The Minister of Marine and Blue Economy, Gboyega Oyetola, revealed this in a statement while addressing the House of Representatives Committee on Privatisation on Thursday in Abuja.
He noted that the government has not fully reaped the benefits of port concessions due to inadequate infrastructure upgrades, with many ports nearing the end of their lifespan, hindering efficient operations.
The minister, represented by Permanent Secretary, Oloruntola Michael, emphasised that during the rehabilitation process, the ministry would strive to prevent complete port shutdowns.
He noted, “The position of the ministry is that any further concession at the ports should be predicated on the larger vision and desire to reinvest in the ports and modernise, reconstruct the deteriorating port infrastructures for effective, efficient and competitive performance.
“The investment required to achieve this is estimated in excess of $1bn. It is therefore expedient to ensure that any step to be taken is fitted within the long-term re-investment plan.
“The dream to achieve a modernised port is paramount and sacrosanct. The concession agreement to be entered into with any investor or operator must align with this vision. In this regard, the Nigerian Ports Authority is committed to the process and is expected to actualise this vision.
“The agency’s review will determine the approximate value of investment to be made for the ports and corresponding tenor to be granted to onvestor/operator.
“During the course of rehabilitation the ministry would ensure the ports are not completely shut down.”
Oyetola noted that in 2005/2006, the Federal Government embarked on ambitious port reforms aimed at revitalising Nigeria’s maritime sector.
The objectives were clear: to bolster operational efficiency, increase productivity, boost government revenue, attract investment, and facilitate technology transfer.
The reforms led to a comprehensive restructuring of the nation’s port infrastructure. The six port complexes in Lagos, Port Harcourt, Calabar, Onne, and Warri underwent a significant transformation, with the creation of 26 terminals.
Cargo operations, previously managed by the Nigerian Ports Authority, were transferred to terminal operators selected through a rigorous competitive bidding process.
Key to the success of the reforms was the Lease Agreements signed between the NPA and Private Terminal Operators, facilitated by the Bureau of Public Enterprises.
These agreements, spanning periods of 10 to 25 years, provided a stable framework for private investment and operational management.
He also said that under the adopted landlord model, the NPA retained ownership and administration of port lands while delegating operational responsibilities to private operators.
Oyetola noted that the five expired leases were initially granted a ten-year concession at Apapa, Tincan Island and Delta Ports.
He mentioned that five-year extensions were granted to terminal operators under Section 25 of the Port Act to compensate for budgetary constraints and the NPA’s failure to fulfil certain lease agreement obligations.
Other challenges highlighted included NPA’s inability to meet advertised vessel reception depths, shifts in government policies, lease property encumbrances, waterway insecurity, and deteriorated port access roads.
Oyetola emphasised that the extension initially expired in 2021 and was subsequently renewed twice for six-month periods.
He highlighted that terminal operators have now requested that the NPA renew the concession agreement, which has been forwarded to the ministry by the NPA.
“On examination of this request by the Ministry, it was observed that the government has not achieved the maximum benefits to be derived from the port concession due to inability to improve the port infrastructure to the desired standard for efficient operation, most of which have/or are approaching the end of their life span.
“Their investments in Nigerian ports over the past 15 years are deemed to be grossly inadequate to boost the port’s productivity, and the returns rendered to the government were mediocre at best according to The World Bank report Nigeria – Ports Concession Assessment Framework and the Crown Agents UK report NPA Concessios and Joint Venture Agreement – Final Report.”
Both reports also scrutinised the absence of a maintenance regimen aimed at preserving asset value in line with regular depreciation, resulting in decreased port productivity over time.
