Inland Port Concession

Prepared by: Uzoma Nwakuche, Executive Director

uzoma@me.com

14 January 2014

22 Mbanugo Street, Ogbete Enugu +234 705 7200 0000

Scott Amede Engineering & Power Supply Ltd.

Executive Summary

ObjectiveOur objective is to source for technical and funding partners to

complete the construction of Oguta Inland Port; operate the

port by concession from NIWA; and operate a container barge

service from Degema Jetty (Atlantic Ocean) to Oguta Port

(approximately 150 km).

Brief History of the Project Oguta Lake is the second largest lake in Nigeria. It was the

Headquarters of British Royal India Company during the

colonial era. At that time, Oguta lake was an inland port utilized

for the exportation of palm produce from Nigeria to Europe.

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In 2001, Scott Amede Engineering Ltd. proposed a BOT

model for Oguta Inland Port to the National Inland Water

Ways Authority (NIWA). Rather than a BOT model, NIWA

decided to fund the construction and advertised the project

for public bidding. In 2009, Scott Amede finally secured the

N2.74 billion contract (lot 1) to build the port after many years

and three contract bidding rounds.

Lot 1 of the project is limited to construction of the port

buildings and quay structure only. It does not include

installation of cranes and equipment. Dredging of the Orashi

river that connects Oguta Lake to Degema Jetty has been

completed.

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FundingThe port contract has been hindered by poor funding from NIWA. Approximately N1.5 billion of the original contract

amount (N2.74) has been utilized on the project. NIWA has approved a contract revalidation, increasing the original

contract amount from N2.7 billion to N4.0 billion. This leaves approximately N2.5 billion to complete the port building and

quay structure; about N1.5 billion for cranes and equipment; and another N1.5 billion for container badges. N1.5 billion

is set aside for concession fees and operational capital. A total of N7.1 billion or approximately $45.8 million funding is

required for this venture.

Viability of the ProjectThere is a major drive by the Federal Government to de-congest Lagos port. It is anticipated that some container vessels

with bills of laden destined to owners in South Eastern Nigeria will berth at Degema Jetty and discharge into container

barges to Oguta port for customs clearing and collection. The business model is simple. Revenue is derived from fees

charged from port operation and transport of the containers from Degema Jetty to Oguta Port. The major challenge is

convincing the importers to utilize the inland ports despite the obvious cost benefits. The other challenge is to create a

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firm integration amongst the importers, shipping lines and the inland ports. It is a fact that the existing ports do not meet

the capacity of imported goods, as a result the ports are always congested. Inland ports will not only reduce congestion,

but reduce of the cost of inland transportation of goods by road.

The Bigger PictureNIWA awarded contracts to build 4 inland ports, namely, Onitsha, Oguta, Lokoja and Baro. Onitsha port utilizes the

dredged Niger river from Onitsha to Warri, while Baro and Lokoja inland ports open up access from northern Nigeria to

Onitsha. Although Onitsha port has been commissioned, there is yet no finalized concession agreement with any

interested parties. Our technical and funding partners maybe interested in appraising the bigger picture which is to take

over the 4 inland ports being offered for concession.

Operation of Oguta, Onitsha, Lokoja and Baro ports by one entity may provide the scale that the business model requires

as movement of goods by road is still the major form of transportation in Nigeria. Additional concession fees could be

waived so as not to heavily impact the proposed funding budget.

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Due DiligenceNIWA has agreed in principal to our proposal to source for technical and funding partners as earlier mentioned. Scott

Amede intends to collaborate with interested parties to conduct due diligence to determine the viability of the proposed

venture and will arrange meetings with NIWA as well as site visits to the inland ports, commissioned and under

construction.

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