How delays in rehabilitation process disrupt ports operations

In this piece, ANOZIE EGOLE explores the state of port rehabilitation in Nigeria, the efforts being made, and their projected impacts on the economy

Nigeria, a country rich in natural resources, faces an intricate web of challenges and opportunities when it comes to port infrastructure. As one of Africa’s largest economies, its ports play a central role in trade and maritime activities. However, decades of inefficiency have left the country’s port infrastructure in dire need of rehabilitation, which is vital to enhancing its competitiveness in global trade, supporting economic growth, and ensuring the nation’s development goals are met.

The Nigerian ports serve as gateways for goods coming in and out of the country, including oil, gas, agricultural products, and manufactured goods. With the increasing demand for shipping services, their rehabilitation has become essential, with the future of infrastructure hinged on how well the country can rehabilitate and modernise them.

The system comprises over 10 ports, with major ones located in Lagos, Port Harcourt, Onne, Calabar, and Warri. The most well-known ports, including the Lagos Port Complex, Apapa Port, and Tincan Island, have faced severe congestion for years.

According to a 2020 World Bank report, Nigeria’s ports were ranked among the least efficient in the world due to poor infrastructure, outdated facilities, and logistical bottlenecks.

In addition, the ports are plagued by outdated equipment and inadequate container handling systems, which have a direct impact on shipping costs and delays. The dredging of channels to accommodate larger ships, as well as insufficient cargo storage space and transportation infrastructure, continue to hinder optimal efficiency.

These inefficiencies result in an increase in logistics costs, with reports suggesting that the cost of clearing goods in Nigerian ports is the highest in West Africa. Importers and exporters have also had to contend with long delays.

Need for port rehabilitation

Port rehabilitation is not just about fixing crumbling infrastructure; it is a broader initiative aimed at enhancing operational efficiency, increasing throughput, and modernising facilities to match global standards.

Nigeria’s maritime sector accounts for over 90 per cent of the country’s trade and contributes significantly to gross domestic product. Efficient ports are crucial to the economic growth and development of the country. They support job creation, improve access to goods, and help reduce the costs of doing business.

The government is heavily reliant on revenue from customs and tariffs. However, inefficient ports reduce the amount of revenue that could be generated through trade. Rehabilitation projects aimed at boosting port capacity and efficiency will increase revenue by facilitating smoother operations and attracting more international business.

With global shipping trends constantly evolving, Nigeria needs modern, efficient ports to remain competitive within the international trading community. Countries such as South Africa, Egypt, and Kenya have made considerable strides in port infrastructure, positioning their ports as regional hubs. Nigeria risks losing its position as the leading maritime player in West Africa if it fails to address its port challenges.

Government efforts

Recognising the critical importance of the maritime sector, the Nigerian government has embarked on several port rehabilitation initiatives in recent years. These efforts aim to modernise port infrastructure, streamline operations, and enhance port security. The Nigerian Ports Authority has launched a series of projects aimed at decongesting and modernising the Apapa Port. These include the dredging of the port’s channels, expanding the terminal space, and upgrading cargo handling equipment. Additionally, efforts are being made to develop road infrastructure to ease traffic congestion around the port.

In April, The PUNCH reported that the Nigerian Ports Authority announced securing a $700m loan from Citibank for the rehabilitation of the Apapa and Tincan Island Ports in Lagos.

The loan was funded by UK Export Finance, an export credit agency.

Announcing this in a statement, the NPA said it had also opened discussions with another funding agency to finance the upgrading of the Eastern Ports, including Calabar, Warri, Onne, and Rivers Ports, as well as the reconstruction of Escravos Breakwater.

Speaking in Lagos during the signing of the mandate letter with Citibank Nigeria, the then Managing Director of NPA, Mohammed Bello-Koko, said the mandate letter would be sent to the Debt Management Office for final review and approval.

Bello-Koko said the funds were ready and the reconstruction of the Lagos ports would start soonest.

He added that the NPA had perfected plans to sign another mandate letter for the upgrading of the Eastern Ports in about a month.

Speaking in Lagos during the signing of the mandate letter with Citibank Nigeria, the then Managing Director of NPA, Mohammed Bello-Koko, said the mandate letter would be sent to the Debt Management Office for final review and approval.

Bello-Koko said the funds were ready and the reconstruction of the Lagos ports would start soonest, adding that the NPA had perfected plans to sign another mandate letter for the upgrading of the Eastern Ports in about a month.

He said, “In the last two years, NPA has realised the need to rehabilitate and reconstruct the ports all over the country. We have been having discussions with multilateral funding agencies that have sent various proposals that we have reviewed.

“What we did was to further the discussion with interested parties, and we realised it was better to separate the ports in Lagos from the ports in the East, and we are in discussion with other funding agencies to bear the cost of the construction of ports outside Lagos,” Bello-Koko said.

He said the Citibank facility was the cheapest for the NPA because it came with affordable interest rates.

