30 August 2014, Lagos – The Federal Government of Nigeria(FGN) has completed due diligence (DD) on the Lekki port project thereby raising hopes on the actualisation of the first ever multibillion naira private/public partnership in that sector of the economy.
The completion of the DD is coming after earlier doubts on the fate of the project following bickering by major shareholders over their equity participation in the facility.
The Lekki port project is said to have the potential to o revolutionise the maritime sector and spur unprecedented economic growth on completion.
The federal government represented by the Nigerian Ports Authority (NPA) had a few days ago concluded the DD demanded as a pre-requisite to go ahead with the project.
Industry watchers said with the conclusion of the DD, the 2018 scheduled date for the operation of the port has been given a boost.
They added that with this development, the much anticipated funding from shareholders expected to facilitate rapid construction of the Lekki port will now be made available so that the next phase of development can commence in earnest.
The deep seaport is a $1.5 billion public private partnership project between the federal government, Lagos State Government (LASG) and the Tolaram Group.
To give effect to the construction of the facility, a Shareholders agreement was signed in December 2012 amongst all the parties involved.
THISDAY had reported that while LASG’s equity and that of the Tolaram Group are in place, the federal government refused to make further commitment to the facility in the absence of any DD.
Industry experts said it is the standard procedure for DD to be conducted by shareholders before infusion of equity into a project of that nature.
Accordingly, NPA carried out and concluded its due diligence on the project through a credible auditor, KPMG, to ensure accountability, transparency and value for money of the project.
The Federal Executive Council (FEC)’s approval for the project and issuance of the finance guarantee was received in December 2013.
Confirming the development, the Chief Finance Officer, Lekki Port, Mr. Sandeep Parasramka said: “Apart from getting the concession from NPA to build Lekki Port, Tolaram has put together leading global consultants such as Standard Chartered Bank, the Louis Berger Group Incorporated, Delta Marine Consultants, BMT Asia Pacific, TBA Netherlands, Jardine Lloyd Thompson Pte Limited and GMaps following which the EPC contractor, China Harbour Engineering Company has been appointed to build the port and the container terminal has been sub-concessioned to International Container Terminal Services, Incorporation, Philippines”.
According to him the project will make Nigeria the gateway to the West African region and will be one of the most efficient and modern maritime facilities, catering for containerised, liquid and dry bulk cargo par international standards. He said Lekki port will have significant positive macroeconomic impact estimated at $361 billion over the entire concession period. It is expected to contribute more than $200 billion to the government treasury while also creating close to 163,000 new jobs in the economy.
“The stage we are in now is structuring the financial terms, which will take a short period before funding is made available to Lekki port. It is only normal that when you do such a large financing of a huge project such as this, it takes more time than building a house,” Parasramka said.
He explained that conventionally, projects of this magnitude are undertaken through project financing on a non-recourse basis. This requires the lending parties to agree on appropriate terms of lending and conduct stringent due diligence. These processes take time and are essential to achieve the debt financing. The good news for Lekki port is that they are at an advanced stage, with the due diligence completed and financing terms well underway.
According to him, “we understand that all shareholders are very committed to ensuring that the scheduled operational date of 2018 is very much on course and are making rapid progress towards this, with the view to kick-off construction works in the last quarter of 2014.”
NPA Executive Director, Finance and Administration, Mr. Olumide Oduntan
expressed satisfaction with the pace of the development of the project and noted that the NPA is finalising documentation and internal processes including a DD report prepared by KPMG Professional Services after which it plans to infuse its equity contribution into the project.
He noted that this is a project that NPA is fully in support of and it will contribute to resolving the congestion of ports in Lagos.
– This Day