The federal government has revealed that it has proposed a $1 billion investment for the rehabilitation of the nation’s ports.
It said the dream to achieve a modernised port is paramount and sacrosanct, adding that the concession agreement to be entered into with any Investor or Operator must align with this vision.
The Minister of Marine and Blue Economy, Gboyega Oyetola disclosed this on Thursday when he appeared before the House of Representatives Committee on Privatisation.
He said that the government has not achieved the maximum benefits to be derived from the port concession due to inability to improve the port infrastructure to the desired standard for efficient operation, most of which have or are approaching the end of their life span.
The minister, who was represented by Permanent Secretary, Oloruntola Michael, was however quick to add that during the course of rehabilitation the ports, the ministry would ensure the ports are not completely shut down.
He added: “The investment required to achieve this is estimated in excess of US$1billion. It is therefore expedient to ensure that any step to be taken is fitted within the long-term re-investment plan.
“The dream to achieve a modernized port is paramount and sacrosanct. The Concession Agreement to be entered into with any Investor or Operator must align with this vision. In this regard, NPA has committed to the process and is expected to actualise this vision.
“The agency’s review/exercise will determine the approximate value of investment to be made for the Ports and corresponding tenor to be granted to Investor/Operator.
“During the course of rehabilitation the Ministry would ensure the ports are not completely shut down.”
Oyetola recalled that the federal government embarked on Port reforms in 2005/2006 in order to enhance operational efficiency, improve productivity and revenue accrual to government, attract investment to the port sector and technology transfer, among others.
He noted that the reform resulted in the delineation of the six port complexes in Lagos, Port Harcourt, Calabar, Onne and Warri into 26 terminals and transfer of cargo operations, which was hitherto performed by the Nigerian Ports Authority (NPA) to the Terminal Operators that emerged through competitive bidding process.
The minister explained that this culminated in the Lease Agreements signed between NPA (Lessor) and Private Terminal Operators (Lessee) with the Bureau of Public Enterprises as the Confirming party for a specified period ranging between 10-25 years.
He said ‘The Landlord Model’ was adopted where the lands for port development and related activities within areas declared as ports are owned and administered by NPA with responsibilities also assigned to the private operators.
Oyetola noted that the five expired leases were initially granted a ten year concession at Apapa, Tincan Island and Delta Ports.
He said that extensions of five years were however granted to compensate the Terminal Operators in accordance with Section 25 of the Port Act due to budgetary constraints and the NPA’s inability to discharge some of its obligations as stipulated in the lease agreements.
He pointed out that other challenges included; inability of NPA to meet the advertised depth for vessel reception, changes in government policies, encumbrances of lease property, insecurity on the waterways and collapsed access roads to the ports, among others.
Oyetola stressed that the extension expired in 2021 and further extended for six month period twice.
He noted that the Terminal Operators have now approached NPA to renew the Concession Agreement, adding that this was forwarded to the ministry by NPA.
His words: “On examination of this request by the Ministry, it was observed that the government has not achieved the maximum benefits to be derived from the port concession due to inability to improve the port infrastructure to the desired standard for efficient operation, most of which have/or are approaching the end of their life span.
“Their investments in Nigerian ports over the past 15 years are deemed to be grossly inadequate to boost the ports productivity, and the returns rendered to the government were mediocre at best according to The World Bank report (Nigeria – Ports Concession Assessment Framework (PCAF)) and the Crown Agents UK report (NPA Concessios and Joint Venture Agreement – Final Report).”
The minister said the two reports further analysed that there was no maintenance regime to ensure that the assets would keep their value in line with regular depreciation —wear and tear, leading to a reduction in port productivity in the later years.
Oyetola said the position of the ministry was that any further concession at the Ports should be predicated on the larger vision and desire to reinvest in the Ports and modernise, reconstruct the deteriorating port infrastructures for effective, efficient and competitive performance.