VZCZCXYZ0058
RR RUEHWEB

DE RUEHOS #0132/01 1011558
ZNR UUUUU ZZH
R 101558Z APR 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 9852
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 9569
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS LAGOS 000132 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR AF/W 
DOT FOR KSAMPLE 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EINV NI
SUBJECT: NIGERIA: PORT PRIVATIZATION YIELDS MIXED RESULTS 
 
 
This cable contains business propriety information. 
 
¶1. (SBU) Summary: During visit of Nigeria Desk Officer and 
EconOff of Lagos ports on March 11, efforts to modernize and 
clean up the Apapa Container Terminal have born fruit in some 
areas.  The privatization of the Lagos ports that began in 
2006 has introduced greater efficiency in operations, 
management, and services delivery. Despite these innovations, 
import bans and dearth of exports threaten the business 
prospects for private terminal operators and restrict the 
possible benefits.  While the privatization can yield great 
gains, the Government of Nigeria still needs to provide a 
good regulatory and trade environment for companies and the 
economy to see the full benefit from privatization.  End 
Summary. 
 
Apapa Privatization Unleashes Port Potential 
-------------------------------------------- 
 
¶2. (U) A tour of Apapa Container Terminal by visiting AF/W 
Nigeria Desk Officer and EconOff on March 11 demonstrated the 
effective management and efficient operation by private 
terminal operator A.P. Moller Terminals (APM). The company's 
Chief Commercial Officer, Ramji Krishnan, cited training as 
the number one challenge to improving management and 
operation.  After the company's takeover of operations as a 
concessionaire in April 2006, APM was confronted with a host 
of issues, from repairing and replacing non-working 
machinery, such as cranes, to removing a mosque from the 
terminal.  Krishnan noted the port had been in such poor 
condition that it took nearly two years to manually clean the 
six inches of grease from the terminal floor.  After an 
eighteen month facelift and a USD 100 million investment, 
Apapa Terminal has emerged as a modern port facility with a 
computerized operating system and greatly improved 
productivity and functionality. 
 
E-Clearance Streamlines, Expedites Cargo Handling 
--------------------------------------------- ---- 
 
¶3. (U) Currently at Apapa Terminal, all internal operations 
are coordinated electronically, namely scheduling custom 
exams, verifying payment and receipt, and generating delivery 
orders.  APM contends that, as the next step forwards, 
investment in IT solutions is imperative to actualizing 
business potential and meeting custom regulations, while 
reducing corruption and enhancing transparency in the cargo 
delivery chain.  APM pointed to the electronic 
interconnectivity that it has established recently with local 
partners as a case in point.  In theory, the import 
e-clearance system should enable consumers to process import 
documents and clearances through banks, customs, and the 
Nigerian Ports Authority (NPA) within hours.  However, it 
remains to be seen whether electronic interconnectivity can 
deliver on this promise given the existing structural and 
regulatory bottlenecks. 
 
Import Bans Threaten Gains from Privatization 
--------------------------------------------- 
 
¶4. (SBU) Krishnan noted that despite significant progress, 
government import bans and stringent customs inspections have 
caused cargos to be diverted to neighboring ports in Benin 
and continue to limit the company's profitability.  Moreover, 
the dearth of Nigerian exports results in cargo containers 
leaving 
Nigeria empty.  Barring a reduction in import bans and an 
increase in exports, Krishnan projected that APM,s 
operations might become unsustainable in two years. 
 
¶5. (SBU) Krishan noted that a Dangote sugar factory still 
operates on the terminal grounds.  Unlike other facilities 
that previously clustered the terminal and were removed 
post-concession, the factory remains given its pre-existing 
contract with another GON,s government entity.  The factory 
is an example of the structural hurdles faced by private 
terminal operators when confronted with the myriad of 
government entities involved in business contracting. 
 
¶6. (U) Comment: Modernization and investment in the terminal 
operations have improved port efficiency.  Based upon APM,s 
experiences, investment in IT solutions can neither resolve 
nor bypass the structural and regulatory bottlenecks faced by 
operators.  APM has lived up to its end of the privatization 
bargain by bringing management and operations closer to 
international standards.  Further progress depends upon GON 
actions to eliminate import bans and to create incentives to 
promote exports.  End Comment. 
 
¶7. (U) This cable was cleared with Embassy Abuja. 
BLAIR