cranes and RTG cranes, which ensures it will be a modern efficient facility. These infrastructure will guarantee that the initial target of 1.5 million 20-foot equivalent units (TEU) container capacity yearly, expected to hit 4.7 million TEUs, will make Lekki Port the hub destination for many shipping lines in the West African markets, which will combine their destination calls to Nigeria with transshipments.
With these, Saraf is convinced that Lekki Port is positioned to serve as the gateway for the country and the surrounding West African region because the port will offer an opportunity to enter the rapidly- growing market and boosting the neighbouring economy.
Saraf further explained that the development of the Lekki Port would be in phases to meet the burgeoning trade coming from within and outside the country. “It is estimated that about 170,000 direct and indirect jobs will be generating approximately $361 billion during the concession, including over $201 billion in tax revenue to both the state and Federal governments,” he revealed.
A key feature of modern port is a world-class container terminal. To this end, Lekki Port has signed a memorandum of understanding (MoU) with CMA CGM Group, a world leader in maritime transport, to operate its container terminal.
As the container terminal operator, CMA CGM, through its subsidiary CMA Terminals, will be responsible for marketing, operations and maintenance of the container terminal. He said with the latest technology in container’s screening and processing, the port will deliver smooth and efficient movement of goods to and from the site once the commercial activities begin in 2020 to ensure clearing of goods within 48 hours.
Determined to deliver a world-class port facility, the promoter has also engaged two global companies, China Harbour Engineering Company Limited (CHEC) and The Louis Berger Group. While CHEC, the engineering and construction arm of China Construction and Communication Company, was appointed as the Engineering, Procurement and Construction (EPC) contractor, The Louis Berger Group, United States, one of the largest multi-disciplinary infrastructure consulting firm in the world, was hired as the project’s management consultant. Notably, China Harbour would soon have equity participation in the project, with a certain percentage to be infused soon.
“It is interesting to note that since the project berthed, the Federal Government has found it worthy to share in the success story. In several fora, it has continued to list the project as one that is in line with its Economic Recovery Growth Plan (ERGP), emphasising that it supports game-changing infrastructure projects directed at making an impact on trade and commerce in the country,” Saraf said.
At the flag-off of the project last year, President Muhammadu Buhari, represented by Vice President Yemi Osinbajo, declared the Federal Government’s commitment to its success, noting its enormous economic benefits. And in line with this, the Federal Government recently directed the Nigerian Railway Corporation (NRC), through the Federal Ministry of Transportation, to link all the seaports, including Lekki Port, to railway as possible shortest.
Upon the completion of Lekki Deep Sea project, Nigeria can stand shoulder high in the league of globally respected maritime capitals.
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Written by Babatunde Ayankunle The Nation Newspaper &
MUYIWA LUCAS APRIL 30, 2019