Additional Storage and Jetty operation (Terminaling service) opportunity has been identified by the feasibility study commissioned by WAPSCO both Technical and commercial viability has been established in studies carried out by WAPSCO’s clients. An investment of about US113 million in 145,000 cubic meters (115,000 mt) storage capacity with 400 road trucks daily (13 million liters per day) loading capacity and 38,000 dwt (max) product receiving jetty is expected to result in profitability (base case) of 32.80% IRR (internal rate of return), US$238 million NPV (net present value @ 10%) and Payback Period of 2.50 years.
On the appropriate recommendation from the studies, land has been acquired, cleared, de-flooded, linked to the major city road and kept safe for commencement of construction. Ernest & Young Dubai was hired to arrange foreign debt and equity while a Nigerian company is to organize private placement for local equity. Competitive Tender for EPC contractor for both Depot and Jetty have been conducted, contract award is waiting for the emergence of a serious lender.
WAPSCO is still in search of suitable JV partners and additional Fund Finder to speed up commencement of construction.
LOCATION
West Atlantic Petroleum and Shipping Company Limited (WAPSCO) was incorporated as a limited liability company in October 2008 under the Companies and Allied Matters Act of 1990 (CMA 1990) by the Corporate Affairs Commission of the Federal Republic of Nigeria.
PROJECT FINANCE AND CAPITALISATION
The initial registered Share capital of the company was N2,000,000 divided
into 2,000,000 units of N1.00 each. This is to be expanded to N25,000,000
of 25 million units subject to the provisions of the Act and without prejudice to any rights attached to any existing shares, any of the shares may be issued with such rights or restrictions as the company may by ordinary resolution determine.
WAPSCO intends to structure its equity ownership and leverage of its business for
the finance and operation of its Depot and Jetty project by raising share capital to
N25,000,000 (nominal value), $45,000,000 (cash value) and raising a debt value of about ($70,000,000) amounting to 40:60 gearing ratio as analysed in table 1 below.
DEPOT AND JETTY PROJECT
WAPSCO intends to build a petroleum products import Terminal with comprising a 38,000 DWT (max) unloading Jetty, to handle about three (3) 30,000 DWT vessels per week o n the average and a 5,000 DWT (min) loading jetty to handle small parcel loading of coastal vessels. It shall also contain a tank farm/depot of about 145,000 cubic meters and ten (10) truck loading gantries for PMS, DPK and AGO at a total cost of about $113 million, 60% debt and 40% equity.
This translates to a total handling capacity of about thirteen (13) million liters per day (400 road trucks daily). This is a fraction of the capacity gap established
by the Feasibility study. Apapa port is congested, the best location for jetty capacity expansion is Lekki; the future industrial location of Lagos. This is the
strength of WAPSCO.
FUNDING, EQUITY PARTICIPATION AND INVESTMENT OPPORTUNITY
WAPSCO had approached oil trading companies importing petroleum products to Nigeria for joint venture participation on the project. Interest expressed by these companies has been overwhelming however investment climate in Nigeria in the past had not encouraged foreign companies to take quick decisions on their participation in a grass-root development project of this type in Nigeria.
However, the country has had a turn of events in politics and government. A new government emerged in May 2015 a nd since then economic restructuring and adjustments have been taking place. The petroleum products market has been deregulated, the national currency (Naira) has been allowed to take its value from market fundamentals of supply and demand for sustainable economic growth.
Currently, Nigeria has become investor friendly and foreign investment interest is growing. While efforts are still being made to secure joint venture participation with reliable oil trading and/or Pipeline & Terminal companies WAPSCO is also seeking alternative Lenders and investors through Ernst & Young, Dubai or elsewhere who will find confidence and credibility in the organization and set up of WAPSCO’s ability to manage the project and terminal operation on its own.