“Port efficiency is not about automation, which we have already begun; it’s also about the physical infrastructure, which must be in place, and that’s why we are automating. Automation will naturally bring efficiency, increase revenue, and plug leakages, “he said.

Meanwhile, in July, the newly appointed Managing Director of the NPA, Dr Abubakar Dantsoho, said that speedy rehabilitation of dilapidated port infrastructure across the nation was a top priority.

He said adequate port infrastructure and robust collaboration with stakeholders would enable the nation’s seaports to attain improved revenue generation through efficiency and productivity.

However, despite these moves, the commencement of rehabilitation works on the ports remains mirageous.

Challenges

Despite these efforts by the government, the road to full rehabilitation remains challenging as several factors have continued to impede its take-off.

Port rehabilitation is not only about upgrading the terminals but also addressing broader infrastructure challenges, including roads, railways, and power supply. Without modernising the entire logistics chain, the benefits of the upgrades may be diluted. Government changes can lead to shifts in priorities, causing delays and the reprioritisation of rehabilitation projects. There is a need for a more consistent, long-term commitment from the Nigerian government to ensure the sustainability of port reforms.

Experts speak

Logistics experts believe that for the country to maximise the full potential in the maritime domain, port rehabilitation is paramount and needs urgent attention.

In a recent chat with The PUNCH, a maritime group, Research at Sea Empowerment Research Centre, in a document titled ‘Re: Delayed implementation of the $700m ports rehabilitation budget, matters of concern,’ obtained by The PUNCH on Monday, said the situation at Nigerian ports was indeed concerning.

The group’s Head of Research, Mr Eugene Nweke, stressed that the lack of implementation of the approved rehabilitation budget is exacerbating the issues.

Nweke expresses the centre’s concern over the continuous delay in the implementation of the port rehabilitation.

“Equally, the centre offers to draw government attention over a need to put in place a milestone implementation process/plan and a definitive rehabilitation project vision to drive the implementation,” Nweke said.

He urged the government to immediately commence the implementation of the approved $700m rehabilitation budget.

According to him, implementing the rehabilitation process will help address the pressing concerns at the ports, such as congestion, poor berth production, and ship turnaround time.

He advised the government to establish a transparent project management system to ensure that the rehabilitation works are carried out efficiently and effectively.

“This includes setting up a project monitoring team, regular progress updates, and a clear communication channel with stakeholders,” Nweke stated.

He emphasised the need for the government to prioritise the most critical infrastructure that needs rehabilitation, such as the quay walls, cranes, and handling equipment.

Nweke, who is also a former president of the National Association of Government Approved Freight Forwarders, pointed out that the government should also address the underlying issues that have led to the current state of the ports, like “inadequate maintenance and repair of existing infrastructure, insufficient investment in new infrastructure and technology, inefficient port operations and management, corruption, and bureaucratic inefficiencies.”

He reiterated the need for the government to invest in modern technology, such as port management systems, to improve efficiency, reduce costs, and enhance the overall port experience.

Also speaking, the President-General of the Maritime Workers Union of Nigeria, Adewale Adeyanju, said it would be difficult for the lives of workers “in those dilapidated places to be safe.”

Adeyanju added, “By now, the contractors are supposed to be on-site and should have started working.

“How do you expect the lives of dockworkers to be safe when some terminals in the ports are not safe? Go to many terminals; they are nothing to write home about; the quay aprons are gone. If someone collects a loan of $700m and up till now work has not commenced, the question you need to ask is where is the money?

“Where are the contractors? I think by now they must have signed the agreement because I remembered that before Bello-Koko left as NPA MD, he said they had secured a loan of $700m and that by now the contractors should have started.”

When contacted, the General Manager of Corporate and Strategic Communications of NPA, Mr Ikechukwu Onyemekara, said the necessary documents have been submitted and that the rehabilitation will start by the second quarter of 2025.

He said, “The loan has been secured. The mandate letter was signed mid-last year because when you secure a loan, there is a mandate letter to sign. The UK Export Finance requested a few more documents, which include the Environmental Impact Assessment report.

“The information, a memorandum about the authority, and an independent analysis of our financial viability are the few documents they required which have been submitted to them. So, mobilisation to cite will commence by the second quarter of this year by the grace of God.”

He further noted that securing the loan had been done but noted that “when you secure a loan like that, there are one or two documents that you are supposed to submit, and we have done that. So, by the second quarter of this year, they (contractors) will mobilise to site.”

Conclusion

Port rehabilitation is a critical element in Nigeria’s quest for economic growth and development. With ambitious projects underway, the future of Nigerian ports looks promising, but success will depend on overcoming challenges related to funding, governance, and infrastructure. By addressing these issues and continuously investing in port modernisation, Nigeria can unlock its full economic potential and become a key player in global trade.

The future of port rehabilitation in Nigeria is bright, but only if the country can overcome the barriers that have long hindered its port development. Several measures can ensure the success of ongoing projects and position Nigeria as a leading maritime player in Africa.