New Report Available: Nigeria Infrastructure Report Q1 2014

From: Fast Market Research, Inc.
Published: Thu Jan 02 2014

Investment continues to flow into Nigeria's infrastructure sector and we believe this is a trend that will continue over the long term. The country is Africa's second largest economy, and with a growing middle class wanting better housing, shopping and transport links, we envisage demand for infrastructure increasing over our 10-year forecast period. There has been a chronic lack of investment in the country's transport and power sectors; however, reforms and development plans implemented under President Goodluck Jonathan are beginning to take effect, with the sell-off the state-run Power Holding Company of Nigeria virtually complete and mortgage initiatives beginning to work on improving access to finance. Thus, in line with our forecasts, Nigeria continues to see strong growth within its construction sector, and we anticipate annual average real growth of 9.5% between 2014 and 2022. We note that risks remain high, and political turmoil within the governing party threatens investor confidence over the medium term. We also continue to highlight the persistent risks hampering the implementation of major projects, ranging from deep-rooted corruption and violence perpetrated by militants to inefficient bureaucracy.

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Key trends and developments in the sector:

* Dangote Group has sealed a financial agreement with 12 banks for a US$3.3bn loan to build a greenfield refinery and petrochemicals complex in Olokola, in the south of Nigeria. With the signature of the financing, Dangote awarded the first contracts for the Integrated Refinery and Petrochemicals Complex. The refining technology has been licensed from UOP/Honeywell. India Engineers Limited (IEL) has been appointed to provide project management consultancy (PMC) from the design stage to the execution phase.
* In October 2012, China Civil Engineering Construction Company (CCECC) won a contract to substantially upgrade Nigeria's airport capacity. Abuja, Lagos, Kano, Port Harcourt and Enugu will all have a new passenger terminal and cargo terminal built, with Asaba just receiving a new cargo terminal. The deal - worth US$683mn - is a significant component of our outlook, and work was due to commence in June 2013. However, the Federal Government is failing to pay contractors.
* APM Terminals is looking to invest in a new port facility in Lagos, in addition to its current operations at the Apapa Terminal in the Port of Lagos. The new facility would be located at Badagry, 40km west of Lagos. In its first phase (of three), the container terminal at the new port would have two berths totalling 650 metres (m), with a draught of 14.5m of water alongside it. Its annual box-handling capacity would initially be 1mn twenty-foot equivalent units (TEUs), to be expanded on in subsequent phases. Construction is due to start towards the end of 2013, with phase I scheduled to open during 2016.

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