PROJECT TECHNICAL DEFINITION
1. PETROLEUM PRODUCTS STORAGE
a. PMS: Import Discharge: 1 X 27,000 M3
Truck Loading: 1 X 16,000 M3
Total PMS tankage: 43,000 M3
b. DPK; Import Discharge: 1 X 27,000 M3
Truck Loading: 1 X 16,000 M3
Total DPK tankage: 43,000 M3
c. AGO; Import Discharge: 1 X 27,000 M3
Truck Loading: 1 X 16,000 M3
Coastal Vessel Loading: 16,000 M3
Total AGO tankage: 59,000 M3
TOTAL STORAGE CAPACITY: 145,000 M3
Operating philosophy: PMS and AGO tanks shall be used integrated with all Slops going into PMS. DPK is to be isolated for HHK and ATK quality.
2. JETTY
a. Loading Berth: 5,000 DWT Min, LOA 140 Meters Max, BEAM
20 Meters Max, DRAFT 7.5 Meters
b. Unloading Berth: 37,500 DWT Max, LOA 188 Meters Max,
BEAM 29 Meters Max, DRAFT 11.5 Meters
3. TRUCK LOADING
a. PMS: 7
b. DPK: 1
c. AGO: 2
TOTAL LOADING GANTRY: 10
PROJECT MANAGEMENT
The Promoters supervise and will continue to supervise the project on till other investors are fully on board and/or finance is in place whereby a permanent project organization shall be established, comprising of (i) The project Steering Committee (ii) Project Management Committee and (iii) The Project Teams are in place to manage the project to a successful completion, commissioning and startup.
LAND ACQUISITION AND SETTLEMENT OF THE RESIDENT COMMUNITY
Having taken possession of the Site land since December 2010 without inhibition or community agitation, full and final payment has been made to the families holding residual title of the land apart from the statutory right of the Lagos State Government under global acquisition. All the necessary transfer of title documents have been completed by the families and passed to WAPSCO solicitors for ratification.
SITE OCCUPATION; RECLAMATION, SAND FILLING AND ROAD WORKS
Main Road
Road construction surfacing has been completed beyond the junction to WAPSCO Site implying a smooth drive of the 7 km road stretch from the main tarred road to WAPSCO junction, the 2 km un -tarred portion in-between the main road and the Coastal road is under construction. When this bit of the road is completed, WAPSCO customers will have tarred, paved road all the way to national road network. It goes to show how the Lagos State Government is committed to infrastructural
development in the area.
Site and Access Roads
Access road has been made from the coastal road to Site. The road has been de-flooded and made motorable the year round. Clearing the Site to bare ground, free of any plant, weed and woody leftover is being done from time to time.
ENVIRONMENTAL IMPACT ASSESSMENT (EIA) REPORT, PERMIT AND CERTIFICATE
EIA report has been completed and submission to both the Federal Ministry of Environment and the Department of Petroleum Resources for EIA permit and Certificate to commence both construction and operation of the Terminal is on-going. Also, in order to be able to start the dredging and sand filling work, application for permission to develop the Site was submitted to Lagos State Ministry of Environment. This has been processed and approved. The letter of permission has been issued.
OTHER PERMITS AND APPROVALS
Further contact has been made with Nigerian Ports Authority (NPA) regarding regulatory standard in ports and terminals and subsequent applicable tariffs payable to Government on the Jetty when comple ted and operational. NPA assures WAPSCO as to their readiness to engage in discussion and understanding of how to progress on the project when WAPSCO is ready.
Contact is further maintained with the Department of Petroleum Resources (DPR). The intention is to familiarize WAPSCO with the leadership of DPR while Final Investment Decision (FID) of Funding through Joint Venture partners and/or venture capital lenders is awaited. FID shall lead to the formation of the project team to prepare necessary drawings for formal application to DPR for Permit to start construction. The list of all approvals required for project execution and operation is
given in the table below.
ENVIRONMENTAL MANAGEMENT AWARENESS
WAPSCO hired Global Environmental Technology Ltd. (GE T) to conduct Environmental and Social Impact Assessment study on the project Site. The choice of location was made after a thorough study of terrain and ocean dept in the Lagos East Atlantic Coast (Lekki corridor). The east coast of Lagos had suffered tremendous neglect owing to the difficulty of developing port facility in the area for lack of estuary or natural harbor on which berthing facilities can easily be built.
