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HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA

AFRICAN PORTS PRIVATISATION & CONCESSIONING OF PORT SERVICES NIGERIAN - EXPERIENCE BY ABDUL SALAM MOHAMMED MANAGING DIRECTOR NIGERIAN PORTS AUTHORITY PRESENTED AT THE 7 TH PAN AFRICAN PORTS COOPERATION CONFERENCE (PAPC) HELD AT DJIBOUTI PALACE KEMPINSKI HOTEL, DJIBOUTI. N I G E R I

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HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA

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  1. AFRICAN PORTS PRIVATISATION & CONCESSIONING OF PORT SERVICES NIGERIAN - EXPERIENCE BY ABDUL SALAM MOHAMMED MANAGING DIRECTOR NIGERIAN PORTS AUTHORITY PRESENTED AT THE 7TH PAN AFRICAN PORTS COOPERATION CONFERENCE (PAPC) HELD AT DJIBOUTI PALACE KEMPINSKI HOTEL, DJIBOUTI N I G E R I A N P O R T S A U T H O R I T Y 15TH -18TH December, 2008 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org 1

  2. OUTLINE OF PRESENTATION • History • Mandate • Functions • Facilities • Initial Challenges • Response to Challenges • Need for Reform • Renewed Initiatives • Reform Objectives N I G E R I A N P O R T S A U T H O R I T Y 2 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  3. OUTLINE OF PRESENTATION – Contd… • Reform Process • Pre-reform situation • New Roles • Handover Process • Reform Challenges • Financial Returns • Operational Returns • Projects –Amortized, BOT • Performance Indicators N I G E R I A N P O R T S A U T H O R I T Y 3 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  4. HISTORY OF PORT OPERATIONS IN NIGERIA • Port operations and development in Nigeria began in the middle of the 19th century. • Effort towards the provision of facilities for ocean going vessels started in the early 1900. • Plans for capital dredging activities aimed at opening up the Lagos Lagoon commenced in 1906 when orders were placed for dredgers to work at the bar and sanction was given for the construction of the first length of the East Mole. • Port Harcourt Port was opened in 1913 following the discovery of coal in Enugu N I G E R I A N P O R T S A U T H O R I T Y 4 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  5. HISTORY OF PORT OPERATIONS IN NIGERIA - Contd… • The first mail-steamer ‘S/S AKOKO’ drawing 5.64 metres entered Lagos harbours in February, 1914 • The construction of the first four deep water berths of 548.64 metres long at Apapa began in 1921 • Four berths of 1,920 feet long were developed at Port Harcourt in 1927. • An additional 762 metres of berthage were constructed and about 41 hectares to accommodate transit sheds, warehouses and marshalling yards in Lagos in 1948. N I G E R I A N P O R T S A U T H O R I T Y 5 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  6. HISTORY OF PORT OPERATIONS IN NIGERIA - Contd… • Port operations and management remained under the control of different government departments during this era (pre-1954) • Cargo handling at the terminals was the prerogative of • Nigerian Railways • While the Marine Department took charge of vessel • movement in the channel up to the quays. • Maintenance of the quay wall was the responsibility of • the Public Works Department. • Nigerian Ports Authority was established in 1954 by an Act of Parliament and commenced operations in April, 1955 N I G E R I A N P O R T S A U T H O R I T Y 6 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  7. HISTORY OF PORT OPERATIONS IN NIGERIA - Contd… • Nigerian Ports Authority acquired the ports of old Warri and Burutu in 1972 that were originally owned by United Africa Company (UAC) Maritime arm of Messrs John Holts Transport • Calabar Port which was owned and operated by Messrs Palm Line Agencies, Elder Dempster Agencies and United African Company (UAC) was also acquired in December, 1969 N I G E R I A N P O R T S A U T H O R I T Y 7 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  8. MANDATE OF THE AUTHORITY • Carry on the business of carrier by land or sea, stevedore, wharfinger, warehouseman or lighterage man. • Construct, develop ports, docks, harbours, piers, wharves, canals, water courses, embankment and jetties. • Invest and deal with the monies of the Authority. • Appoint, license and manage pilots of vessels. • Enter into Agreement with any person for the operation or the provision of any of the port facilities which may be operated or provided by the Authority. N I G E R I A N P O R T S A U T H O R I T Y 8 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  9. FUNCTIONS OF THE AUTHORITY • Provide, maintain and operate ports facilities • Maintain, improve and regulate the use of the port • Ensure the efficient management of port operations • Optimal allocation and use of resources • diversification of sources of revenue • guarantee adequate returns on its investments N I G E R I A N P O R T S A U T H O R I T Y • Provide safe and navigable channel • Provide towage, pilotage services and appliances for salvage of life and property/prevention of fire. 9 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  10. FUNCTIONS OF THE AUTHORITY – Contd… • Offer cargo handling and storage services • Ensure safety and security • Control pollution within port limits and their approaches • Provide ancillary services