Exporters will fund port rehabilitation: at long last, it seems that Liberia's ports, all of which are in a general state of disrepair, will be given a new lease of life to ensure the smooth export of rubber and iron ore. Neil Ford reports.

Several Liberian ports are to be redeveloped in the latest stage of efforts to rebuild the West African country's infrastructure after the devastation of its long civil war.

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The Cavalla Rubber Corporation (CRC) plans to rehabilitate the port of Harper, largely in order to ship its rubber production out of the country; Buchanan is to be brought back into use to serve the iron ore industry and Monrovia needs to be redeveloped as the country's main port.

While donor support will be required on Monrovia, private sector companies are to fund the other two schemes as part of integrated investment packages for the country.

At present, only Monrovia is a functional multi-use port, as the country's other three ports, Buchanan, Greenville and Harper are all in urgent need of investment and currently handle only timber products. However, Harper could be first in line for a major overhaul following the announcement that CRC has held talks with Liberia's National Port Authority (NPA) over the port's future.

Ownership of many Liberian plantations was disputed after the end of the war and the Rubber Planters Association of Liberia was given a one year temporary contract to manage the Cavalla rubber plantations.

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However, last December ownership passed to CRC, which is owned by Salala Rubber Investments, which in turn is a subsidiary of one of the world's biggest rubber firms, Dutch company Acomo. The company hopes to supply Michelin with its Liberian rubber. CRC is reported to be investing more than $25m in the Cavalla plantations and it now needs to find an outlet for its exports. Harper has been barely used for many years but it is hoped that both bulk and container facilities can be installed at the port, while new cargo handling equipment will be required and the harbour basin may need redevelopment.

Putting together a financial package may take some time but CRC has already committed $1m to road redevelopment in the area and will probably have to provide much of the project finance, although donor loans could also make a contribution.

Iron ore conduit

While Harper is set to become a rubber port, Buchanan should also be redeveloped to take advantage of another of Liberia's main raw materials. As reported in African Business in March, Arcelor Mittal has agreed to increase its investment in Liberian iron ore production from $lbn to $1.5bn. The company's chairman, Lakshmi Mittal, held a press conference with Liberia's President Ellen Johnson-Sirleaf to unveil his plans and to announce a full assessment of the ore reserves at Yekepa.

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The ore will be transported via rail from Yekepa to Buchanan, from where Arcelor Mittal plans to begin shipments from mid-2009.

Both the railway and the port will require structural redevelopment and new investment in dry bulk handling facilities, which is expected to be provided by the Indian firm.

A $21m contract for engineering work on the port and railway has already been awarded to Odebrecht. In addition, Monrovia is confident that a survey of the country's other iron ore deposits should result in further iron ore deposits and yet more demand for port capacity over the next few years.

The award of one iron ore concession remains in doubt. South Africa's Delta Mining Consolidated appeared to have been awarded the concession to develop the Western Cluster iron ore deposits, which had been mined before the war. After Johnson-Sirleaf announced the company's success in the first round of the tender, many Liberian commentators questioned the company's ability to do the job, partly because of the firm's lack of international profile.

However, it now appears that Delta Mining has merely been put at the top of a shortlist of those companies listed for further consideration. Sinosteel of China and India's Tata Steel, the world's sixth biggest steel producer, are among the other companies listed.

An inter-ministerial technical committee chaired by the Ministry of Land, Mines and Energy will now asses the bids. The project investment costs are estimated at $1.6bn and as on other similar schemes include the development of port, road, rail, power and water infrastructure. The Liberian government's finances remain very tight and any money available for port development is likely to be dedicated to Monrovia, where many different users will be able to take advantage of it.

In addition, it is hoped that the freeport of Monrovia could become the main investment hub for the entire country in the longer term. In early March, a delegation of British businesses, including Infrastructure Development Group (IDG) Maritime and Coastal Reclamation Engineering Services visited the Liberian capital to assess the state of the port and to hold talks with the NPA an the National Investment Commission.

According to a spokesperson for the delegation, it is possible that a British consortium will bid for a 25-year concession to overhaul the freeport, which he conceded was currently in a poor state of repair.

It is hoped that a phased redevelopment can be achieved, with foreign companies brought in to train Liberian employees. Given the level of respect for Johnson-Sirleaf and the good start her government has made, donor support is likely to be forthcoming.

RELATED ARTICLE: Kenya

Japan remains committed to Mombasa

The Japanese state agency that has agreed to fund the construction of a second container terminal at the Kenyan port of Mombasa looks set to maintain its involvement in the project despite political uncertainty in the country.

The transport sector was severely hit by the violence that broke out across Kenya in the weeks following the disputed December elections.

Trains from Mombasa to Uganda were attacked and the port handled just 5% of its usual cargo for several days, while it was even reported that some vessels were turned away from the harbour because of the Kenya Ports Authority's (KPA) inability to get containers out of the harbour.

In January, the Japan Bank for International Cooperation (JBIC) ended months of negotiation with the KPA and Kenyan government by offering to fund the construction of the new container terminal at Kipevu, which will have handling capacity of 1.2m twenty foot equivalent units (TEU).

The existing terminal is designed to cope with just 450,000 TEU a year but has been forced to handle slightly more than this over the past couple of years because of rising trade levels between Kenya and the rest of the world. In addition, traders in countries to the west of Kenya, Including Uganda, have funnelled more freight in and out of the port.

As a result, congestion has become an increasingly severe problem at Mombasa. While new investment in rail services is planned and investment in IT systems and cargo handling equipment has been made, the terminal is likely to be increasingly unable to cope.

However, JBIC has agreed to provide a loan of up to 26.7bn Japanese Yen ($235m) to the Mombasa Port Development Project to fund the construction of the second container terminal, new cargo handling equipment, plus some auxiliary transport links.

It will also fund the expansion and deepening of the harbour basin to 15 metres to increase the turning area for vessels and allow larger vessels to enter the port.

Some tenders for ship-to-shore gantry cranes and rubber tyred gantry cranes were launched at the end of January and others will follow later this year.

The loan is the first in sub-Saharan Africa made under Japan's new Special Terms for Economic Partnership. Chief representative of JBIC, Susumu Iwamoto, said: "The loan for the project is a soft and very special facility to KPA because it carries an incredibly low interest rate of 0.2% per annum with a grace period of 10 years and 40 years within which to repay."

Terminal two will be developed in three phases, with the final stage finished by 2018. With total port handling capacity of 1.65m TEU, Mombasa should be able to cope with demand expected to reach 1m TEU by 2016. Japanese consultants will be employed to advise on the best management systems for customs clearance and container handling.

Despite the post-election violence and political confrontation, JBIC is expected to stand by the agreement, providing an internationally accepted government is put in place as soon as possible.

The Japanese agency has spent at least three years working on the port plans and so would be reluctant to pull out of what is its flagship African project at this stage. One of the most interesting aspects of the port development is whether a private sector operator will be awarded a concession to operate the new container terminal.

Previous Kenyan governments have toyed with the idea of privatising the existing Mombasa terminals or contracting private companies to manage them. Political opposition has prevented such a move to date but in its project document JBIC indicates that it will give Nairobi advice on the "participation of private terminal operators".