Habib’s Two-Year Scorecard: River Port
Dredging, Deep-sea Ports and The Promise of NPA’s 25-Year Development
When Nigeria's economy was rebased in 2013, she became the largest market
in Africa with the biggest GDP of N80.22 trillion (about $510 billion).
As an import dependent nation, the effect of this expanding market was
reflected by increased throughput at her seaports where 76.9 million
tonnes of cargoes were handled in 2013. Even for her exports, mainly
crude oil and gas, the smooth replacement of the US with European buyers
of Nigeria's crude petroleum, means that her export terminals (which
load about 2,400 oil tankers annually) continued to be busy as ever,
with 800.3 million barrels of crude oil lifted in 2013 (about 2.19m
barrels per day), according to the NNPC.
However, for the Nigerian Ports Authority (NPA),
the significance of the market expansion is that without sufficient
draught at the approach channels and the berths, half of the shipping
tonnage (5,185 vessels) that called at the regular Nigerian ports in
2013 and the busy traffic at the crude oil loading terminals would not
have made it.
Managing the Port Systems…
NPA has about six active port systems located in Lagos, Warri, Calabar,
Port Harcourt and Onne; almost all are river ports built several nautical
miles inshore from the Atlantic Ocean. Therefore, huge amounts of harbour
dredging must be done regularly to clear the channels of siltation,
remove wrecks and sand shoals or to expand the channel widths to accommodate
bigger ships. With the emplacement of the channel management companies,
essential add-on services like aids to navigation (buoys, lighting and
bathymetric surveys), must be constantly done to maintain advertised
draughts or to achieve new targets that will satisfy the clientele.
Last year, for example, Lagos Channel Management (LCM) dredging campaigns
aided the hitch-free berthing of the biggest ship to call at the Lagos
ports system so far, Maersk Cadiz. The Bonny Channel Company (BCC),
on the other hand, this year achieved new depths at the Bonny channel
up to Onne and facilitated the entrance and berthing of the Cadiz and
other Maersk WAFMAX vessels to begin calling at Onne Port, the first
time in history for such big container vessel operations.
NPA’s managing director, Alhaji Habib Abdullahi, in a recent interview
to mark achievements made by his management team in two years, said
the WAFMAX vessel’s exclusive call to Apapa, Tin Can Island and
Onne ports attests to the unique position of the Nigerian market in
the sub-region and to the efficacy of solutions his administration has
brought to the port industry. Before the inception of LCM and BCC, NPA's
management of the channels was hobbled by bureaucracy whereby ministerial
approvals for even small routine jobs took weeks or months to get through.
This used to be a joke on the organization when viewed against international
best practices of smart decision-making and fast turnaround times.
The Birth of Channel Management Companies
During the 1990s when these problems were rampant, some frustrated ship
owners diverted their ships to neighbouring West African ports such
as Cotonou, Lome or Tema. But the coming of LCM and BCC to manage the
channels at optimum levels changed the tide and put Nigeria back in
contention to claim her natural right as a hub port nation for the sub-region.
The Port of Abidjan which competes for that role is challenged by the
size of the Nigerian market at over 165milion population and the steaming
distance to her ports at not less than 2 to 3 days.
Thus, about 70% of the shipping traffic in West Africa has Nigerian
addresses of origin or destination even though the potentials of this
natural endowment were formerly diminished by red tape in her port industry.
But with the port reforms that began in 2001, the sector was massively
transformed. Private port operators came in as concessionaires to manage
cargo handling and terminal operations, cutting off the previous unruliness
in dock work and cargo insecurity. The Nigerian Customs Service was
also improved while the channel management JVs, with 60%:40% stake-holding
in favour of NPA, were introduced to overhaul the dredging regime and
At the two-year anniversary of the Habib Abdulahi administration, the
drums are being rolled out for some milestones the management team are
proud about. One of these is an e-payment solution which skirts the
previous delays in relaying payment information to the ports from the
banks. Formerly, the payment slips were scanned and emailed to headquarters
which then emailed them to the target ports, a process that took at
least two days or more. Now, with e-payment solution, the information
is relayed simultaneously, ATM-style to all the recipients in real time.
Mr Olumide Oduntan, Executive Director of Finance and Administration
maintains that this has seen revenues increase by 50% since its introduction
less than one year ago. He predicts a doubling of revenues soon and
argues that the system also eliminates other human-interface problems
like fraud or other manipulations.