i.e. ship repair, supply of water to vessel etc N I G E R I A N P O R T S A U T H O R I T Y 10 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  11. PORT FACILITIES • Lagos Port Complex • Tin Can Island Port Complex • Rivers Port, Port Harcourt • Onne Port Complex • Calabar Port • Delta Ports, Warri N I G E R I A N P O R T S A U T H O R I T Y 11 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  12. CHALLENGES • Rapid Economic Growth • Containerization • Changes in vessel sizes & architecture • Globalization • Finance N I G E R I A N P O R T S A U T H O R I T Y 12 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  13. RESPONSE TO CHALLENGES • Increase capacity • Third wharf extension was completed 1977 • Tin Can Island Port also 1977 • New Warri Port was commissioned 1979 • New Calabar Port, 1979 • Onne in the late 70s to early 1980s • Provide efficient service • Minimal cost N I G E R I A N P O R T S A U T H O R I T Y 13 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  14. NEED FOR REFORM • Technical Committee on Privatization and Commercialization • Decree 25 of 1988 • Its Observations • Large organization • Unwieldy operation • Lack of commercial orientation • Its recommendations • Incorporation for private sector orientation • Zonal structure for decentralized control • Establishment of subsidiary companies • - Seaview Nig. Ltd and Continental Shipyard N I G E R I A N P O R T S A U T H O R I T Y Inconclusive implementation – Later revised 14 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  15. RENEWED REFORM INITIATIVE • 2001, World Bank and Federal Government initiative • Diagnostic Study by Royal Haskonning/Dynamar/Challenge International Associate to: • Update existing sector knowledge • Identify key issues • Generate viable options for reform N I G E R I A N P O R T S A U T H O R I T Y 15 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  16. RENEWED REFORMS INITIATIVE – Contd… • Recommendation of Royal Haskonning/Dynamar/Challenge • International Associate • Landlord model • Three regional authorities • Slim corporate headquarters • Clear role for the FMOT, Corporate Hq, Regional Authorities • Separation of operational from regulatory responsibility N I G E R I A N P O R T S A U T H O R I T Y 16 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  17. REFORM OBJECTIVES • To increase efficiency in port operation • To decrease cost of port services to stakeholders • To decrease cost to the government for the support of viable port sector • To attract private sector participation so as to free public resources for public services N I G E R I A N P O R T S A U T H O R I T Y 17 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  18. REFORMS PROCESS • Appointment of CPCS Transcom as adviser to Bureau of Public Enterprise with responsibilities to: • Reform, Restructure and Concession • National Council on Privatization • Presidential Committee on Port Reform • Guide the process • Dialogue with stakeholders • Ensure success N I G E R I A N P O R T S A U T H O R I T Y 18 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  19. REFORMS PROCESS – Contd… • Expression of Interest Dec 2003 • 110 Applications received • 94 Pre qualified and issued bid documents • 24 Concession transactions concluded, two (2) outstanding • First Hand-over – APM Terminals, 20th March, 2006 N I G E R I A N P O R T S A U T H O R I T Y 19 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  20. REFORMS PROCESS – Contd… • Delineate the ports into terminals and concession them to large independent Terminal Operators for 10 – 25 years. • Operators selected through transparent internationally competitive tenders N I G E R I A N P O R T S A U T H O R I T Y * Two outstanding Terminals yet to be concluded 20 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  21. PRE-REFORM SITUATION • Ageing Port infrastructure • Port design favoured the handling of loose shed cargo as against containers • Inadequate investment in equipment. Only two (2) Ship-to-Shore cranes were bought since 1978 in Lagos Port • Cumbersome and bureaucratic Cargo clearance • Excessive political pressure affecting operations • Skewed distribution of traffic resulting to over-use of infrastructure in Western Ports and under use of some facility leading to premature obsolescence in Eastern Ports N I G E R I A N P O R T S A U T H O R I T Y 21 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  22. NEW ROLES OF PRIVATE AND PUBLIC SECTORS • Private Sector (Terminal Operators) • Cargo Operations • Port Labour • Investment in equipment • Investment in terminal maintenance • Insurance of concession assets • Public Sector (NPA) • Port Planning, Licensing and Control • Port Development • Technical Regulations • Marine Services • Channel Management N I G E R I A N P O R T S A U T H O R I T Y 22 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  23. HANDOVER PROCESS • Conduct joint surveys of fixed assets. • Get inventory of cargo being handed to operators along with terminals • Settle employment and accommodation issues • Termination of existing contracts and agreements • Freeing the terminals of all other moveable assets not to be handed to operators • Address insurance requirements • Sale/transfer of spare parts consumables