Nigerian Port Concessioning, 10 years of Port Reforms

In 2016, the Nigerian Ports Authority (NPA) took stock of the 10th anniversary of Port reforms in Nigeria amid assurances by the Minister of Transport, Mr. Rotimi Amaechi, that a comprehensive audit of the concessionaires’ operations would soon be carried out to know whether to review their agreement with NPA, especially those whose tenure expires this year.

The Nigerian economy accounts for about 70% of all seaborne trade in the West African sub-region and yet, the system of seaports, established in 1921, had not undergone any systematic process of re-development until the concession programme of port reforms, which commenced in 2000 and was concluded in 2006.

The concessioning programme with concession terms ranging from 10-25 years brought into existence the current system of private port operators in Nigeria, namely Lagos Port with 7 concessionaires, Lagos Tin Can Island Port with 4 concessionaires, Rivers Port (Port Harcourt) with 2 concessionaires, Delta Port Complex with 5 concessionaires, Onne Ports (Federal Lighter Terminal & Federal Ocean Terminal) with 4 concessionaires, Calabar Port with 3 concessionaires.

The concession system has resulted in compliance with international standards, particularly the International Ship and Port Facility Security Code (ISPS Code). Security compliance bench-marking to international regulations and elimination of a multiplicity of poorly coordinated federal law enforcement and security operatives, has also served to curb the incursions of unauthorised personnel within the port; along with the several vices long associated with the Nigerian ports, namely, pilferage, bribery and unscrupulous labour and stevedoring practices (including excessive charging). Additionally, plant and equipment inefficiencies and inadequacies have been minimized.

Significant gains have been made as a result of the concessioning such as: shortened turn-around time for ships; significant reduction of costs, seaport congestion, demurrage, overtime cargo and complaints of untraceable or missing cargoes; the rehabilitation/replacement of cargo-handling plants and equipment owned by the Nigerian Ports Authority (NPA) which were hitherto mostly unserviceable.

Nevertheless, it hasn’t been all smooth sailing, with concessionaires, who spoke under the aegis of the Seaport Terminal Operators Association of Nigeria (STOAN) in commemoration of 8 years of port reforms in 2014, cited ills affecting the effective and efficient running of the nation’s seaports to include inadequate power supply and incessant removal of management of government agencies. Others are arbitrary arrest of vessels at berth and attendant consequences, friction among maritime statutory agencies due to overlapping functions and lack of national carrier capacity for the United Nation Conference on Trade and Development (UNCTAD) 40:40:20 liner code.

STOAN have also recently cited, further challenges in need of attention, namely, inadequate provision of pilotage facilities, which reduces berth occupancy and utility rate; irregular sweeping of the Harbour bed, thus reducing draft and endangering vessels berthing; insecurity of vessels at the anchorage and water front of the Harbours and inconsistent cargo reception and release processes in the terminal together with associated delays.

Infrastructure Investment and the Diversification of the Nigerian Economy in 2016

Firm announced as Legal Advisors to Rendeavour Lagos Project

F.O. Akinrele & Co has been appointed by Rendeavour, Africa’s leading urban developer, to provide comprehensive legal structuring and infrastructure advice to the Rendeavour Lagos Project.

The Rendeavour Lagos Project is a major infrastructural undertaking in Lagos State and falling within a core practice area of the firm. The Rendeavour Lagos Project involves a landmark mixed use land development scheme on 200 hectares of land in the north-west quadrant of the Lekki Free Trade Zone (“LFTZ”) in Lagos State, Nigeria. This is being executed via a Public-Private Partnership (“PPP”) joint venture with the Lagos State Government (“LASG”).

F.O. Akinrele & Co’s advisory work is multifaceted and includes negotiation of land rights and title; generation and evaluation of interrelated project documentation and regulation, structuring of investment vehicles including special purpose vehicles (SPVs), joint ventures (JVs) and public private partnerships (PPPs).

The Nigerian Petroleum Sector 2016 Third Quarter Year Review

In our 2016 third quarter year review, we examine specific challenges confronting the Nigerian oil and gas sector as it continues to be affected by global externalities in 2016.

This year, the Nigerian petroleum sector continued to confront the downturn in global crude oil prices since the third quarter of 2014. The resultant slowdown in upstream exploration funding and investment is currently having an impact on oil well exploration and developmental programs. Equally, the power sector has had to confront interrelated challenges mostly emanating from supply shortages and gas pricing, the preferred fuel for power.

As NNPC has undergone much-welcomed restructuring in 2016 and Nigeria, in its capacity as an OPEC member continues to engage with fellow OPEC members in addressing global crude oil pricing; industry experts predict that funding and investment in the Nigerian petroleum sector will be positively influenced in the medium to long term if also accompanied by regulatory certainty and reform.

