Delta aims to become industrial power: an ambitious industrial project, based on the presence of liquefied natural gas, is one the drawing board in the states of Ogun and Ondo. It will involve developing a new shipping hub and a large scale industrial zone. Report by Neil Ford.

Countless initiatives have been launched in Nigeria to promote industrial development over many decades. Most have disappeared without trace, as the country has failed to build on the solid base given to it by its oil and gas wealth.

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Yet recent moves towards the construction of industrial development zones and clusters seem to bring something new to the table. The Olokola integrated port and industrial zone appears to provide an example of the way ahead, by using hydrocarbon investment to kick-start a much broader scheme.

By far the most important industrial element in the Nigerian economy at present is its liquefied natural gas (LNG) sector. The Nigeria LNG (LNG) plant on Bonny Island has led the way but total investment in the sector is expected to reach tens of billions of dollars within the next five years. It is therefore fitting that an LNG plant has been chosen as the anchor tenant for the Olokola scheme.

Most combined port and industrial zone ventures require one or two projects that can justify investment in port, rail, road and power infrastructure, which can then be used to attract a large number of smaller enterprises, thereby helping the diversification of the economy as a whole.

Egypt is already pursuing this policy with its Sokhna port and Suez Special Economic Zone (SSEZ), while South Africa is following suit with Coega in the Eastern Cape.

The state governments of Ogun and Ondo have sought to develop a similar scheme at Olokola, on the borders of their two states. Two LNG liquefaction projects had been planned for the site but BG, Chevron and Shell now appear to have pooled their resources to develop a combined LNG plant. Developing this facility will swallow most of the $12bn that the two governments believe is bound for Olokola over the next few years.

It has also been revealed that Chinese Overseas Shipping Company (Cosco), one of the biggest shipping firms in the world, has held talks with Nigerian officials over developing the $1bn port at Olokola.

A full range of shipping facilities will be required, including container, dry bulk, liquid bulk and roll on roll off (ro-ro) terminals, all of which will have a depth alongside of 16 metres. This would allow very large vessels to use the port and could enable Olokola to become a major transhipment port for the entire Gulf of Guinea. The Ogun state governor, Otunba Gbenga Daniel, visited Beijing in December to hold talks with Cosco, which would be expected to lead a consortium on the project. Ogun and Ondo states will probably be included in the consortium, while Western Metal Materials Company, GMT Group, the Lee Group of Companies and Shanghai Waterway Engineering Company, all of China or Hong Kong, have been mentioned as possible investors.

International shipping companies generally run regular container services around the world that utilise only one or two ports in each region and prefer to use larger ports with greater capacity, where containers can be unloaded for transfer to other local ports.

Although there are more than a dozen significant ports on the Gulf of Guinea, none has yet emerged as the dominant player in the region, so Olokola could have regional ambitions. Cosco has yet to sign a development contract but a feasibility study is planned this year.

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Aside from the port and LNG plant, a 10,000 hectare free trade zone, aimed at industrial and export processing investors, will be developed at the site. A spokesperson for the Ondo government said that $15bn would be invested in the Olokola free trade zone over the next two years but even taking into account the LNG plant, this timetable seems optimistic. A $2.5bn fertiliser plant is planned, plus two petrochemical facilities and reports in the Nigerian press indicate that Toyota is interested in constructing an automotive plant.

The chief of staff to the Ondo state governor, Femi Agagu, said: "We are determined to change the oil producing areas now because one day, the oil will dry up and there will be no more derivation money. This is why we are taking this area to a high level that will ensure quantum lift of their economy."

Support for industrial clusters

In January, the federal government revealed that it supported the policy of developing industrial clusters. Abuja and state governments will seek to promote those locations that possess most advantages to potential foreign and domestic investors, including sea access and local gas and water supplies, while adding other infrastructure, including road and rail links to entice investment. In the past, successive governments have sought to spread the benefits of any industrial development around the country.

Following a cabinet meeting, the Minister of Information and Communications, John Odey, commented: "The Niger Delta is being designed to be the petrochemical hub in Nigeria. Council reiterated this position during the presentation of cluster concept by the minister of commerce.

"The need for peace to reign in the region for this concept to drive industrial development has become imperative. Council today adopted the cluster concept as one of the draft strategies for Nigeria's industrial development to be considered in the vision 2020 strategy. Council further directed the presentation of industrial development strategy to the National Economic Council and to encourage participation by all stakeholders and the state."

There have been a number of notable successes for Nigeria over the past year in seeking to make the most of the industrial capacity that it already possesses.

In May 2007, the Federal Ministry of Power and Steel gave Nigerian firm Global Infrastructure Nigeria Limited (GINL) a 20 year concession to manage the Nigerian Iron Ore Mining Company (NIOMCO) and Ajaokuta Steel complex.

NIOMCO is an industrial enterprise in its own right but the availability of high quality steel is a prerequisite for other potential industrial investors. In addition, the Aluminium Smelter Company of Nigeria (Alscon) plant has been redeveloped by Russia's United Company (Rusal), providing the domestic and regional market with much needed aluminium.

By making the most of its existing industrial capacity and encouraging the development of modern industrial zones, Nigeria can finally gain industrial capacity of some note.

RELATED ARTICLE: Cameroon

Another term for Biya?

A suggestion by Cameroon's President Paul Biya that he may seek to amend the constitution to allow him another term of office has met with a cool reception.

He followed the well-worn path of other African leaders reluctant to give up the reins of power by suggesting that popular opinion was forcing him to examine the possibility of lifting the restriction on a maximum of two terms of office.

In his New Year speech to the nation, he said: "There have been appeals from deep inside the country for me to modify the constitution, notably paragraph two of article six, which stipulates the president of the Republic is elected for a seven year term, renewable once. I have not been insensitive to these appeals which are backed by very good reasons, because article six limits the will of the people and is contrary to our democratic options."

Biya has held high political office for many years, becoming minister of national education in 1964 and prime minister in 1970, before gaining the presidency in 1984.

He altered the constitution in 1996 to extend presidential terms from five to seven years and subsequently won the 1997 and 2004 elections.

However, shortly after his October 2004 victory, political allies began to float the notion of amending the constitution to allow him to stand again, despite the fact that he will be 78 years old when the next election is held, in 2011. This suggestion seems to have been an early attempt to test the political waters on another term for the president.

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Under the current rules, any changes to the constitution must be passed by a two-thirds majority of the National Assembly. However, this seems something of a formality given that Biya's party, the ruling Democratic Rally of the Cameroonian People (RDPC), won an easy victory in July's legislative elections, taking 152 out of 180 seats in the National Assembly.

The president of the opposition Alliance for Democracy and Development (ADD), Garga Haman Adji, who unsuccessfully contested the 2004 presidential election, believes that the general public will not accept yet another term from Biya. He commented: "We all in Cameroon know that those so called motions of support are drafted by the central committee of the RDPC. Cameroonians will not be fooled." Members of various non-governmental organisations (NGOs) also condemned Biya's suggestion.

Even members of Biya's own party were reported as expressing their opposition to the move. There seems little doubt that any progress that has been made towards creating a genuine multiparty, pluralist political system in Cameroon would be undermined by Biya seeking to retain power. Moreover, Cameroon boasts one of the most diverse economies in West and Central Africa, but relatively little progress has been made towards developing its economic base over the past two decades.