PPP as an anchor for diversifying the Nigerian economy
Lagos Container Terminals Concession as a Case Study
As at 2005, the Nigerian ports faced major challenges which made it one of the most inefficient ports globally. The average Ship waiting time before berthing was 21 days, vessel turnaround time was 5 days while dwell time for cargo was over 30 days. The ports had poor infrastructure (roads, rail, quay, buildings, equipment, and yard) and were heavily congested leading to insecurity and pilferage, delays in cargo clearance and inefficiencies in cargo handling largely due to manual processes. As a result of the challenges, the Federal Government of Nigeria in 2006, concessioned the ports to 25 Terminals Operators over a 25-year license period.
Across Africa, the Public-Private Partnership (PPP) model has become increasingly critical as both a funding and operational mechanism for social (e.g. hospitals and schools) and economic infrastructure such as ports, railways, roads and airports. The public partner is typically represented by the government at a national, state, or local agency level. The private partner can be a privately-owned business or consortium of businesses with a specific area of expertise.
PPP is applicable to medium to long term management contracts with investment requirements which may include funding, planning, building, operation, maintenance and divestiture. PPP arrangements are particularly useful for large complex infrastructure projects that require highly-skilled workers and a significant capital outlay to execute. The PPP model is also useful in countries that require the state to legally hold an interest in any public infrastructure but permits a level of private sector participation.
Using the Lagos Container Terminal as a Case Study, this publication analysis the impact of the Concession of the Ports on the Nigerian economy. The estimated revenue to government from the Concession of the Ports is put at $6.54 billion over the concession period. Such PPP models can be adopted in other sectors of the economy to improve infrastructure and accelerate growth.