Nevertheless, the most impactful developments seem to be at the waterfronts
where cargo throughput is the concern of the chief port industry stakeholders.
Here, the joint venture channel management companies hold the ace and
the seriousness of emplacing them was apparent in the level of rigour
adopted for their selection. This began in 2005. First, international
adverts were placed for the pre-selection of channel management companies
for Lagos, Warri, Calabar and Bonny channels. The bids from 49 companies
were screened for technical and financial competences by Mobotek of
Holland. The successful bidder-consortia were led by Forby Engineering
for Warri channel, Dredging International for Bonny channel, Depasa
Marine for the Lagos channel and Niger Global Engineering and Technical
Company Ltd (Niger Global) for Calabar channel. Only two of these winners,
Depasa Marine and Dredging International, were mobilized to site immediately
in Lagos and Bonny respectively.
In their work plans, not just capital
and maintenance dredging of the approach channels are prioritized; the
draft alongside the berths and the turning basins are also deepened
on an incremental basis or as the need arises. For example, the operation
that facilitated the calls of the 4,500-TEU WAFMAX vessels to Nigeria,
especially to Onne port, required a special dredging campaign by BCC
in close collaboration with NPA and Maersk Line, the vessel owners.
The WAFMAX vessels arrive Lagos ports fully laden with containers and
drawing a draft of 13.8m. The containers are progressively offloaded
at Apapa and Tin Can Island ports to lighten her for the Onne port run.
The remaining containers are then taken to the Bonny River and Onne
port when the vessel is drawing a draft of 11m.
However, due to the contours of the Bonny River up to Onne port, engineering
studies identified some essential capital dredging works that should
straighten the bends to enable vessel maneuverability. Electronic simulations
of the voyage at a South African marine facility showed that these changes
were mandatory to ensure success of the trips. The execution cost extra
money and months of toil. Other contingency mandates included extra
training of the river pilots, buoy relocations, enhancement of the turning
basin and provision of tug boats for the berthing exercises.
Moreover, to achieve the entrance of
the WAFMAX vessels, BCC’s wreck removal campaign was redoubled,
whereby five wrecks were cleared from the channel in 2013 and another
five between January and July 2014. In fact, one large wreck of a sunken
oil tanker took six weeks of cutting and lift-out to completely remove
from the riverbed, according to the company’s General Manager,
Bart van Eeno. To begin the special operations, a trial run as made
by Maersk Copenhagen (carrying mere empty containers) on December 3,
2013. The successful berthing and operation of the fully loaded sister
ship happened on May 14, 2014 when Maersk Cadiz entered Onne port drawing
11m at high tide. This began the weekly run which is continuing.
In total, BCC removed 11 million cubic metres of spoil from the Bonny
River in 2013 in the course of its work to keep the channel open and
navigable to traffic. LCM on its part scooped out 12.1 million cubic
metres of spoil and removed five wrecks in its work at the Lagos channels
in 2013. Industry observers believe that the success of the two JVs
encouraged the signing of Calabar Channel Management Company.
Calabar Channel Dredging issues
In January 2013, the JV contract between NPA and Niger Global was signed,
setting the stage to kick-start activities for the new management of
the Calabar channel by Calabar Channel Management Company, CCMC. The
only problem, according to Alhaji Abdullahi, is the history of failed
dredging campaigns at the Calabar River which must be sorted out before
Niger Global can begin work. The 84-kilometre Calabar channel is subject
to controversies. According to DDH findings, its location has been attributed
to politics because it is too far inland, a factor that accounts for
the problematic dredging issues in the first place. In fact, the magazine
was told that Oron, at the mouth of the Atlantic Ocean, was the location
initially selected by the technical assessment team before political
pressure was brought on the authorities to shift the location to Calabar.
More importantly, the greatest burden for dredging the channel is the
lack of commercial incentive. Unlike Lagos and Bonny channels whose
cost of dredging is only a small fraction of the accruing income from
shipping traffic levies, the Calabar channel enjoys a low volume of
shipping traffic. For example, of the 5,185 ships weighing 131,674,337
gross tons that called at Nigerian ports in 2013, Calabar port recorded
only 197 ships weighing 2,792,488 gross tons. Many importers from the
port's catchment areas of south-south, south-east and north-east still
prefer to clear their goods at the Lagos ports. Port Harcourt ranks
second, leaving Calabar port with insufficient throughput to justify
its huge dredging costs which, in 1996 alone, cost the Federal Government
N3b paid to China Civil Engineering and Construction Company (CCECC)
to dredge the channel.
