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Banks shun Lekki Port promoters’ investment initiative



Lekki deep sea port project may have suffered a major setback as local banks have refused to invest in the project ,despite the juicy dividend projection by the promoters led by a Singaporean firm, Tolaram Group.

NPA Managing Director, Malam Habib Abdullahi

NPA Managing Director, Malam Habib Abdullahi

Worried by the poor investment response from the banks, the project promoters are now believed to be looking for funds from leading global consultants such as Standard Chartered Bank, the Louis Berger Group Inc., Delta Marine Consultants, BMT Asia Pacific among others to execute the project. The port is expected to commence operation in 2018 although the promoters have shifted commissioning date five times.

It was learnt that most of the banks and other financial institutions that initially showed interest in the multi-billion naira project have since backed out.

A source noted that the financial institutions had doubted the viability of the project, especially since it does not hold the prospect of an early return on investment.

Also, sources explained that some of the banks approached by managers of the port were not willing to give financial assistance due to the fear that they might not be able to recoup their money on time. But now, there are moves to secure N24,3billion ($150million) from the African Development Bank for project which was earlier scheduled to start operation in 2012, then shifted to 2013 and later to 2015, Early this year, 2016 was announced as the take-off date, but recently, the firm announced 2018 as new commissioning date without giving any reasons for the perpetual change in date.

But the Chief Finance Officer of the company, Mr. Sandeep Parasramka explained that the port project received a boost from one of its key investors, Nigerian Ports Authority (NPA), putting it on a firm footing to become operational by 2018.

Parasramka, while shedding light on major developments, particularly as it concerns the company’s drive in ensuring that Lekki port becomes operational by 2018, said “Apart from getting the concession from NPA to build Lekki Port, Tolaram has put together leading global consultants such as Standard Chartered Bank, the Louis Berger Group Inc., Delta Marine Consultants and BMT Asia Pacific.

Others are TBA Netherlands, Jardine Lloyd Thompson Pte Ltd and GMaps, following which the EPC contractor, China Harbour Engineering Company (one of the foremost builders of ports with a track record of delivering projects on time), has been appointed to build the port and the container terminal has been sub-concessioned to International Container Terminal Services, Inc, Philippines, a leader in the container terminal operations with a footprint across the globe”.

Continuing, he said: “I can confidently tell you that African Development Bank has recently obtained Board Approval for $150 million funding for the project while European Investment Bank which is very much eager about investing in the project, has also gotten Principal Board Approval which would see them support the project with funds also.”

The port’s chief finance officer also said that more international banks were also in the process of securing their board approval to join the list of the banks that will invest in the project.
He added: “All the banks are very keen to participate in the Project given its strategic importance, competitive advantage, good financial returns, strong Government Support and unprecedented economic value it is expected to inject into the economy.

“Conventionally, projects of this magnitude are undertaken through project financing on a non-recourse basis .This requires the lending parties to agree on appropriate terms of lending and conduct stringent due diligence. These processes take time and are very essential to achieving the debt financing. The most important development now is that Lekki Port is at an advanced stage, with the due diligence completed and financing terms very much underway. He said the much anticipated funding from shareholders would fuel rapid construction activities needed to move the project to the next phase of development.

According to him, the Lagos state equity in the project and that of the Tolaram Group were already in place while NPA was in the process of making its equity contribution.

“The stage we are in now is structuring the financial terms, which will take a short period before funding is made available to Lekki Port. It is only normal that when you do such a large financing of a huge project such as this, it takes more time than building a house.

Conventionally, projects of this magnitude are undertaken through project financing on a non-recourse basis. This requires the lending parties to agree on appropriate terms of lending and conduct stringent due diligence. These processes take time and are essential to achieve the debt financing. The good news for Lekki Port is that they are at an advanced stage, with the due diligence completed and financing terms well underway.”

Reacting to recent speculations in some online and print media, the Executive Director Finance & Administration of NPA, Mr. Olumide Oduntan stated categorically, that the sale of land transaction between Lagos State Government and the port promoters does not affect the Deep Sea Port project as the land in question was not the land designated for the port site. It is a separate and distinct transaction that does not include “NPA nor have any relationship with the project. Simply put, the transaction was a creative way for LASG to fund its shares

in the Lekki Deep Sea Port project”.

He expressed satisfaction with the pace of the development of the project and noted that the NPA was finalizing documentation and internal processes (including a due diligence report prepared by KPMG Professional Services) after which it plans to infuse its equity contribution into the project. will be unfolded

However, a maritime economist and Executive Director of ABN Consults, Mr. Harrison Agada has explained why it is difficult for local banks to fund Lekki seaport project, saying some of the banks were afraid that they might not recoup their investment on time. .

.“It will require not less than $1.5 billion to actualise the Lekki port project and I cannot see the cargo volume to justify any such investment in the medium term and who is willing to invest and not get return in 10 to 15 years?” he asked.

Justifying his position further, Agada stated: “Investors doubt the ability of the promoters of the port to draw cargo traffic to the facility because of the expected cargo evacuation bottlenecks.

“Because the Lekki axis is largely a residential area, vehicular traffic in and out is very heavy without the added burden of trucks plying that route. What will happen when trucks join the fray on the road is better imagined.

“Due to this constraint and in the absence of a rail system, evacuation of containers from the Lekki Port to the Western part of the country will be very difficult if not impossible.

“You can’t move goods up north either except a new bridge the size of the Third Mainlaind Bridge is constructed around the lagoon.
“Trucks evacuating goods from the port however can head for the Eastern part of the country but then, they will have to travel almost 100 kilometres to link up the Benin-Ore road.

“Movement of goods out of the port through barges is not an option either because Lekki is backed by a very broad and shallow lagoon making barging difficult.”

It may be recalled that promoters of the Lekki port project have variously shifted the port’s commencement. The facility was originally said to commence operation in 2014 which was later shifted to 2015 and now to 2016.

“All of these point to uncertainty around the port and no investor will put their money under such circumstances,” he stated. Abiodun Coker, the head of the group media consulting firm, BD Consult, said the project was still on course, adding that only the commissioning date was shifted to 2018.

The deep seaport is a $1.5 billion public private partnership project between the Federal Government (represented by the Nigerian Ports Authority), the Lagos State Government and the Tolaram Group. A Shareholder’s Agreement to this effect was signed in December 2012 amongst all three parties.—Business Monoitor

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners



…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live



The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured



…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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