Developing Port Infrastructure via PPP
Eromosele Abiodun posits that the sustained development of critical port infrastructure through public, private partnerships, will unlock the full potential of the maritime sector
With a vast and extensive natural maritime endowment base comprising a coastline of over 800 kilometers(kms), an exclusive economic zone of over 200 nautical miles, the Nigerian maritime sector has the potential to accelerate Nigeria’s economic development beyond its crude oil revenue earnings.
Nigeria is also blessed with vast inland waterways resource estimated at nearly 3,000kms, and comprising over 50 rivers, that can support a vibrant intra-regional trade.
The country is located on the coastline corridors of the gulf of Guinea and the Bight of Benin, with eight of her 36 states having littoral status. This is addition to a vast and growing population and market that confers ability to generate huge indigenous tonnage and capacity.
To this end, experts believe the maritime industry in Nigeria can become a veritable engine of growth for national economic development and its transformation agenda.
Industry stakeholders believe the nation’s maritime sector can be a notable contributor to efforts at poverty reduction, creation of wealth, promotion of skills acquisition and encouragement of entrepreneurship.
They believe that the sector can, if seriously harnessed and exploited, contribute very significantly to the growth of the nation’s gross domestic product (GDP) and eliminate the nation’s unsustainable over-reliance on petroleum as Nigeria’s major revenue earner.
Many industry watchers are, however, baffled that despite these intimidating factsheets, there’s still a major disconnect. With its population, market and economy, Nigeria, since independence, has remained unchallenged as the biggest importer and exporter in the sub-region. Her cargo throughput, inclusive of oil and gas, far outstrips those of other seaports in the sub-region put together.
However, is it baffling that the ports in smaller neighbouring countries pose such a serious challenge to the emergence of Nigerian seaports as the leading ports in the sub-region, a preferred choice of destination for cargoes bound for the sub-region. The question that comes to mind then is how the Nigerian maritime industry can be made a stronger catalyst of growth of the nation’s economy.
The Way Out
Experts suggest that the way to go is increased and sustained investments in port infrastructure coupled with introduction of progressive and innovative changes in the way business is done in the port.
Speaking at the second edition of the Taiwo Afolabi Annual Maritime Conference held at the University of Lagos recently, Executive Director Sifax Haulage and Logistics Company Limited, Major Henry Ajetunmobi agreed with the above submission but stressed that stakeholders first have to agree on what we understand by the term port infrastructure.
“To me, port infrastructure is an umbrella term that covers all those activities and facilities that support and enhance the maritime transport sector, making it efficient, productive, safe and environmentally friendly, reinforced by an effective regulatory framework – all combined to make the sector deliver on its fundamental objectives.
“Port infrastructure is broadly considered to include: Ports, terminals, cargo handling equipment, channels and harbours, warehouses, ports access roads, whether tolled or nontolled, including tunnels, bridges etc. Others are, intermodal transport involving rail and roads interfacing with ships and badges, utilities – which include power or electricity, water, wastewater, information communication technology (ICT), deep seaport and scanners,” he said.
PPP Model
Ajetunmobi described Public Private Partnership (PPP) as a contractual framework or structure in which public and private entities come together to deliver a project or service that is traditionally provided by the government or the public sector.
According to him, “Various structures or models exist. They include: service agreements or outsourcing, joint ventures, concessions – such as we have in 2006 when private entities known as concessionaries or private terminal operators were brought in by the federal government to take over cargo handling aspect of terminal operations.”
He stated that the efforts to develop the port industry will achieve greater effects if strategic alliances and partnership are grown not just between private and public entities alone, “but between one business enterprise and another or better still, among a group of several others, aimed at pooling scarce resources.
“The primary reason for this is that investment in modern port infrastructure requires money and lots of it, not mere pennies. Promotion of strategic alliances and partnership among principal stakeholders will improve the port industry, making it a more dominant contributor to the growth of the national economy.”
He added that as the government’s concession of the ports to private terminal operators enters the second decade of its existence, there should be stronger consolidation of the gains of concession that are already witnessed beyond dispute by various classes of port users and operators as well as government agencies.
