12 September 2014, Lagos – The board of directors of African Development Bank Group (AfDB) has approved a total of $256 million for the financing of investments in Nigeria and Ethiopia.
This comprises a $150 million senior loan to Lekki Port Lagos Free Trade Zone (LFTZ) Enterprise for the construction of a Greenfield seaport in the LFTZ. The loan for the LFTZ project, followed a 45-year concession granted to Lekki Port LFTZ Enterprise (LPLE), the special purpose vehicle of the Nigerian Ports Authority (NPA) under a build, own, operate and transfer scheme.
A statement obtained from the AfDB’s website yesterday further explained that the approval for the loan which was granted in Abidjan, involves the construction of port infrastructure such as breakwaters, quays, approach channels, dredging of the basin as well as captive utilities such as water and power.
In Nigeria, on completion, the port would handle 2.5 million 20-foot equivalent units (TEUs), 16.7 million tonnes (MT) of liquid cargo and 4.5 MT of dry bulk. Construction is expected to start in January 2015 with the container terminal operations expected to start in December 2018. The project, estimated at $1.675 billion, would be financed through a 54/46 debt to equity ratio
“It is aligned with the Bank’s Nigeria Country Strategy Paper 2012-2016 which stresses infrastructure development in the non-oil and transport sector as well as the country’s Vision 2020, which emphasizes modernising infrastructure. “The project is also in line with the Bank’s Regional Integration Strategy Paper (RISP) for West Africa which emphasises linking regional markets through regional transport infrastructure,” it explained.
For Ethiopia, the AfDB said it would contribute $5-million equity investment to the establishment of Kukuza Project Development Company (KPDC), a new firm that would focus on early-stage design and preparation of African infrastructure projects.
KPDC will assume turnkey responsibility for preparing the contractual, technical and financial arrangements of its projects, and marketing such projects to a range of potential private and public-private investors for onward implementation.
The company expects to process between two and four new infrastructure projects per year. Thus, in 10 years the company aims to develop 30 to 40 projects for a combined possible investment of over $5 billion.
Other initial investors in KPDC include Allied Investment Partners (AIP) of Abu Dhabi, India Exim Bank and State Bank of India (SBI), one of the world’s leading project finance banks with a 10% market share and an extensive network of Indian investors amongst its active corporate clients.
The board of the AfDB also approved a loan of UA 60 million ($91.10 million) and a technical support grant of €7.63 million ($10.06 million) from the Rural Water Supply and Sanitation Initiative (RWSSI) Trust Fund to finance the country’s mega water, sanitation and hygiene program, one of the biggest of such projects in the world.
*Obinna Chima – Thisday