Why banks shun Lekki port project – Expert

A maritime economist and Executive Director of ABN Consults, Mr. Harrison Agada has explained why it is difficult for banks to fund the construction of the Lekki seaport project located in Lagos.

Speaking against the backdrop of recent newspaper reports that the Lekki port project in Lagos is being threatened, as investors and banks were said to have declined putting their money into it; Agada said that investors’ pessimism over the project is borne out of concerns for its viability.

Media report last week revealed that the construction of the port has suffered a setback owing to lack of funds. Sources close to the promoters of project disclosed that most of the banks and other financial institutions that initially showed interest in financing the multi-billion naira project have since backed out.

According to the sources, the financial institutions had doubted the viability of the project, especially since it does not hold the prospect of an early return on investment.

Sources explained that some of the banks approached by managers of the port were not willing to give financial assistance due to the fear that they might not be able to recoup their money on time.

“It will require not less than $1.5 billion to actualise the Lekki port project and I cannot see the cargo volume to justify any such investment in the medium term and who is willing to invest and not get return in 10 to 15 years?” he asked.

Justifying his position further, Agada stated: “Investors doubt the ability of the promoters of the port to draw cargo traffic to the facility especially because of evacuation bottlenecks.

“Because the Lekki axis is largely a residential area, vehicular traffic in and out is very heavy without the added burden of trucks plying that route. What will happen when trucks join the fray on the road is better imagined.

“Due to this constraint and in the absence of a rail system, evacuation of containers from the Lekki Port to the Western part of the country will be very difficult if not impossible.

“You can’t move goods up north either except a new bridge the size of the Third Mainlaind Bridge is constructed around the lagoon.

“Trucks evacuating goods from the port however can head for the Eastern part of the country but then, they will have to travel almost 100 kilometres to link up the Benin-Ore road.

“Movement of goods out of the port through barges is not an option either because Lekki is backed by a very broad and shallow lagoon making barging difficult.”
It may be recalled that promoters of the Lekki port project have variously shifted the port’s commencement. The facility was originally said to commence operation in 2014 which was later shifted to 2015 and now to 2016.

“All of these point to uncertainty around the port and no investor will put their money under such circumstances,” he stated.

Meanwhile the promoters of the Lekki port project have shifted its take-off date for the fifth time.

According to the company the project was still on course but the operational date is now 2018.

The earlier take off date announced by the promoters was 2012 which was shifted to 2013 and then to 2015, Early this year, 2016 was announced as the take-off date until last week when the firm indicated 2018 without giving any reasons for the perpetual change in date

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