Consolidation, he stated, can come only through greater investments in port infrastructure anchored on stronger public-private enterprise involvement.
Decaying Port Infrastructure
On the decaying port infrastructure, he said, maritime Nigeria has over the years neglected the wisdom in intermodalism when it chooses to focus majorly on just one mode of transport (road), to the near total neglect of the other two vital modes-rails and barges.
“Thankfully, the current federal government is addressing the matter through inclusive and specific intervention measures. However, the current bad state of port access roads, especially to the two ports in Lagos, Apapa and Tincan – the ports that receive over 70 per cent of the total cargo throughput in Nigeria - is a rather sad commentary on the way we have fared as a nation even on the one transport mode we appear to have chosen.
“As it is well known, the negative consequences of this development are not just telling on the economy and the state of equipment; they also impact adversely on human health both of port users, operators, and residents of the host communities themselves,” he said.
He pointed out that this is one area that would benefit from decisive PPP - driven investment intervention.
Ajetunmobi e added, “Perhaps the time is now right to start considering adoption of other options and models of maintaining and improving upon the quality of our port access roads, including concession through tolling. Or perhaps we should strive for bolder and more ambitious option. This may be by proposing that within a given span of time, short rail lines should be constructed to somewhere between Lagos and Ibadan, and another to a location between Abeokuta and Ibadan to which all cargoes arriving Lagos ports will be evacuated by rail before delivery to shippers and their agents.”
“To conclude, we affirm that it is on the sustained development of critical port infrastructure through PPP that the full potential of this Maritime country will be unlocked. Today, 11 years into the port concession regime, our ports are increasing in productivity and efficiency, but these have come at great costs.
“The industry is encumbered by circumstances that the stakeholders especially government, are striving to repair. We must be honest enough to admit to ourselves that in our quest for efficiency, there’s no ‘’silver bullet” or one-size-fits-all solutions.
“The future will be bright if we are consistent in embracing the policy of inclusive innovativeness and transformation. And more importantly, if we continue to invest in the youth, many of whom are here gathered in this hall today,” he stated.
Curbing unemployment
On his part, Group Executive Vice Chairman, SIFAX Group, Dr. Taiwo Afolabi stated that the federal government can harness the huge potential of the maritime sector in the country to end poverty and unemployment.
The maritime sector, he stated, has a role to play in the alleviation of extreme poverty and hunger as it already provides as important source of income and employment for many developing nations.
The sector, he added, provides opportunity such as the supply of seagoing personnel, ship recycling, ship owning and operating shipbuilding and repair and port services.
“According to the United Nation’s affiliate responsible for regulating the global maritime industry, International Maritime Organisation (IMO), over 90 per cent of world trade is transported by the sea and it is, by far, the most cost-effective way to move en masse goods and raw materials around the world.
“As highlighted above, the maritime industry is strategic to any maritime nation in terms of its contribution to its economic growth and development. In Nigeria, the contribution of the sector to the country’s gross domestic products (GDP) is still very low when juxtaposed with its huge potentials and opportunities, “Afolabi said.
He added that one of the factors that have impeded the sector from fulfilling its potential is huge infrastructural deficit.
“Deplorable access roads, faulty cargo scanners, non-existent rail system, non-functional trucks bay, amongst others have conspired to negatively to impact the service delivery efficiency and overall impact. This is the major reason we are all gathered here in order to address it. Our sector cannot continue to reel under the burden of infrastructural decay if we want to contribute meaningfully to the economy and fulfil its industrial potential,” he stated.
In her speech, the Managing Director of the Nigerian Ports Authority (NPA), Ms. Hadiza Bala-Usman, stressed that for any maritime country, the seaport is indeed the gateway to the country’s economy.
The seaport, she added, serves as a gauge for the purse of the economy, facilitate trade when it operates efficiently, but inhibits business and economic growth when it is efficient.
“It is in recognition of this pivotal role of the port that successive efforts have been made by administrations in the past to reforms or restructure the industry, invariably with the ultimate aim of infusing efficiency for overall good of the national economy,” she said.