In its first Monetary Policy meeting this year, the Central Bank of Nigeria increased the benchmark interest rates to 22.75 percent to curb Inflation and prop up the value of the naira. This means that borrowers will face higher interest rates on their loans. With borrowing becoming more expensive due to higher interest rates, consumer spending and business Investment may decrease, and companies may postpone big-ticket investments. In Nigeria, there are multibillion-dollar port projects that may suffer delays due to the inability of the promoters to reach financial closure over the fluctuation of the exchange rates and hike in interest rates.
These projects include the $1 billion port rehabilitation project, $2.59 billion Badagry Deep Seaport in Lagos, $1.5 billion Ondo Deep Seaport in Ondo State, Ibom Deep Seaport in Akwa Ibom, Snake Island Port, Benin River Port, and Bonny Deep Seaport in Rivers State. The Nigerian Ports Authority (NPA) recently unveiled a $1 billion port rehabilitation plan to enhance the physical Infrastructure in the Apapa, Rivers, Onne, Warri, and Calabar Port complexes. Mohammed Bello-Koko, managing director of NPA, said the aim is to achieve the depth of the ports up to 14 meters and increase the draft at the quayside to accommodate vessels of all sizes.
NPA considers $800M loan for port project; Nigerdock expands ports.
He said the NPA is considering taking an $800 million Loan facility, which will be repaid in seven years to fund the port rehabilitation project. In 2023, Nigerdock received approval from the Federal Government to expand Snake Island Port. The port signed a 45-year concession agreement with the Federal Government. The Snake Island Port would gulp $974,185,203, with the concessionaire and the federal government receiving $18 billion and $5.23 billion in Revenue respectively over the concession period. Maher Jarmakani, chairman of Nigerdock, said the proposed port will attract about $1 billion in private investment and facilitate job creation.
Also, Burutu Port plays a significant role in the Export of crude oil and Petroleum products, as well as facilitating the importation of goods into the Niger Delta region. To expand the port infrastructure, it would cost over $1.3 billion and be commissioned for 40 years with the concessionaire and the federal government reaping $125 billion and $9 billion, respectively over the period. Then, Badagry Deep Seaport is estimated to gulp $2.59 billion, which has been approved by the Federal Executive Council during the Buhari administration and is expected to create about 250,000 jobs and attract foreign direct investment. The Federal Government approved the Construction of Ondo Port with a depth of 16.5 –18 metres. The port project has advanced to the concession and Negotiation stage.
Edo plans Benin River Port; Ibom & Bonny Deep Seaports advancing.
Further, the Edo State Government is concluding plans to develop the Benin River Ports project. Greg Ogbeifun, chairman of the Benin River Port Project Committee, said the state is finalising talks with the Port of Antwerp from Belgium to begin the development of the port. He said Mota-Engil Africa has been selected as the preferred bidder to construct the 300,000 Twenty-foot Equivalent Unit Benin Port. Ibom Deep Seaport is to be located in the Mbo Local Government Area of the state, which has a draught of 17.5 meters. It will enable the berthing of bigger vessels, reduce cost and create economies of scale.
The port is said to take a $4.2 billion investment expected to cover the Ibom Deep Seaport & Free Trade Zone. In 2022, the Akwa Ibom government started the discussion with China Harbour Engineering Company for the actualisation of the deep seaport project. Bonny Deep Seaport is situated in Rivers State in a location with a natural draught of 17 meters. The port is estimated to gulp about $462 million worth of investment and will be built under a public-private partnership arrangement. At completion, Bonny Port will have a capacity of about 500,000 TEUs and will help to reduce the pressure in Lagos and open new investment opportunities in both the South-South and South-East regions.
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Ayorinde Adedoyin, chairman at Peacegate Group, said some of these port projects would be ‘dead on arrival’ if care is not taken particularly with the current macroeconomic issues. He said the majority of containers that come into Nigeria exit the country empty because Nigerians are not taking up the opportunity to export. “It is not about how many ports we have but what value are they bringing to the economy. It is not the number of ports that matters but what they are used for because it is not enough to make money from import duties and container stacking fees, we need to sell our products through export,” he explained.