At last, the Federal Government has accepted to review the concession agreement of Lilypond Terminal for another five years after the first 10 years concession expired two years ago. But the decision has generated a lot of rumpus among the maritime stakeholders.
Managing Director of Nigerian Ports Authority (NPA), Ms Hadiza Bala Usman, disclosed the decision to review the concession agreement when the management of the Infrastructure Concession Regulatory Commission (ICRC) visited her in the office in Lagos.
She charged all concerned with the working document for the review of the terminal’s agreement to speed up the processes that would allow for swift consideration and possible approval for a five-year renewal being sought for Lilypond. The NPA boss restated the need to fast-track the nation’s navigational channels so as to accommodate bigger vessels.
But in a sharp reaction to this decision, stakeholders opined that as a dry port, Lilypond cannot function independently unless it is tied to APM Terminals. APM Terminals Apapa is the largest container facility by capacity serving Lagos, Nigeria’s largest city and business centre. It is also the largest container terminal operation in West Africa, having doubled container traffic after concession began in 2006. It handles nearly 90 per cent of Nigeria’s inbound containers.
Following this debate, the President, National Council of Managing Directors of Customs Licensed Agents (NCMDLCA), and Managing Director, Eyis Resources, Lucky Amiwero, explained that Lilypond is an off-duck terminal and so must be linked to a wet port. He argued that if Lilypond is concessioned to function independently, it will not work, urging government not to embark on an impossible mission.
“Lilypond is an off-duck terminal. That means it has supply from a wet port. It must be linked to a wet port. APMT got the concession. They used Maerskline to get Apapa Bulk terminal because they wanted to control the transport value chain.
“APMT ran it for some time. But concession is not about making money for government. Concession should be able to look at why that thing was concessioned. There are reasons why a port is concessioned – to build infrastructure and to bring in modern facility. Concession is not a complete sell off, it is for a period of time.
“But NPA is looking at concession differently. Lilypond cannot work until it is tied to APMT. Lilypond was created by NPA as an off-duck terminal. It is an off-shoot of Apapa port and was created and concessioned to accommodate the overflow from Apapa port. But nobody monitored APMT and the concession agreement was not fulfilled. So, they abandoned the agreement and left.
“I was a member of the committee that recommended rail line for Lilypond. The terminal would not have had any problem if the authorities had taken our recommendation, which we did around 2001 and 2002. There would have been consignments leaving the ports for Lilypond to reduce the pressure from Apapa.
“Lilypond will not work because it is not a seaport. It is an off-dok process because it is supposed to be tied to APMT. So, there is need for them to go back to that concession. As a port expert, you cannot give that Lilypond out if it is not tied to a port,” he emphasised.
In the same vein, the Co-ordinator of Save Nigeria Freight Forwarders, Dr. Osita Patricks Chukwu, also saw the government’s plan to review the concession as an unworkable project.
According to him, before Lilypond will work, there must be a deliberate effort to make it work. He said that some cargoes must be destined for Ijora by shippers for it to have enough cargo to clear.
“Ijora terminal was a booming terminal before the concession. It was just after the concession that we began to see some conflicts of interest. Before Ijora will work, certain vessels will be destined for Ijora. Ijora is supposed not to be Tin Can Two. Ijora should be an extension of APMT. We all know that APMT has been on the frontline until they started having problems.
“Ijora cannot stand on its own because of the unavailability of vessel bank. Ijora still remains a dry port. It cannot obtain vessel on its own,” he said.
However, Lilypond is a container depot established as an overflow facility to accommodate containers that could not be accommodated by Tin Can and Apapa ports. But at the beginning of the economic downturn in 2015, activities in the terminal dropped to an abysmally low level.
Following the low business showing in the ports and the related maritime activities, the concessionaire withdrew from the agreement even before the 10-year contract could elapse. The terminal was concessioned in 2006.
According to the then manager of Lilypond Terminal, Mr. Tristram Denyer, his company withdrew from the agreement because of the protracted losses being incurred by the company as a result of poor availability of containers.
He said that even though the company had invested over $15 million about (N2.4 billion then) in developing the facility since it won the concession in 2006, the business model upon which the concession was granted could no longer be sustained.
The development, according to Denyer, occasioned a colossal monthly loss of over $5 million (about N800 million then), which was unbearable, hence the pull-out before the expiration of the 10 years concession agreement.
Since then, government has tried without success to make it functional. It tried to use the container depot for export-processing centre to boost agricultural export but the result was still not encouraging.