Analysts question near $10bn investment in five new seaport infrastructure

Industry analysts have questioned the commercial viability of close to $10 billion investment in the development of five new deep seaports by five state governors in partnership with private sector investors, as existing ports continue to record low (import and export) business volume due to economic downturn.

According to them, Nigeria will not have sufficient import and export cargo, even in the next 50 years, to support such facilities given the current underutilisation of existing ports outside Lagos, especially Warri, Port Harcourt and Calabar ports that have about 25 percent capacity utilisation while Lagos ports have capacity utilisation of about 50 to 60 percent.

Findings show that Lagos State is currently pushing for the Lekki deep seaport and Badagry mega port, while Ondo and Ogun states have been championing the joint development of the Olokola deep seaport. Akwa Ibom State recently joined the fray with the proposed Ibaka or Ibom deep seaport, while Cross River State has also started advocating for the Calabar deep seaport when the existing Calabar port is idling away.

Ironically, these projects are gaining momentum at this time of economic recession when investors in Nigerian ports are counting losses, as shrinking volume of import and export commodities brought annual container throughput down to 929,239 Twenty-foot Equivalent Units (TEUs), and volume of dry bulk cargo to 9,381,463 million metric tons in 2015.

The proposed Lekki Port, for instance, is expected to handle an annual container throughput of 1.5 million Twenty-foot Equivalent Units (TEUs), which would be expanded to handle 2.7 million TEUs with about 4.0 million MT of dry bulk cargo. This is why industry analysts strongly believed that Nigeria might not be able to generate enough cargo for the upcoming ports.

“Five new seaports in Nigeria in addition to Rivers Port, Calabar Port, Onne Port, Warri Port, Lagos Port Complex Apapa and Tin-Can Island Port is an overkill. And there is simply no market for them and there won’t be in another half a century,” Bolaji Akinola, CEO of Ships and Ports Communication Company, saya.

According to Akinola, rather than establish these mega white elephant projects, the governments of Akwa Ibom and Cross Rivers for instance, should join hands with the Federal Government to address the shortcomings of the Calabar Port, which include shallow draft, to attract business and compete with other ports in the sub-region.

Akinola, who questioned the viability of the proposed five new deep seaports, says that it lacks economic sense for a state government to spend close to $2 billion in building quay wall, quay apron, terminals, cargo handling equipment, information technology, etc, of a new port that might not yield good returns or add value to the economy of the state. He further cites Batangas International Seaport in Philippines that was built 10 years back to take congestion off Port of Manilla that was heavily congested.

“For the first two years of operation, no ship called at Batanga and till date, the port handles less than 10 percent of Manilla’s cargo despite several government incentives such as reduction in wharfage, berthing fees and other vessel-related charges,” he says.

Stating that the existing ports in Lagos will run out of capacity in the next five years, according to projections, he suggests that Nigeria would require a new port and not five to complement the existing ones as container throughput at Lagos ports alone is expected to grow to 2 million twenty-foot equivalent units (TEUs) by 2020, which would be an over stretch on existing ports in Lagos.

Tony Anakebe, another industry analyst, who argues that there is need for government to pay more attention on reviving existing ports in the Eastern part of the country rather than building new ones. Anakebe says the promoters of these projects need to consider how to move patronage from the existing facilities to the new port, especially moving the operations of freight forwarders, importers, exporters and other stakeholders to the new port.

To Anakebe, government support is required to make new ports work, but it is also important to have a strong gateway cargo and not depend on trans-shipment cargo for other countries, which might not come.

Jonathan Nicole, president, Shippers Association of Lagos State, who discloses that Nigerian seaports have lost 75 percent of its cargo to ports in Cotonuo, Togo, Ghana and even Burkina Faso, says Nigerian ports are losing business due to adverse government policies and clearing bottlenecks that may be a big challenge to the potential cargo for the new ports.

AMAKA ANAGOR-EWUZIE