In the recent failed dredging campaign of 2007, the duo of Jan de Nul
and Van Oord were paid a whopping $56m to dredge the channel to 6.5m
deep at the mouth of the river and 10metres depth along the channel.
While Van Oord was to dredge Km 0 -46 for US$26.5million, Jan de Nul
was saddled with dredging Km 46-84 for US$30million. They were to scoop
out 25 million cubic metres of spoil and achieve an overall draught
of -8 metres. But the result was inconclusive because they demobilized
from site before achieving the set target on the claim that the quantity
of spoil specified in the contract had been attained. The rest of the
channel was not cleared and remained silted and shallow, leaving the
channel unusable by cargo laden ships.
In the subsequent attempts to re-do the dredging in
2012, considerable caution was deployed by NPA to ensure that not only
competence but also integrity would be brought to bear on the job to
avoid sharp practices. Consequently, robust debates in the national
dailies, arguments and even petitions from all sides of the bidding
table have been recorded on the problems of the project. Although Jan
de Nul and Niger Global have raised petitions against various aspects
of the project’s bid process, NPA has successfully defended its
handling of the situation. But by far the most significant petition
was written by no less a person than the NPA Board Chairman, Chief Tony
Anenih. In the petition, he invited the Minister of Transport to peruse
the disagreeable fine prints of the JV contract signed between NPA and
Niger Global for the management of CCMC, laying part of the blame on
negligence by NPA and Transport Ministry officials.
Was Chief Anenih spurred by vendetta
or is this an act of bold self criticism? Some observers have reasoned
that the PDP bigwig preferred to err on the side of caution instead
of proceeding without rocking the boat at the head of an organization
whose operating gangplank was at the risk of vulnerability through avoidable
pitfalls. What were the complaints in the petition? Firstly, Chief Anenih
queried why Niger Global which had no previous records of similar dredging
works should be leading its JV consortium when a multinational dredging
firm like Royal Boskalis was involved in the consortium but was not
even in the management? Secondly, he found fault with the JV agreement
which gave "absolute control of the finance and management"
of CCMC to the consortium rather than to its Board of Directors. The
upshot, in summary, was his call for a review of the contract for failing
these and other points of due process.
Deep-sea Port Operations and the 25-Year Port Development Master Plan
For NPA, however, the palaver over Calabar dredging issues could have
a salutary effect as a tutorial on how to manage the imminent switch
to deep-sea port operations across the country which would involve high
levels of multinational collaboration. Deep-sea ports look to be a game-changer
for Nigeria's port industry and West Africa's maritime trade. NPA’s
helmsman, Alhaji Abdullahi, told the magazine in a recent interview
that the proposed 25-year port development master plan now at the design
stage would solve the problems of running Nigeria’s current port
systems in traffic-choked city environments. He said the coming of deep-sea
ports will take port industry activities far out to sea where there
is ample space for cargoes and where new road networks will be put in
place. Furthermore, he foresaw a future use for fallow grounds opposite
the Lagos ports complex such as Snake Island, Ogogoro Island and Takwa
Bay. In that new day of green ports, the NPA helmsman saw the current
Lagos port grounds as fit only for redevelopment as prime waterfront
residential estates, permanently solving the present traffic malaise.
Presently, the petrol tank farms and
factories within the Lagos port grounds patronize hundreds of trucks
which deliver products to customers in the city and hinterland due to
the failure of the pipeline networks and the absence of adequate rail
services. Similarly, cargo-laden trucks from the ports pass through
the commercial centres bordering the ports to reach consignees in the
city and hinterland, thereby putting pressure on the road networks and
clogging traffic flow. In view of galloping population and the attendant
expansion of the shipping market, the over-stretch of current port infrastructure
cannot be mitigated in the short term. In the long run, the solution
is projected to be deep sea port complexes whose large areas can accommodate
the factories, tank farms, petrochemical complexes and massive container
stacking and warehouse spaces needed to cater to the increase in traffic
According to AP Moller, whose concession at Apapa port is the biggest
container terminal in Nigeria, the current container traffic volume
of about 1.7m TEUs for the country is projected to exceed 2.5m TEUs
by 2020. In fact, port industry top executives were told in one recent
investment forum that when deep-sea ports begin full operation, Nigeria's
current river ports will be good only for leisure fishing trips, according
to one of them. Thus, there is a considerable ferment of opinion about
the deep-sea ports and their multiplicity seems to suggest it might
be a new silver bullet.
