FG requires $1.1bn reinvestment to renew nation’s port concession agreement

By Tom Okpe

The Minister of Marine and Blue Economy, Gboyega Oyetola has informed that the Federal Government require about $1.1billion reinvestment in the nations port before renewing its concession agreements.

He also said in view of the political will showned by President Bola Ahmed Tinubu, to develop the nation’s maritime sector, the Government will not seat back and watch the untold, happen and for the ports to completely collapse.

Oyetola stated this before the House of Representatives Committee on Privatisation at the National Assembly, Abuja on Friday noting that concession on the ports was delayed to allow Government, conclude it’s reinvestment plan and reconstruct the ports to meet required standard.

Represented by the Permanent Secretary in the Ministry, Oloruntola Micheal, the Minister said the present agreement between Government and concessionaires was unacceptable as it falls below required standard.

“Under modernization programme of the Port, the Ministry is envisioning a major reinvestment in the port system for it to meet the expected service delivery that commensurate with the image of Nigeria and the level of international business the country is in.

“The current situation at the port does not meet required standard. The investment quantum, expected to be invested in the port will require a major rethink of concessioning of the ports.

“As a result, the Ministry, in concert with the agency, the Nigeria Ports Authority, (NPA) in particular has begun a process of reinvestment package for the port.

“It means, the Ministry must factor into whatever relevant concessions that has to be made into that larger vision or else, we may progress further in error and put that reinvestment plan at risk.

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“It must be put on record that what you have as a proposal which has been stalled is yet to be given approval by Government and has been considered by the Ministry to fall below the expected threshold both in terms of revenue and in terms of investment.

“The Ministry is expectant that it will be able to conclude investment plan and bring on board, necessary modalities for the consideration of these concessions,” he said.

Responding to questions, he said; “the extension alluded to, expired before May 29, 2023 and that was before the coming of this Government.

“The Ministry of Marine and Blue Economy, created by this Government has taken steps to review what it met on ground and what we have is not acceptable.

“Anybody who wishes our ports systems better will ask for something different. A major reinvestment is necessary and the Ministry does not want to truncate the plan for that major reinvestment on the altar of commitment to this agreement.

“There is nothing in that agreement that says Nigeria must renew. It is not at my level that the decision will be taken.

“The decision and process of review will be taken, but the larger interest of Government, the people of Nigeria, the port system is over riding.

“We are making earnest steps to finish the arrangements to secure funding for this reinvestment. The terms of those funding it, will be factored into whatever agreement that we must sign, because the lenders will lend to us on terms we must agree to so, we must do one before the other.

“The operators at the port are still running and paying revenue to Government on the basis of the agreement that expired. So, the Government is not losing any revenue and the operators have not been displaced.

“If the interest to do what is right is uppermost, then no status quo should be ruffled.

“The stand of the Ministry is that, we must finish the arrangement of major reinvestment in the interest of the port and the better interest of the country.

“As soon as it’s possible, that’s what we have to do. What we may do is to grant short term extension to cover for the time, required.

“We are on the same page with our agency. Mr. President has deposited the biggest political will in this sector by creating a dedicated Ministry for this sector. We must show results and that is what the Ministry and its agencies have resolved to do.

“We are not resisting renewing this agreement. We are only saying allow the Ministry put in place a reinvestment plan for the port in the better interest of Nigeria, the port system and Nigeria at large.

“The Ministry is saying it should be allowed to do what is right and just. The port require a major reinvestment beyond what we have witnessed in the last decade or more. That is more important than what is being taunted.”

Managing Director of the Nigeria Ports Authority, (NPA), Mohammed Bello Koko said the proposal for renewal of the concession agreement for the ports was submitted to the Federal Executive Council, (FEC) in February 2023.

He explained that FEC put the renewal on hold, demanding additional information, adding that one of the issues raised by FEC was investment as it relates to existing infrastructure at the ports.

“In view of the fact that there was more work to be done, we gave a six months short extension for the terminal operators to continue operating so, Government was not losing any revenue and, still paying what they were paying to the NPA.

“We observed then, imminent collapse of the port locations. We realised that there was need for complete rehabilitation of the ports. The plan is to move into the channel by three meters and that completely, changed everything.

“Currently, the estimate is about 1.1 billion dollars and discussions have started and about to be concluded so that we get funding from those that have shown interest.

“The loan will be for 15 years with two to three years moratorium, during construction.

“That is why we felt that there is need to evaluate what was discussed about six years ago. At the end, parameters will change and the conditions will no longer be the same.

“The ports are working, but not fully, because part of it has collapsed, but to ensure continuous operation, we felt there is need for reconstruction and within the next few months, the agreement will be signed and construction begins.

“Right now, the port is collapsing. That is why we are saying it has to be reconstructed. In ENL which is one of the terminals, belt 7 has completely collapsed and not in use. If you go to TinCan, belt 4,8,9 and 10 have partially collapsed and these are the places we want to renew.

“That’s why we are saying there is need to critically look at what needs to be done.”

But the Acting Director General of the Bureau for Public Enterprise, Ignatius Ayewoh believe that, Government reinvestment plan should stop the renewal process of the concessioning exercise.

“An interagency committee was set up to see to the concessions and some of the renewals made. Some are still ongoing, some have expired.

“The concession agreement has provision for renewal as well as retender. In terms of performance, we can say that the state of the port is no longer as derogatory as it used to be.”

Chairman of the House Committee on Privatisation and Commercialisation, Ibrahim Hamisu Chidari said the Ministry must put measures in place to ensure that Government does not lose revenue as a result of the delay in renewing the concession agreement.

He further noted that after the expiration of the agreement in 2021, “the terminal operators were given a six months extension twice and after that, there has been no extension.

“We don’t want them to continue to operate illegally, because there must be no vacuum.”

The Minister however, said a six months extension will be given to the terminal operators to operate legally, adding that; “all plans by Government should be concluded within the six months period.”