Emmanuel Onwadi is the Director, Transport Infrastructure Department at the Infrastructure Concession Regulatory Commission (ICRC). In this Interview with Oluyinka Onigbinde he speaks on the role of ICRC in the development of dry ports and deep seaports in the country.
Briefly, what is the role of the ICRC?
What the ICRC is set up to do is to ensure that projects are viable and bankable to be able to meet the obligations and also to ensure that social and economic benefits derivable from projects are met.
What’s the update on the Dala Inland Dry Port and what role is ICRC playing to ensure that the dry port comes alive?
The Dala Inland dry port was one of the very early projects in Kano that were approved by the Nigerian Shippers’ Council (NSC) and it is as far back as 2006/2007. However, for some reasons the projects did not move, some of the reasons were based on not being able to get to ‘financial closure’ stage which was very key; meaning that they try to get investors to put in money was a challenge, there were challenges with the rail connectivity because the survival of any inland dry port is the effectiveness of the rail system, the rails are not link to the port, so the way to make it work is to ensure that there is steady safe and reliable rail transport system that connects intermodal transport system, so basically you have that situation lacking.
So, those are the major challenges, the other challenge is to say probably you wanted to truck those cargoes and move them from the seaport to Kano; you know what will be the safety of those cargoes, because what it means is that when the goods arrive Lagos or the seaport, you just move them on trucks straight to Kano and then you do your clearing there.
And then, for some of the inland dry ports, there are issues of title, payment of compensation etc, don't forget that at that time too the ICRC was not in existence. As a matter of fact, the board of ICRC was inaugurated in 2008 and operations started in 2009, so ICRC was basically not in existence at this time, so those projects could not start at that time. So when ICRC came, we try to look at those projects. From time to time; the Shippers Council approaches the ICRC to see how the projects can be brought back to life and with respect to Kano, recently we are informed some few weeks ago about the initial investor which is Dala, so they informed us about the new investor who wanted to partner with them on the project and don't forget that this project has already been approved by the government, and a contract signed with the concessionaire; so when they approached us we said now that there's a new law, what it means is that you must abide by the law of the land as at that time, so we are agreed that they have to do four things, one of them is to look at the concession agreement that was signed and then see how that can be properly amended, the other one is to determine who the core investors are and do due diligence on them, to determine their claim for financial muscle and the ability to invest in it, the other one is to determine how far the state government has gone with the provision of access road to the port.
Is that supposed to be the risk of the state government?
Yes, that’s supposed to be the risk of the state government; they bear to take that risk, provide the capital expenditure to develop that road to link the dry port, at the same time we wanted to know the plans of government to link that port with rail line.
You are aware that government is already working on the railway modernization plans which also includes the Lagos- Ibadan-Kano and all those axis, presently the Lagos -Ibadan is almost over 80% complete, but the one from Ibadan straight up to Kano, Kaduna and other places, which will actually mean that this is where the cargo will yield in making that port viable was not ready, so we needed to know what plans that will be put in place to do that, so those are some of the issues that we needed to solve. At the same time too, since they are bringing in new investors; they needed to go back to the Corporate Affairs Commission to see if they can amend the initial Special Purpose Vehicle, so that is as far as ICRC is doing in making sure the viability was done, what we did was that we asked them to produce another business case; you agree with me that the business case that was produced in 2006 must have become obsolete; so many thing must have changed; the capital expenditure must have been different, even in the design that would have been new improvement in a design and all that.
Have they been able to provide the Full Business Case?
We have engaged the consultant who is presently working with them to produce the full business case, so when they produce the full business case, it will be sent to the small committee that was set up within the ICRC and the various stakeholders including the state government, investors the ministry of finance, and of course Shippers Council and the ministry of transportation will then look at the full business case and ensure that there is proper negotiation, because they have to agree now as to so many areas in terms of control, in terms of share of profit, in terms of technical roles, and some administrative work that need to be put in place, we believe that once that is accomplished, we will then carry out due diligence regarding the proper status of the site.
What is the level of work carried out so far at the Dala Port?
If you go to the site presently, I don't think there is much. I'm talking about the current location, they needed to develop the stacking areas, develop some platforms, create the administrative block and all that have not been put in place, so the investment that will be brought in by the new core investor will help to address that.
So after this, what will ICRC do?
What the ICRC will then do is to make sure that we certify the full business case and then make it ready to go to the Federal Executive Council (FEC), FEC according to the ICRC Act is the only body that has the power to approve the PPE course concession at the Federal level in Nigeria, that is according to ICRC Act of 2005. I want to believe that once that is approved, the parties can then sign commercial contract after which, we will then do what with call FDD, FDD means Financial Due Diligence, the Financial Due Diligence will mean us speaking to their lenders because they have to get to what we call Financial Closure, don't forget that initially they will have to get to Commercial Closure, Commercial Closure means that they will be signing the commercial terms; they will be signing the constitutional agreement, commercial terms include things like your retirees that will be paid and other different aspect that will be done. However, Financial Closure means that you have met all the conditions, provisions necessary by the concessionaires.
Apart from the Dala Dry Port, are there any other dry ports that are coming on stream?
Yes, we are working on some, we have the Dagbolu the one in Osun state, then of course you know that by the time the Kano one was approved; they approve about five or six of them, we have the Kano Dala Dry Port, Isiala Ngwa in Abia state, already the government of the state is speaking with ICRC and few other agencies to see how they can attract investment on that, we also have the Jos inland depot we also have that of Ibadan, however that of Ibadan has gone to procurement, we are doing the negotiation now and is already with the CRCC, we have issued the certificate of compliance for the OBC, the OBC is the Outline Business Case after which we have gone through the programme and process and we arrived at the preferred bidder which is the CRCC; now we are negotiating with the CRCC, ICRC, Ministry of Transport, Ministry of Finance, Oyo state government, the advisers because Shippers Council have to procure a transaction adviser and of course ICRC we have been working on negotiation, once that is done we will issue certificate of compliance, thereafter once that is done we will then go to FEC by the Ministry of transportation to get the approval and then we can sign the commercial contract, a team has also carried out due diligence on the CRCC to ascertain that they have the capability. Also we have a private one called the Ames Edo Inland dry port, we are aware that the Ministry of Transport has given them a provisional license to put the necessary things in place for the commencement of operation.
Discussion about this post