Q: Could you please introduce yourself, while also letting us into your background?
Aswani: I am Haresh Aswani, managing director of Lekki Port, and we own a couple of businesses in Nigeria. When we first came into the country we started a few things before we finally decided on focusing on manufacturing and services.
We eventually found that we could specialise in manufacturing, so my task was to help restructure the group to better focus on manufacturing. One of the key businesses we have developed from zero base, which most of you would be knowing by now is Indomie; it is interesting to see how we created a product that was not consumed here to make it a staple that is loved and now consumed by people all over Nigeria, and is gradually extending to the entire West Africa.
Having being in Nigeria for a while now, what would you say about the business environment?
Aswani: Well, it has been challenging, but at the same time very rewarding in a way that it is very lucrative. If you know how to go about it, if you focus on your business with the attention it requires, you can achieve anything you want. I have found that because we have focused on a few businesses, each of our businesses are number one in their own category. For instance noodles, carpets, our logistics business; also our bleach product, Hypo, is also a firmly strong brand. So we always strive to be number one at all times, no matter how challenging it is and Nigeria offers a lot of good potential.
Many businesses have come and gone, and there have been quite a lot of complaints about the harsh environment. What strategies did you adopt, that has kept you over the years and also done well to put you ahead of your peers?
The one key thing we did was to look at Nigeria as a long-term investment. Other businesses came here with short-term or medium-term concept/plan, but we did not. I would give you an example with the Indomie business. During the initial years that we came in, we lost money, it then came to a point, when we were deciding, if we should carry on or not. But with little patience and hard work, we broke even and things changed. Any potential business must look at Nigeria as long-term venture at the starting point, if you do, you would never regret it.
Not many investors would delve into a project with such a magnitude as the Lekki Port; what is the rationale behind the project or on what basis is the idea founded?
Initially, we got some investors many years ago to try and create a petrochemical industry but it didn’t work out because we couldn’t get gas supply. Until now we are still having difficulties getting gas supplies. So as at that time, His Excellency, President Obasanjo told us we could build a port here.
Meanwhile, prior to that time, he had been to Singapore and saw the port development in Singapore and said ‘I want something like this in Nigeria’.
So we studied for about two and a half or three years and we looked at the viability and we realised that Nigeria actually needs another port- it does need capacity.
So we looked around and we found the ideal spot to be just outside Lagos.
The reason we decided to build there is because the location is good; location matters because we have the road infrastructure and a large city to support it.
Eventually, we quickly understood that this will become the hub for West Africa and our aim is to make this serve West Africa. So our capacity in the first stage will be 1.5million containers per year, eventually going to 2.7 million and ultimately, we hope to grow to 4.5million containers a year. This, we intend to do, to meet the deficit demand that we have now because there is a huge capacity gap and that gap, we feel will be 1.5 million in the next three years.
There is already a gap that we now estimate to be about 600,000 containers per year. Now, this means shippers that want to come here, don’t have the space to do so now and the size of ships that come here are small which is about 2,000 twenty-foot equivalent units (TEUs). What we intend to do is dredge to 16metres, which will allow us to bring in 8,000 to 10,000 TEU vessels which means that, when you bring a large size ship, you have optimum economies of scale and the overall cost in the value chain goes down.
How much are you going to be sinking into the project, in terms of total cost?
The total cost is estimated at about $1.5 billion, of which the equity is about $450 million and the balance we intend to raise in debt and we are in the process of doing that now. It (the delay) is more of paper work than anything else.
We have been interfacing with the banks for the last one year, they have come to investigate the project, they have seen the site, and done their due diligence and they are very comfortable with the project. The stage we are in now is structuring the terms, which may take another month to agree upon.
What is the role of Lagos State government in this project?
Lagos state government is participating with 18.15 percent funding while Nigerian Ports Authority (NPA) is 20 percent, and the balance are from investors, which includes us, and a consortium from oversees and some Nigerians. Lagos State has brought its money, we have also brought our money in, and we are now waiting for NPA to do so.
Also we are hoping that the area will be developed in a structured manner, so we are creating what is called a Master Plan. We are also working closely with the Federal Ministry of Works and Lagos State Ministry of Physical Planning and Works Ministry to develop new roads eventually. The existing roads are good what they need to do is expand and the more important thing is to maintain these roads in the future.
Are you going to be sourcing for funds locally or from foreign banks for the project?
We are approaching both foreign and local banks, they include African Development Bank, African Finance Corporation, Standard Chartered Bank, European Investment Bank (EIB), Stanbic Bank, FCMB and Standard Bank.
The project is a huge one with varying technicalities; who are the building consultants/partners working towards its realisation and how far has the project gone/how close it is to completion?
The building consultants are Louis Berger Group, they have done some jobs in Africa. They are probably rated as number three in America or in the world as contracting consultants. What they do is to carry out a supervisory role, monitoring whether the contractor performs or develops according to specification. We and NPA have our own engineers to monitor this. So it is a three-pronged approach where there are three sets of engineers supervising the project.
The project is scheduled to take 39 months, approximately three and a half years. They’ve started work, if you go to the site you will see how much work has been done. Rating progress in percentage, the work is about 5 percent complete. They would do the dredging and the break water early next year. If you go to site now, you will see the trucks moving the rocks; the site has been cleared, they have carried out soil tests, soil investigation and other required assessments.
What would be the benefits of this project to trade in Nigeria, West Africa and Africa as a whole?
The benefits to cargo trade business in Nigeria and West Africa would be unprecedented because revenue inflows to the economy will be huge, generating over an estimated $360 billion and creation of jobs will also be great, both direct and indirect means of employment as it would create over 163,000 new jobs in the long-run.
It is worthy of mentioning that the sub-concessioners, ICTSI, who will handle the port are bringing in some of the most knowledgeable people and modern equipment in the industry, so nothing is being spared in ensuring that Lekki Port, becomes the gateway into the West African region and that it would be one of the most efficient and modern maritime facilities in Africa that will cater to containerised, liquid and dry bulk cargo par international standards.
Number two, most of West Africa import their products and right now, where do large ships go? They go to locations in Europe or South Africa, they drop their goods there, they get feeder ships to bring them over to Nigeria. Why should we be doing that? So we have created a location that is sufficient to meet our capacity demand at our ports and for goods to move thoroughly in West Africa.