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AFRICAN PORTS PRIVATISATION & CONCESSIONING OF PORT SERVICES NIGERIAN - EXPERIENCE N I G E R I A N P O R T S A U T H O R I T Y 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 15TH -18TH December, 2008 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 1 OUTLINE OF PRESENTATION History N I G E R I A N P O R T S A U T H O R I T Y Mandate Functions Facilities Initial Challenges Response to Challenges Need for Reform Renewed Initiatives Reform Objectives HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 2 OUTLINE OF PRESENTATION – Contd… Reform Process N I G E R I A N P O R T S A U T H O R I T Y Pre-reform situation New Roles Handover Process Reform Challenges Financial Returns Operational Returns Projects –Amortized, BOT Performance Indicators HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 3 HISTORY OF PORT OPERATIONS IN NIGERIA N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 4 HISTORY OF PORT OPERATIONS IN NIGERIA - Contd… N I G E R I A N P O R T S A U T H O R I T Y 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. HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 5 HISTORY OF PORT OPERATIONS IN NIGERIA - Contd… N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 6 HISTORY OF PORT OPERATIONS IN NIGERIA - Contd… N I G E R I A N 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 P O R T S 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 A U T H O R I T Y HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 7 MANDATE OF THE AUTHORITY N I G E R I A N P O R T S A U T H O R I T Y 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. HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 8 FUNCTIONS OF THE AUTHORITY Provide, maintain and operate ports facilities N I G E R I A N P O R T S A U T H O R I T Y 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 Provide safe and navigable channel Provide towage, pilotage services and appliances for salvage of life and property/prevention of fire. HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 9 FUNCTIONS OF THE AUTHORITY – Contd… Offer cargo handling and storage services N I G E R I A N P O R T S 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 A U T H O R I T Y HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 10 PORT FACILITIES N I G E R I A N P O R T S A U T H O R I T Y Lagos Port Complex Tin Can Island Port Complex Rivers Port, Port Harcourt Onne Port Complex Calabar Port Delta Ports, Warri HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 11 CHALLENGES N I G E R I A N P O R T S A U T H O R I T Y Rapid Economic Growth Containerization Changes in vessel sizes & architecture Globalization Finance HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 12 RESPONSE TO CHALLENGES N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 13 NEED FOR REFORM Technical Committee on Privatization and Commercialization Decree 25 of 1988 N I G E R I A N P O R T S A U T H O R I T Y 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 Inconclusive implementation – Later revised HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 14 RENEWED REFORM INITIATIVE 2001, World Bank and Federal Government initiative N I G E R I A N P O R T S A U T H O R I T Y Diagnostic Study by Royal Haskonning/Dynamar/Challenge International Associate to: Update existing sector knowledge Identify key issues Generate viable options for reform HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 15 RENEWED REFORMS INITIATIVE – Contd… N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 16 REFORM OBJECTIVES To increase efficiency in port operation N I G E R I A N P O R T S 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 A U T H O R I T Y HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 17 REFORMS PROCESS Appointment of CPCS Transcom as adviser to Bureau of Public Enterprise with responsibilities to: N I G E R I A N P O R T S A U T H O R I T Y • Reform, Restructure and Concession National Council on Privatization Presidential Committee on Port Reform • Guide the process • Dialogue with