• Thursday, June 13, 2024
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Nigeria to lose $1bn investment as government sets up parallel dry dock

Dry Dock

The recent plan by the Federal Government to set up another dry dock in another part of the Niger Delta region with $10 million contract to a Chinese company to begin feasibility study seems to rock stakeholders’ investments.

Nigeria thus stands to lose over $1 billion in already secured investments in the proposed Finima Dry Dock project as interested investors are said to be shocked by the latest development.

The announcement to this effect by the executive secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, and the minister of state for petroleum resources, Timipre Sylva, who said at the weekend that the government had awarded $10 million contract to China Harbour Engineering Company to start a feasibility study on setting up a dry dock in Brass, Bayelsa State, seems to send investors in the $1 billion Finima Dry Dock in Rivers State scampering.

BusinessDay gathers that the local partners in the Finima project went into meetings all through Monday and Tuesday after the minister’s announcement at the weekend.

Wabote had declared how the government had just engaged the Chinese company for the construction of a shipyard in Brass Island. In a statement in Abuja, Saturday, the NCDMB said the feasibility study for the project had commenced, adding that when completed, the shipyard would cater for the maintenance and repair services of cargo vessels, oil tankers, and Liquefied Natural Gas (LNG) carriers.

The NCDMB disclosed that there were currently over 20,000 ships working for the oil and gas sector in Nigerian waters, with an annual spend of over $600 million in the upstream sector to engage these vessels.

According to the NCDMB, it would provide funding for the feasibility study as part of its overarching mandate to domicile key oil and gas industry infrastructure and increase retention of industry spend.

The scope of the feasibility study, it explained, includes geotechnical and bathymetric surveys, conducting a market study, ascertaining an optimal construction scale, developing technical proposal and construction plan and estimation of the required investment to bring the project into reality.

It disclosed that the project’s schedule indicated that the site work would be executed within six months while feasibility study would be completed in four months.

Speaking at the meeting to kick off of the project, the minister stated that it would be executed by China Harbour Engineering Company, which he said had carried out similar projects across the globe as well as in Nigeria.

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Reacting, the investors’ forum in Port Harcourt, which has partners from around the world, said Tuesday night after their meetings that the Royal Royal HaskoningdHV of Holland had six years ago carried out same feasibility study for the same Federal Government (through the Nigeria Liquefied Natural Gas, NLNG) at about same cost ($10m) and that the project had progressed for five years at formative stages.
The investors wondered how two government agencies would be spending in excess of $10 million each on same, or likely project, located few nautical miles apart, serving same market.

Sources said the NLNG had signed non-disclosure deals with the investors so that all activities would progress without noise. It was gathered that a special purpose vehicle (SPV) was established to carry out the preliminary activities and secure financial and technical partners and government approvals with location and local memoranda of understanding (MoU) before going open. This is said to have lasted five years so far, and when they were about to file for government approval to start physical work, the same government announced it was starting a new dry dock in nearby Bayelsa State.

A source in the meeting, who is also the president of the Rivers Entrepreneurs and Investors Forum (REIF), Ibifiri Bobmanuel, confirmed the development and shock to the partners around the world.

Bobmanuel said the group through the SPV had already reached agreement with the Finima community and final MoU was awaited, if not for the Covid-19 disruptions, saying it was expected to be sealed in December 2020. The location of the project has since been chosen to be at Light House in Finima, Bonny Island of Rivers State.

The REIF president said: “The announcement by the Minister of Petroleum is a huge shock to the investors. We met all evening in Port Harcourt to file a letter to the Minister and bring him up to speed on this. We have made giant strides. We paid first official visit to the community in 2016 and paid second visit in 2019.”

On why the NLNG was mentioned by the Minister in the proposed Brass Dry Dock, Bobmanuel said the NLNG might have been roped into it, noting it takes between five and eight years to establish a world-class dry dock. “The process is very long and windy to set up a dry dock and get funding from international investors. Thus, you need to secure all necessary documentation including Federal Government approvals, which are key before you sign final MoU with your financial partners which we have finalized. This takes between five and eight years,” he said.

He also said it took a lot of time to choose a community most suitable, taking into account time-value of money, as he company, Royal Royal HaskoningDHV of Holland, was industry standard benchmark when it comes to the maritime industry. “Anybody can fact-check this. That must be why they were given the job to do the feasibility study for the Dry Dock by the NLNG in the first place which was completed in 2015.

“There is a checklist of things to do and we have been doing them one after the other. They are very thorough. They were paid to do the feasibility work and they did a good job at that in excess of $10m to do such a thorough job. They came from Holland to Port Harcourt to carry out the feasibility studies and Road Show.

“We have been courting investors and doing meetings following this up in many countries of the world, inspecting the best dry docks in the world. We have been meeting investors in the US, UK, China, etc. It’s not a process for unserious people and short-visioned people. Look, this is project of over $1Bn and we scouted round the world for serious investors.”