and moveable assets N I G E R I A N P O R T S A U T H O R I T Y 23 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  24. REFORM CHALLENGES • Downsizing port workers by 75% (about 9,000 • redundancies) • Dismantling casual docklabour system and Pay-off of • 13,000 Dockworkers • Financing severance packages (about US$400 million) • Programme of re-orientation and attitudinal changes N I G E R I A N P O R T S A U T H O R I T Y 24 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  25. REFORM CHALLENGES – Contd… • Preparing redundant workforce for absorption by the market place • Need for capacity building (training and retraining) particularly port employees and dockworkers • Shift from operator to regulator/landlord • Regulating the private operator N I G E R I A N P O R T S A U T H O R I T Y 25 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  26. FINANCIAL RETURNS • Estimated investment - Over US$1.0 Billion • Estimated income over a concession duration of • between 10- 25years: • - Commencement fees - US$44,200,000 • - Equipment sales - US$53,145,100 • - Lease fees - US$4,852,033,342 • Sub Total = US$4,949,378,442 • Projected Throughput fees – US$1,586,490,196.91 • Total Estimated Income = US$6,535,868,638.91 N I G E R I A N P O R T S A U T H O R I T Y 26 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  27. OPERATIONAL RETURNS • Reduced vessel waiting time • Reduced cargo dwell time • Increased cargo throughput • Improved berth occupancy • Improved security N I G E R I A N P O R T S A U T H O R I T Y 27 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  28. AMORTIZED PROJECTS • 25 no. amortized projects are presently at various stages of completion. • Total value of the projects is US$496,106,014.87 • Areas covered by the projects are: • Road construction • Berthing facilities • Dredging of Channels • Storage facilities N I G E R I A N P O R T S A U T H O R I T Y 28 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  29. BUILD OPERATE AND TRANSFER (BOT) PROJECTS • Port and Terminal Multiservices Ltd (PTML) Terminal – a Greenfield Development of RORO Berths 11/12 on 25yrs BOT arrangement. • 1st Phase: US$62,400,000.00 – Main Project • 2nd Phase: US$25,000,000.00 – Additional work (Berth 12, dredging and land reclamation) • Total investments: US$87,400,000.00 • MEL-SEAMENT Ltd – a berthing facility made of a trestle, 2no. Breasting and a mooring dolphins under construction, capable of receiving post-panamax vessel. Project cost = US$45,771,508.00 N I G E R I A N P O R T S A U T H O R I T Y 29 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  30. PERFORMANCE INDICATORS CARGO THROUGHPUT - PRE AND POST CONCESSION N I G E R I A N P O R T S A U T H O R I T Y 30 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  31. PERFORMANCE INDICATORS - Contd… VESSEL TRAFFIC - PRE AND POST CONCESSION OCEAN-GOING ONLY– EXCLUDE CRUDE OIL TERMINALS N I G E R I A N P O R T S A U T H O R I T Y 31 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  32. PERFORMANCE INDICATORS - Contd… - CRUDE AND LNG N I G E R I A N P O R T S A U T H O R I T Y 32 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  33. PERFORMANCE INDICATORS - CONT… CONTAINER THROUGHPUT (TEU) N I G E R I A N P O R T S A U T H O R I T Y 33 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  34. PERFORMANCE INDICATORS - Contd… VEHICLE THROUGHPUT N I G E R I A N P O R T S A U T H O R I T Y 34 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  35. PERFORMANCE INDICATORS - Contd… WAITING, TURN AROUND AND BERTH OCCUPANCY N I G E R I A N P O R T S A U T H O R I T Y 35 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  36. PERFORMANCE INDICATORS - Contd… APMT - AVERAGE TIME AT THE ANCHORAGE N I G E R I A N P O R T S A U T H O R I T Y 36 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  37. PERFORMANCE INDICATORS - Contd… APMT - BERTH PRODUCTIVITY (MOVES/HOUR) N I G E R I A N P O R T S A U T H O R I T Y 37 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  38. PERFORMANCE INDICATORS - Contd… APMT - CONTAINER THROUGHPUT (TEU) N I G E R I A N P O R T S A U T H O R I T Y 38 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  39. PERFORMANCE INDICATORS – Contd... APMT - CONTAINER THROUGHPUT (TEU) N I G E R I A N P O R T S A U T H O R I T Y 39 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  40. PERFORMANCE INDICATORS – Contd... N I G E R I A N P O R T S A U T H O R I T Y The emerging improvement shown by the performance indicators would lead to efficiency and ultimately lower cost to our customers and more revenue to the Nation. President, Federal Republic of Nigeria Umaru Musa Yar’Adua GCFR 40 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  41. SUMMARY CAPITAL INFUSION PORT COMMUNITIES OTHER STAKEHOLDERS N I G E R I A N P O R T S A U T H O R I T Y ENHANCED FACILITIES AND EQUIPMENT + TRAINING AND REORIENTATION More revenue Better service at least cost Preferred ports Generates more investment Promotes Trade ENHANCED EFFICIENCY 41 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

  42. N I G E R I A N P O R T S A U T H O R I T Y THANK YOU 42 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org.E-Mail:info@nigerianports.org

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