Why Lekki Port will stop Nigeria’s cargo losses
Nigeria is currently losing cargoes to neighbouring ports of Lome, Tema and Abidjan due to a number of factors which includes inability to receive mega sized ships and persistent human-to-human contact which breeds corruption at its seaports. In this report, TOLA ADENUBI examines why commencement of operation at Lekki port could change the narrative. Excerpt.
In 2021, a report by Netherlands’ leading consulting firm, Dynamar, revealed how Nigerian ports of Apapa and Tin-Can had fallen behind in terms of vessel call in the West African sub-region.
According to Dynamar, since 2017 when the Port of Lomé (PAL) in Togo rapidly expanded from 311,500 20-foot equivalent (TEU) containers in 2013 to 1,193,800 TEU in 2017, the port has not looked back as it continues to lead due to a depth of 16.60 meters.
With 80 per cent of containers shipped to West and Central Africa destined for Nigerian markets, most of Nigeria’s cargoes have had to be shipped either to the ports in Lome, Togo or Abidjan in Cote D’Ivoire before being trans-shipped to Apapa or Tin-Can with smaller vessels.
With a depth of about 10.5 metres, Nigeria’s busiest port of Apapa, due to its shallow draft, cannot accommodate large ships that call at its neighbouring ports, thereby losing out on many cargoes to these ports.
For leading shipping companies in global trade, deployment of ultra mega-sized ships is the trend as it reduces cost of operation for the shipping liners. Outside Lagos, the Onne port which is close to what Nigeria can boast of as a deep seaport has a depth of 13 metres, still a far cry from what is obtainable in Lome which has 16 metres depth. With this disadvantage, Nigeria has been losing out on receiving very large ships due to the shallow nature of its seaports.
Another constraint being occasioned at Nigerian ports has been the issue of lack of automation of port processes. With human-to-human contact highly prominent at Nigerian seaports, the issue of corruption has refused to give way, thereby also increasing the cost of doing business at her ports, and leading to vessel diversion from Nigeria’s ports to neighbouring ports.
Lekki Port, a game changer
With over 80 per cent of cargoes shipped to West and Central Africa destined for Nigerian markets, the need by Nigeria to build a deep seaport that can accommodate very large ships became highly imperative.
Thus, the Federal Government began the development of the Lekki Deep Seaport which was conceptualised on the basis of a significant gap in projected demand and capacity. Market studies indicated that the demand for containers is expected to grow at a CAGR of 12.9 per cent up to 2025.
However, given the expansion constraints on the existing infrastructure at the Lagos ports, the capacity in Lagos is incapable of meeting the growing demand. The capacity shortfall for container terminal facilities in Lagos is projected to be 0.8 million TEUs in 2016 going up to 5.5 million TEUs in 2025.
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With funding becoming an issue, the Nigerian government looked towards a build, own, operate and transfer concept, with a consortium that included China Harbour Engineering Company, Tolaram, Lagos State government, Nigerian Ports Authority and Lekki Port Investment Holding Inc.
Speaking recently when he paid an inspection visit to the port, the Minister of Information and Culture, Alhaji Lai Mohammed, stated that aside bridging the capacity deficit, Lekki Deep seaport would have significant positive impact estimated at $361 billion over the term of concession once it becomes operational by September 2022.
“We have just concluded a tour of the Lekki Deep Seaport here at the Lagos Free Zone, located some 65 kilometres east of Lagos. This visit is the second we are making to this area within a month, coming after our trip to the Dangote Petroleum Refinery and Petrochemicals as well as the Dangote Fertiliser on April 3, 2022.
“The Lekki port is a massive project, a game changer and a pacesetter. It is the deepest seaport in Nigeria and West Africa and that in itself is a unique advantage. It covers a land area of 90 hectares and it has a concession period of 45 years.
“I call it a game changer because of the impact it will have on the nation’s economy and the jobs it will create, among others. The investment is huge: $1.53 billion on fixed assets and $800 million on construction. But the aggregate impact has been put at $361 billion in 45 years, which will be over 200 times the cost of building it. In addition, it will create 169,972 jobs and bring revenues totalling $201 billion to state and federal governments through taxes, royalties and duties. The direct and induced business revenue impact is estimated at $158 billion, in addition to a qualitative impact on manufacturing, trade and commercial services sector
“Beyond that, when it begins operation in the last quarter of this year, it will make it possible for Nigeria to regain the maritime business that was lost to ports in Togo, Cote d’Ivoire and Ghana. It is also a big boost to Nigeria in its quest to take advantage of the implementation of the African Continental Free Trade Agreement (AfCFTA).
“A major advantage we have to leverage is trans-shipment. With this port, Nigeria will become a trans-shipment hub and the revenue we are currently losing to our neighbouring countries will come here. That’s big. As you know, this project is being done in phases. Phase one has reached 89 per cent and will be completed in September this year.
“The facilities here are first class. We have seven ship-to-shore cranes and 21 RTG cranes. No port in Nigeria currently has this. The excellent equipment is why this port can do 18,000 teu, which is more than four times the number that can currently be handled by our other ports.
“Also, the project is self-sufficient in required electricity. It is now ready to generate up to 10 Megawatts and the total capacity is 16 Megawatts.
”The project enjoys a development structure that is first of its kind in Nigeria. This is the single largest private investment in infrastructure in Nigeria being developed on non-recourse project finance basis with majority of financing being raised internationally,” Mohammed stated after inspecting the project.
With a fully automated port operation at Lekki Port, the nation is expecting to witness another watershed in the way cargoes are handled in its ports.
In the words of a business consultant, Victor Nwani, “Automation will definitely wipe out human-to-human contact which is the main enabler of corruption at our seaports. If Lekki Port commences on that note, then the cost of doing business at our ports will be reduced drastically and owners will want their cargoes to be brought here since they will pay less to clear them.
“Lekki port being a trans-shipment hub will also transform cargo evacuation business in Nigeria. The very large ships will come here and other smaller ports in the sub-region will have cargoes taken there via smaller ships. That’s more revenue for Nigeria.”