Concessionaire pulls out of Lilypond terminal over poor business

Bonded terminal operations in the country, which had been faced with survival struggles owing to bad business, may have suffered yet another major setback at the weekend, following the sudden pullout of Lilypond Container Depot Nigeria Limited from the concession agreement with government on Ijora Terminal, Lagos.
Manager of the terminal, Mr. Tristram Denyer, who announced the withdrawal at a meeting with journalists in Apapa, last Friday, said that the action was hinged on protracted losses being incurred by the company as a result of poor availability of containers that.
He said that even though the company had invested over $15 million about (N2.4 billion) in developing the facility since it won the concession in 2006, the business model upon which the concession was granted can no longer be sustained.
The development, according to Denyer, had occasioned a colossal monthly loss of over $5 million (about N800 million) which is now unbearable, hence the pull-out, before the expiration of the 10 years concession agreement.
He said that the company had as at last Friday morning officially notified Nigerian Ports Authority (NPA) management of its decisions to embark on the gradual withdrawal which would ultimately take effect within the next six months.

Describing the decision to pull out of the facility as “a very difficult one”, he noted that it was a last resort after the apparent failure of “concerted effort by Lilypond management and staff to develop a viable new and sustainable long term business model over the last eight months”, which had been “frustrated by a number of factors including the lack of overflow container volume available for depots generally, the high cost of operating the depot and increased capacity in Nigerian marine container terminals.”
Denyer added that discussions with the NPA over the period for transition to another operator would commence shortly, but that he expected this was unlikely to exceed six months.
The management of Lilypond, according to him, would co-operate with the NPA to ensure the successful handover to a new concessionaire should, “as anticipated, NPA decide to tender the Lilypond concession.”
While lamenting the apparent job losses due to the development, he said that talks had commenced with some sister organisations who may wish to employ some of its 47 permanent staffers while the larger number of contract employees will be disengaged within a month notice.
Pointing out that the Ijora Lilypond Terminal was not a complete write-off; Denyer advised that government may wish to consider other uses for the facility, aside from being retained as a bonded terminal.