stakeholders • Ensure success HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 18 REFORMS PROCESS – Contd… N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 19 REFORMS PROCESS – Contd… N I G E R I A N Delineate the ports into terminals and concession them to large independent Terminal Operators for 10 – 25 years. Operators selected through transparent internationally competitive tenders S/NO Port No. of Concessions 1. Lagos Port 6 + 1 ICD P O R T S 2. Tin Can Island & Lilypond 4 + 1 BOT 3. Port Harcourt Port 2 4. Calabar Port 3 A U T H O R I T Y 5. Warri/Koko Ports 5 6. Onne Port 3 TOTAL 24+1 BOT * Two outstanding Terminals yet to be concluded HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 20 PRE-REFORM SITUATION N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 21 NEW ROLES OF PRIVATE AND PUBLIC SECTORS • • • • • N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 22 HANDOVER PROCESS N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 23 REFORM CHALLENGES N I G E R I A N P O R T S A U T H O R I T Y • 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 24 REFORM CHALLENGES – Contd… N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 25 FINANCIAL RETURNS N I G E R I A N P O R T S A U T H O R I T Y • Estimated investment - Over US$1.0 Billion • Estimated income over a concession duration of between 10- 25years: - Commencement fees - Equipment sales - Lease fees Sub Total = US$44,200,000 US$53,145,100 US$4,852,033,342 US$4,949,378,442 • Projected Throughput fees – US$1,586,490,196.91 Total Estimated Income = US$6,535,868,638.91 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 26 OPERATIONAL RETURNS N I G E R I A N P O R T S A U T H O R I T Y • Reduced vessel waiting time • Reduced cargo dwell time • Increased cargo throughput • Improved berth occupancy • Improved security HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 27 AMORTIZED PROJECTS N I G E R I A N P O R T S A U T H O R I T Y 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 28 BUILD OPERATE AND TRANSFER (BOT) PROJECTS N I G E R I A N • 1st Phase: US$62,400,000.00 – Main Project • 2nd Phase: US$25,000,000.00 – Additional work (Berth 12, dredging and land reclamation) P O R T S A U T H O R I T Y Port and Terminal Multiservices Ltd (PTML) Terminal – a Greenfield Development of RORO Berths 11/12 on 25yrs BOT arrangement. 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 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 29 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 IMPORT (MT) EXPORT (MT) THROUGHPUT (MT) 1999 15,751,331 6,481,605 22,232,936 2000 19,230,496 9,702,384 28,932,880 2001 24,668,791 11,271,901 35,940,692 2002 25,206,380 11,780,861 36,987,241 2003 27,839,293 11,926,652 39,765,945 2004 26,907,075 13,909,872 40,816,947 2005 29,254,761 15,697,312 44,952,073 2006 31,937,804 17,235,520 49,173,324 2007 33,722,488 20,918,560 54,641,048 2008 Jan-Sept 30,803,353 18,720,889 49,524,242 YEAR HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 30 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 NO. OF VESSELS TOTAL GRT 1999 3,123 32,911,941 2000 3,333 44,432,370 2001 3,745 56,106,345 2002 3,500 53,267,921 2003 3,661 60,622,666 2004 3,606 61,384,221 2005 3,692 60,541,810 2006 3,689 63,267,047 2007 4,646 83,197,856 2008 (Jan-Sept) 3,399 67,095,080 YEAR HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 31 PERFORMANCE INDICATORS - Contd… - CRUDE AND LNG CRUDE OIL YEAR N I G E R I A N P O R T S A U T H O R I T Y NO. OF TANKERS GRT OF CRUDE TANKERS LIQUEFIED NATURAL GAS CRUDE LIFTED (MT) NO. OF TANKERS GRT OF LNG TANKERS LNG LIFTED (MT) 1999 656 62,691,842 92,463,264 46 650,269 1,503,398 2000 757 80,627,950 102,930,079 130 2,887,141 5,953,567 2001 731 60,550,031 100,732,875 149 10,458,086 7,154,965 2002 634 64,302,640 86,284,036 133 9,745,230 8,084,749 2003 657 73,216,175 85,797,681 173 14,690,798 9,292,832 2004 924 100,564,659 117,055,427 220 17,569,209 11,529,827 2005 902 94,984,566 112,872,821 215 17,072,976 11,264,515 2006 840 70,093,870 106,403,640 243 20,628,015 13,284,612 2007 817 90,222,365 105,986,381 344 