There is a coastal road built in the early 80s linking Victoria Island with communities in the area. Settlements along this road are sparsely populated and inhabited by fishermen who migrated from Epe. The land is a plane stretch of sand with grain size of high porosity and permeability, hardly able to retain moisture and nutrients for economic plants to grow. The soil therefore does not support any reasonable farming and agriculture. The only economic tree in the area is coconut.
In recent time, the Lagos State Government has slowly been executing its economic development program for the area. The Lekki Free Trade Authority was established to develop infrastructure like roads, drainage, electricity, Airport, Sea port and other utilities for industrial and commercial enterprises to be attracted to the area. Work is progress to tar the coastal road to OK Free Trade Zone boundary.
The virgin status of the area poses both challenge and opportunity to West Atlantic Petroleum and Shipping Company as the company will not only provide all infrastructural facilities and amenities for itself, it will also provide for communities in its vicinity. However, the road network is expected to be open and free for WAPSCO’s customers to turn around their trucks quickly for steady and smooth operation.
WAPSCO desires to attain excellence in productivity by making concerted effort geared towards achieving the following:
(i) A safe and healthy work place
(ii) Elimination of all discharges and emissions that will have a negative effect on the environment
(iii) Establishment and maintenance of a safe and environmentally sound working standards, procedures and practices throughout the company operations
(iv) Compliance with all statutory obligations concerning Health, Safety, and the environment as required
(v) Conduct and support research and development directed towards the improvement of safety and health at work and conservation of the environment.
COMMUNITY RELATIONS
The company engaged communities in the area viz Igbogun, Okunlofi, Imedu, Mawejo, etc. on a lot of discussions to solicit their involvement and support for the project. It is heartwarming and expectedly so, that the response was positive and overwhelming. Okunlape Village on whose soil the project is to be located is about five (5) kilometers to Ode -Omi, the boundary village with Ogun State. It is currently not conne cted by road and it is off Akodo-Folu Road, Ibeju-Lekki Local Government Area of Lagos State.
WAPSCO shall maintain a cordial relationship with the host community. This will be achieved by putting in place regular extensive consultation with the communities and;
(i) Employing a Community Liaison Officer
(ii) Making communities to have a sense of belonging by making them to be part of the project and developing a program that will benefit the communities
(iii) Organizing induction courses for staff before resumption to community location
(iv) Employing labour from host communities
(v) Having respectful and non-interference policy towards the culture of host communities
(vi) Having regular interaction with the host communities
SAFETY DURING CONSTRUCTION, COMISSIONING AND STARTUP
The company will not allow its workers to work under hazardous conditions. The company will identify, evaluate, and properly manage the risk that may likely affect company personnel and property at all sites and at all times. The company shall also engage security personnel to effect surveillance at sites who could be mainly local guards from the communities and/or personnel from licensed security agency/outfit.
RISKS AND MITGATION
The principal risk facing the project is the band wagon effect of militancy in the Niger Delta region which has created a lot of sea pirates who attack ocean going vessels and marine facilities to steal petroleum products. While the Navy and Police have set up independent patrol teams to chase away the pirates and keep Lagos Coast free of intruders, few cases still occur.
This risk has been the primary reason why WAPSCO has opted for Pier Jetty that is close to shore and accessible rather than an SPM that is far away in the sea and can only be accessed through a service boat. WAPSCO intends to build on the existing cordial relationship with the communities in its area by providing jobs to the indigenes. Indigenes will also be employed as Depot and Jetty surveillance vigilantes in a community patterned security network involving the armed forces, the police and security specialty companies.
Project performance risk which may come in terms of cost overrun, time overrun, quality of work and overall integrity of construction work. This is a major risk but can be under control from the very beginning of the project. WAPSCO has been working with Julius Berger since 2008 on this project. Julius Berger is the only company that has built the same type of jetty in Nigeria and has a major presence in the country. The intention therefore is to get Julius Berger to build the facility but at a very competitive cost.
Other categories of risks affecting the prospect of the company include country risk, political risks, inflation risk, currency conversion risk, regulatory risk, business cycle risk, taxation risk, etc. Mitigating the impact of these risks on WAPSCOs performance constitute a major challenge which the Board and Management will make their impact.
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