Deep-sea Port locations…
The tally of proposed deep-sea ports to date include the Lekki Deep-sea
Port at Lekki Free Trade Zone and the Badagry Deep-water port, all in
Lagos. Others are proposed to be sited at Olokola and Ibaka, not discounting
the Federal Ocean Terminal (FOT) at Onne which has been in existence
since the 1980s. In December last year, the Federal Government formally
joined the ranks of shareholders intending to build the US$1.354b Lekki
Deepsea Port on a PPP arrangement. Its contribution was said to be 20%
while other investors include Lagos State Government, 18.5% and private
investors, 61.85%. The project promoters, Messrs Lekki Ports LFTZ Enterprises
were awarded a reviewed concession spanning 45 years, with a federal
guarantee to compensate them in the event of any damages arising from
expropriation, war, civil disturbance, breach of contract or any other
defaults. The Federal Government stake is held in trust by NPA in the
project whose revenue estimates amount to US$397b over the first 45
Unlike the current river ports whose installed cargo capacities are
60,000 tonnes each, the Lekki Deep-sea Port has gargantuan proportions.
Its total area is 90 hectares (with room for expansion), six kilometres
in length, four million tonnes installed cargo capacity, with a channel
width of 300 metres and draught of 17.5metres, the deepest in West Africa.
NPA, by the project calculations, will receive an income of US$9.3b
in marine services, royalties and profit share over the initial 45year
period. Over 162,000 new jobs will also be created by the venture.
Nevertheless, if dimension is anything
to go by, AP Moller Terminals’ proposed new megaport project and
free trade zone at Badagry will put the Lekki Deep-sea Port somewhat
in second place. When fully built, the ambitious project which was spurred,
reportedly, by shortage of room to expand its Apapa terminal for an
imminent 10% growth in trade, is being hyped to be one of the largest
in Africa with 7 kilometres of quay, 1,000 hectares of dedicated yard,
a barge terminal and state-of-the-art facilities for container, bulk,
liquid bulk, Ro/Ro and general cargo as well as oil and gas operations
support. The proposed infrastructures also include the construction
of a power plant, oil refinery, industrial park, warehousing and inland
container depot at the adjoining Badagry Free Trade Zone. During its
first phase (the project will be built in three phases), it will feature
a container terminal of two berths capable of handling one million TEUs
even though depth alongside will be comparatively humble at 14.5m. The
proposed kickoff date for the first phase is September 2016.
Peder Sondergaard, the chief executive of APMT's
Africa and Middle East region told Lloyds List's Containerization International
that the company had compared the Lekki and Badagry corridors before
settling for the latter location because of the new 10-lane expressway
being made by Lagos State Government. He said that the traffic congestions
of Victoria Island and Lagos were considered a dampener for them. However,
he revealed that the Badagry project enjoys support from NPA, Lagos
State Government, the Federal Government and Royal Haskoning DHV. In
the main, however, APMT's consortium for the project comprises Terminal
Investment Ltd, and indirectly Mediterranean Shipping Company (MSC),
Australia-based Macquarie Group, Orlean Invest and Oando.
Although signing of the concession agreement and actual construction
were supposed to happen in 2013, DDH findings indicate that things did
not work exactly to that plan. How the delays will affect the projected
opening date is open to question. Although feelers from the industry
give the Badagry project high credibility ratings, doubts persist about
the commercial viability of two deep-sea ports in the Lagos market despite
its hyped expansion. Of the two, however, the odds seem to favour the
Badagry port over the one in Lekki because of the availability of more
road networks and the business interconnections of the core investors
who are shipping and port industry operators. Conversely, the Lekki
port's core investors are venture businesses and facility prospectors
who may have the added burden of attracting ship owners, importers and
exporters to nominate Lekki as the destination port.