29,562,631 19,076,748 2008(JANSEPT)* 578 63,825,200 73,750,000 292 22,214,870 21,820,809 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 32 PERFORMANCE INDICATORS - CONT… CONTAINER THROUGHPUT (TEU) 120,000 2006 N I G E R I A N 2008 100,000 80,000 TEU 60,000 40,000 P O R T S A U T H O R I T Y 2007 20,000 JAN FEB MAR APR MAY JUN JUL AUG SEP SEPT OCT NOV DEC OCT NOV DEC TOTAL YR JAN FEB MAR APR MAY JUN JUL AUG 2006 61,869 45,844 59,693 41,928 50,412 36,605 63,073 67,732 44,868 70,030 51,999 62,162 656,215 2007 41,873 58,630 52,032 56,815 76,368 39,001 75,535 76,485 67,578 57,265 62,672 71,286 735,540 2008 80,628 67,025 84,600 97,633 74,072 74,261 73,791 89,599 101,500 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 743,109 33 PERFORMANCE INDICATORS - Contd… VEHICLE THROUGHPUT MONTH N I G E R I A N P O R T S A U T H O R I T Y 2006 2007 2008 JAN 7,958 12,166 11,485 FEB 5,859 16,469 9,425 MAR 7,076 9,194 11,130 APR 8,321 14,205 13,826 MAY 11,898 15,950 10,442 JUN 6,413 15,859 13,059 JUL 9,100 6,347 17,135 AUG 13,851 13,084 13,623 SEPT 10,483 15,595 19,208 OCT 9,571 10,896 NOV 10,154 13,084 DEC 11,497 24,319 TOTAL 112,181 167,168 119,333 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 34 PERFORMANCE INDICATORS - Contd… WAITING, TURN AROUND AND BERTH OCCUPANCY YEAR N I G E R I A N P O R T S A U T H O R I T Y WAITING TIME TURN AROUND TIME BERTH OCCUP. (%) 1995 0.47 6.17 27.76 1996 0.46 6.34 36.68 1997 0.47 6.71 36.73 1998 0.39 7.31 41.39 1999 0.36 6.31 47.09 2000 0.34 7.01 44.76 2001 1.27 7.91 51.78 2002 3.99 11.34 56.58 2003 2.17 7.89 52.75 2004 1.44 6.44 50.93 2005 2.60 7.40 49.70 2006 2.00 6.10 46.93 2007 1.00 4.70 47.43 Jan-Sept ‘08 3.72 40.24 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 35 PERFORMANCE INDICATORS - Contd… APMT - AVERAGE TIME AT THE ANCHORAGE 30 N I G E R I A N P O R T S A U T H O R I T Y AVG. WAITING TIME (DAYS) 25 20 15 2006 10 2007 2008 5 0 JAN JAN FEB FEB MAR MAR 2006 APR APR MAY MAY JUN JUN JUL JUL AUG AUG SEP SEP OCT OCT NOV DEC NOV DEC 18 18.9 24.2 6.4 2.4 1.3 0.6 0.1 0.9 1.7 1.7 3 2.7 5.5 1.5 2007 0.3 0.5 0.5 0.4 1 0.4 2008 1.1 0.6 2.0 1.0 1.3 4.2 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 36 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 AVG BERTH MOVES/HOUR 20 18 16 14 12 10 8 6 4 2006 2 2007 2008 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC MONTH JAN FEB MAR 2006 APR MAY JUN JUL AUG SEP OCT NOV DEC 6.45 5.02 5.9 9.6 9.3 10.8 14.4 15.8 15.8 11.3 10.6 15.9 2007 16.3 14.5 13.8 14 12.6 14.9 14.4 14.2 14 2008 18.2 15.2 14.6 14.7 15.6 14.5 15.6 14.2 14.2 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 37 PERFORMANCE INDICATORS - Contd… APMT - CONTAINER THROUGHPUT (TEU) 60000 P O R T S A U T H O R I T Y 50000 40000 TEU N I G E R I A N 30000 20000 10000 2006 2007 2008 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC MONTHS JAN FEB MAR 2006 APR MAY 18,723 22,069 22,720 38,455 34,959 34,034 43,221 31,649 38,283 27,086 41,520 42,195 39,721 36,745 38,105 45,719 2007 37,052 37,011 32,925 28,041 39,930 2008 44,783 34,233 48,077 48,318 49,273 JUN 37,361 JUL 40,247 AUG 49,739 SEP OCT NOV DEC 51,740 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 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 YEAR TEU 500,000 400,000 300,000 TEU 2006 284,113 2007 446,050 200,000 403,771 100,000 JAN-SEPT. 2008 - 2006 2007 JAN-SEPT. 2008 HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 39 PERFORMANCE INDICATORS – Contd... N I G E R I A N P O R T S 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 A U T H O R I T Y HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 40 P O R T S A U T H O R I T Y OTHER STAKEHOLDERS N I G E R I A N PORT COMMUNITIES SUMMARY CAPITAL INFUSION More revenue Better service at least cost Preferred ports Generates more investment Promotes Trade ENHANCED FACILITIES AND EQUIPMENT + TRAINING AND REORIENTATION ENHANCED EFFICIENCY HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 41 N I G E R I A N P O R T S THANK YOU A U T H O R I T Y HEADQUARTERS: 26/28 MARINA, LAGOS, NIGERIA Website: www.nigerianports.org. E-Mail: [email protected] 42