The Director-General, Infrastructure Regulatory Commission (ICRC), Chidi Izuwa, has expressed concern that several years after the execution of the Lekki Deep Seaport contract, the concessionaire is yet to attain financial close, thus hampering the early completion of the project.
The concession agreement for Lekki Port was signed on April 21, 2011 by the Nigerian Ports Authority (NPA), the Lagos State Government and Lekki Port, Lekki Free Trade Zone (LFTZ) enterprise with a contract term of 45 years.
The project promoters, Tolaram Group, had earlier planned to attain financial close by second quarter of 2016 and commence full operations by second quarter of 2019 thereby giving a period of three years for the construction work.
The proposed $1.5 billion port project is jointly financed by a consortium of six banks – the African Development Bank (AFDB), the European Investment Bank (EIB), Standard Chartered Bank (SCB), Rand Merchant Bank (RMB), Africa Finance Corporation (AFC) and Standard Bank. NPA and the Lagos State Government also have equity shares in the project.
Speaking during an assessment tour of the facility at the Ibeju- Lekki axis of Lagos on Friday, Izuwah said if all parties to the contract were committed to its implementation, the port would have been completed in less than three years.
He noted that while all the funding required to complete the project has not been released, the project sponsors are moving ahead with their equity while still looking for financing.
“The commission is worried 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 challenge. Financial close is when all the covenants have been signed and all the monies locked up are ready to be released.
“Lagos has increased her equity in this project from 18 to 20 percent. That is an amazing sign of confidence in the success of this project. The project, however has not reached financial close. We, at ICRC firmly believe that if all parties to this contract demonstrate utmost commitment towards this project, the goals will be become a reality in less than three years,” he said.
Izuwah assured that given the huge investment of about 150 million dollars funds collected from equity on the project; the Commission will assist the project promoters in sourcing for additional counterpart funding for the deep seaport project.
He said, “I promise you that the ICRC under my leadership will go above and beyond the call of duty to assist you reach financial close. We are willing to join you on focused lender/investor road shows to seek additional debt and equity capital.
“We will also play a key role in driving the creation of an inter government and agency high impact team to solve some of the projects immediate problems like a high capacity evacuation route from the port site to assure investors and lenders that all containers and goods arriving at the ports will be evacuated flawlessly and efficiently.”
The ICRC boss also charged promoters of the project to engage local engineers and technicians, as well as raw materials for the project in line with the federal government local content and diversification plan.
“The project is still at the very early stage. So they should ensure that Nigerians are fully engaged, that is what technology transfer is all about. We will engage the right engineers to make sure we have a significant involvement.
“They are going to create about 170, 000 jobs, so those jobs must be done by majority of Nigerians to make sure that the investment come in and resides in our country and the value chain benefit flows around the country,” he said.
Speaking on the progress of work done at the facility, the General Manager, Projects, Lekki Port LFTZ Enterprise, Steven Heukelon, said major construction work has commenced on the site with the construction of the main breakwater for the port.
He said the port is expected to commence full operation by 2020.
The promoters of the project are targeting about 1.5 million Twenty-foot Equivalent Units (TEUs) container capacity annually, which they expect to grow to about 2.7 million and 4.5 million TEUs when the port commences operation.