Twelve years after it was publically announced that Tolaram Group in partnership with the Nigerian Port Authority (NPA) and the Lagos State Government were partnering to build Nigeria’s deepest seaport at Ibeju-Lekki area of Lagos, the project is yet to be completed largely due to financial challenges and delays on the part of the project financiers to deliver on their promises.
Lekki port, which is promoted by Tolaram Group as the lead sponsor with 60 percent equity while the Nigerian Port Authority (NPA) holds 20 percent equity stake and the Lagos State Government, another equity investor holds 20 percent stake, has had its delivery timeline moved up to three times.
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.
However, there is now hope that the speed of work at the project site would accelerate in the coming months to meet the 2021 new delivery timeline. This fresh hope was due to the recent disclosure that the project promoter has reached financial close with its financiers and would by the middle of this year, get hold of the funds needed to push the project further to a reasonable extent.
Currently, Lagos State government has paid up its part of the equity contribution to the project while the NPA has so far paid about US$23 million out of the total commitment of US$ 110.9 million.
It is projected that the sum of $1.53 billion would be invested on building the fixed assets while $800 million would be spent on construction of the Lekki port.
Upon completion, Lekki Port will have a total of three container berths, one dry bulk berth and three liquid berths. It will also has the capacity to handle 2.7 million twenty-foot equivalent units (TEUs) of container per annum.
Comparatively, Lamu Port in the northern coast of Kenya, which was launched in 2012, has neared 42 percent completion. The $25 billion port project is expected to have 21 berths with the capacity to handle 21 million TEUs, compared to seven berths in Lekki and capacity to handle 2.7 million TEUs annually.
Also, Last week, Lagos State received share certificate for its 20 percent equity in the Lekki Port LFTZ Enterprises, the special project vehicle for the development of the port project.
However, a major construction work has finally commenced on the project site of the port as the promoter recently flagged off the construction of the main breakwater, which is one of the biggest components of the port construction.
“Tolaram Group has reached financial close on the Lekki Port project, meaning that all necessary documents needed for getting funds has been signed, and the money locked up in a purse, ready to be released at any time,” said Chidi Izuwah, acting director general of the Infrastructure Concession Regulatory Commission, (ICRC), on the sideline of his visit two weeks back to the project site.
Izuwah, who noted that the project is very critical to Nigeria’s economic diversification agenda, said that the commencement of the breakwaters shows that the promoters were moving ahead with the project without holding back.
Izuwah, who had earlier expressed worry that several years after the execution of the contract, the concessionaire is yet to attain financial close on the project as a result of certain contingent challenges, stated that the earlier plan was to attain financial close by second quarter of 2016 and commence full operations by second quarter of 2019.
He however promised that the ICRC under his leadership will go above and beyond the call of duty to assist Tolaram in reaching financial close. “We are willing to join you on focused lender/ investor road shows to seek additional debt and equity capital to fund the project.”
So far, he said, Tolaram has invested a total of about US$150 million collected from equity investors on the project; completed the basis design and currently working on detailed design; finalised geotechnical investigations both onshore and offshore; completed hydrographical, bathymetrical and topographical surveys and hauled 100,000 tons of rock for the breakwaters.
Speaking on behalf of Tolaram Group, Bolaji Abimbola, company’s media consultant, said the first phase of the breakwater aspect of the construction which started in 2017 was ongoing and would be completed in April, 2018.
Abimbola, who acknowledged the scale of work at the site, said: “Port construction takes time because it was not an ordinary construction that can be rushed over.
“We have obtained all the necessary approvals required for this kind of work. As I speak to you, the breakwater project is ongoing in a massive scale. By April this, the first phase would have been completed,” Abimbola said.
Meanwhile, Olayinka Oladunjoye, commissioner for commerce, industry and cooperatives, who received the share certificate on behalf of the state government last Friday, described the investment of the state in Lekki Port as a commitment to the success of the project and sign that the state has fulfilled its financial equity funding for the project.
Oladunjoye said the state government was passionate about the delivery of the port as it was germane to the overall developmental projects going on along the Lekki corridor.
“The major part of building a deep seaport is breakwater. Once the breakwater is done it remains the quays and dredging, which anybody can do. The breakwater takes about 50 percent of the total cost of building a deep seaport and usually there is no private individual that does breakwater in most countries except in very special arrangements. Government does the breakwater through its agency, as in our case, the NPA,” Omar Suleiman, former managing director of the NPA said in an interview.
Steven Heukelom, general manager, Lekki Port Project, said that China Harbour Engineering Company Limited (CHEC), the engineering and construction arm of China Construction and Communication Company (CCCC), is the Engineering, Procurement and Construction (EPC) contractor for the Port (through China Harbour Engineering LFTZ Enterprise).
He further disclosed that Louis Berger Group of USA, one of the largest multi-disciplinary infrastructure consulting firms in the world, is the Project Management Consultant (PMC) in charge of supervising the construction of the port.
JOSHUA BASSEY & AMAKA ANAGOR-EWUZIE