Another notable proposed deep-sea port is to be located at Ibaka. However,
DDH findings show that apart from delineation of the project site and
formal acquisition of the land by the Akwa Ibom State Government, not
much else has been done. Governor Godswill Akpabio had promised in 2008
that before he leaves office in 2015 the port would be in operation.
Not many people believe him, especially the indigenes of Ibaka who heard
the promise firsthand. Okon Eyo Udotong, a community leader who lives
adjacent to the proposed project site is disappointed that "Government
is always deceiving Ibaka people". He said that since the land
was taken from them, no one from the Government had come back to do
anything there or even to settle the issue of compensation which he
said was the only indication he would recognize as a sign of seriousness.
Although the architectural drawings designed by CCECC have been submitted,
the absence of any constructions at the site puts the 2015 promised
date under question. But the Federal Government's commitment to the
project is not in doubt since a steering committee and a project committee
had been set up by Transport Minister, Senator Idris Umar, since September
2012. Sequel to the committee's activities, a Transport Adviser was
appointed who worked on the initial due diligence report that was submitted
to the Project Steering Committee in 2013. The initial Due Diligence
Report is a requirement of the ICRC Act meant to verify a project's
feasibility from the perspectives of financing, technical and legal
implications and to design a structured approach to its subsequent phases.
This report also detailed the vision
of Ibaka Deep-sea Port, its commercial rationale, operational status,
assessment of existing facilities, business opportunities, technical
scope and main challenges. Subsequently, an outline business case and
the procurement process were put in sequence though progress in these
tasks has been slow in coming.
The other deep-sea port in the horizon for Nigeria
is the Olokola Deep-sea Port and Free Trade Zone (OKFTZ), a joint venture
of Ondo and Ogun State Governments. First proposed during the early
years of the new millennium as an alternative to the Lagos ports, OKFTZ
and deep-sea ports were advertised for their proximity to oil fields
belonging to Agip (Abo N), Exxon Mobil (Erra 1 & 2) and SNEPCO (Bonga),
all of which are closer to Olokola than ports and facilities at Lekki,
Warri and Onne. However, although the two states conceived the project,
there were reportedly initial disagreements about stakes during the
In recent times, less of Ogun State is mentioned. For example, when
Governor Olusegun Mimiko set up a Technical Committee on Deep-sea Port
Development to work with NPA in fast-tracking the speedy development
of the port, it was composed only of Ondo State commissioners. Moreover,
the Governor revealed that Ondo State had committed N24b on the construction
of "a 3-lane access road to the Zone" for the use of trucks
serving the port. He regretted that the projected was behind schedule
by more than ten years.
Olokola Deepsea Port and FTZ was projected to be constructed at a total
cost of about US$400m based on 40% state government participation and
60% private sector investment. However, the seeming rosy prospects in
the beginning appear to have lost some of their allure as bigger and
stronger contenders began to arise in the Lagos axis a few years later.
Whether the IOCs will prefer Olokola to the Lagos facilities is open
to question. Nevertheless, the most cheery news for the OKFTZ was the
announcement in 2013 that a refinery worth US$8b was being proposed
to be sited there by Africa's richest man, Alhaji Aliko Dangote. OKFTZ
was said to have been chosen as the site for the 400,000 barrel-per-day
refinery because of its proximity to the oilfields where crude oil feedstock
would be sourced from.
However, although a deep-sea port was being promoted alongside the free
trade zone, it appears that the most viable of the twin projects is
the latter, as exemplified by the Dangote move. Thus, the refinery,
if it materializes, would likely weigh heavily with the OKFTZ promoters
to foreclose on the deep-sea port development since rival projects in
nearby Lagos could render it unviable. In any case, NPA, as the port
regulator in Nigeria would have to give its seal of approval or otherwise,
depending on compliance with laid down rules.
Trends in Nigerian Maritime and Dredging Sectors
major focus in this edition is the trend of harbor dredging activities
which are on an upward tick. It is no longer news that the current stock
of river ports in Nigeria are overstretched due to the increase of Nigeria’s
economy and the inadequacy of road and rail infrastructure to cope with
cargo delivery from the quays. In July, the Apapa-Ijora road was blocked
for two straight weeks as all hell was let loose on account of the number
of trucks and trailers jostling for the limited road space. Even though
the Lagos State Government is fast-tracking road reconstructions, albeit
belatedly, there seems to be no solution in the short term.. Read
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