However, the short-term key existential and overriding challenge is militant activity. Since February 2016, midstream infrastructure facilities have come under incessant attack and vandalism by the new militants in the Niger Delta, triggering force majeure on production streams, bringing Nigeria’s production down to 1.2m-1.6m barrels per day for prolonged periods from the 2016 budget production estimate of 2.2m barrels per day and reducing the crude oil feed stock to local refineries.

The former government (2011-2015) had despite the news of continued pipeline vandalism, engaged in a militant amnesty programme substantially reducing the disruptions to industry facilities and enabling production to go back up to previous peaks of approximately 2.5 million barrels per day. Nevertheless, the gains of the amnesty were undermined by the revelation in 2013 that crude oil theft was costing Nigeria between 150,000-400,000 barrels per day.

The present government now seeks to re-evaluate the militant amnesty programme and address key Niger Delta security and environmental remediation issues through the establishment of a Joint (Army-Navy-Airforce) Task Force and the inauguration of the $1 billion Ogoni fund in February 2016 for the environmental restoration of Ogoni lands. The NNPC is also strengthening its collaborations with the Nigeria Security and Civil Defence Corps (NSCDC) to better protect its oil installations/pipelines in the country. In NNPC’s monthly financial and operations reports since September 2015, it has prioritised pipeline security reforms that would ensure reduction in crude oil theft as well as address the loss of other petroleum products.

To date, the NNPC continues to strive to fulfil the mission statement in its monthly report for September 2015 that “A comprehensive reform of the pipeline security situation will unlock several industry upsides, including improved upstream oil production due to reduced pipeline disruptions, improved refinery utilisation due to increased crude oil feed from restored pipelines, and reduction of crude/product losses”.

Joachim Okere Is Appointed Partner

Joachim Okere is appointed Partner (Litigation and Dispute Resolution Practice Group). He joins longstanding Partners, Mr. Adamu Usman (Partner and Head of Banking & Capital Markets and Corporate Practice Group) and Mr. OlumideAju (Partner, Litigation and Dispute Resolution, Practice Group).

Federal Government & States Over Sovereign Wealth Fund

The decision of the Federal Government of Nigeria to establish a National Sovereign Wealth Fund (NSWF) has been greeted with divergent commentaries from various quarters especially from State governments as well as financial and social commentators.

Already a bill for the establishment of the Nigerian National Sovereign Wealth Fund has been sent to the Legislative arm of government as an executive sponsored bill while a seed capital of one billion US Dollars ($1 billion) has been proposed and set aside for the commencement of the Fund.


A Sovereign Wealth Fund (SWF) is an investment fund owned by a sovereign state/nation with the mandate to invest in financial assets such as stocks, bonds, precious metals, property and other financial instruments. However, the objectives might include providing liquidity stabilization funds as well as the funding of vital economic infrastructure projects within the sovereign state. The structure and scope of investments in a sovereign wealth fund generally depend on the circumstances of each nation as well as the enabling law however Sovereign wealth funds usually have long-term investment focus. The need for the SWF is that countries through the SWF diversify their revenue streams by devoting a portion of its reserves to an SWF that invests in the types of assets which act as shields against systemic risk, and in the case of Nigeria, against oil related risk.


In view of the seed capital of one billion US Dollars ($1 billion) from the ‘Excess Crude Account, Governors of the 36 States of the Federation commenced an action against the Federal Government before the Supreme Court (Nigeria’s Apex court) over plans to transfer $1 billion from the “Excess Crude Account” to a new a new account to be known as the “Sovereign Wealth Fund.

A seven-man panel of the court, headed by the Chief Justice of Nigeria, CJN, Justice Dahiru Musdapher, has now assumed jurisdiction of the legal dispute following a breakdown of an out-of-court mediation between the parties. Earlier on, the Federal Government had approached the court (at the commencement of the suit) praying that the parties be allowed to explore amicable resolution of the case through negotiation.

The plaintiffs in their consolidated suit, had sought preservative orders of the court restraining the Federal Government from making any withdrawals howsoever from the account styled the “Excess Crude Account” (or any account replacing same by any name howsoever) pending the hearing and determination of a substantive suit. They further urged the court to order that all sums standing to the credit of the said “Excess Crude Account”, (or any account replacing same by any name howsoever) be paid into court or be otherwise secured as the court may deem fit pending the hearing and determination of the substantive suit.

It appears that the substance of the disagreement is not with the setting up of the fund, but with the funding from the ‘excess crude account’ which invariably will deplete their monthly allocations from the Federation accounts.
At the last sitting of the court, the case could not progress as the court was indisposed. It remains to be seen what the outcome will ultimately be.