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Nigeria Freight Transport Report 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: February 2008 Product Code: R302-2287 Description Severe congestion across Nigeria’s ports was said to be clearing by mid-August 2007. Congestion hadreached something of a peak in May when state-owned Nigerian National Petroleum Corporation(NNPC) had to reduce petrol imports to 33 cargoes (960,000 tonnes) in its third quarter tender, downfrom a planned 55 cargoes. Third quarter deliveries, normally scheduled for between July and September,were also delayed by a month so as to take place between August and October. Although Nigeria is amajor oil producer in its own right, inadequate capacity and recurring technical problems at refineries,together with serious problems with crude pipelines, mean it regularly has to import significant quantitiesof petrol. Earlier, in July NNPC head Funso Kupolokun had indicated that constant theft of kerosene froma pipeline near Lagos had caused a shortage of the fuel and a queue of tankers outside the main port. Hesaid that thieves were regularly drilling into the pipeline and siphoning the kerosene off into jerry cans foruse or resale on the black market. As a result of the disruption caused by the damage to the pipeline, aqueue of 19 tankers had formed waiting to deliver their loads. In May 2006 pipeline theft of this kindcaused an explosion in which an estimated 200 people were killed. These examples underline the fact thatNigeria remains one of Africa’s economies with the greatest future potential - and some of the worstpresent-day problems. The maritime freight sector could in principle take off if trade grows and a seriesof current initiatives, such as the government’s increased reliance on private operators to bring greaterefficiency and cost effectiveness to the port sector, begin to pay off. In our latest Nigeria FreightTransport report, BMI concludes that maritime freight traffic will grow by an average annual rate of 7.2%in the 2007-2011 period.Various factors, both positive and negative, support this prediction. Among the positives are theintroduction of private operators into the ports sector, as well as the continuing if patchy effects of the oilexportboom, which should help boost both international trade and domestic economic growth. Predictedaverage annual GDP growth across the next five years will be 5.2%. In our view, however, the economyremains prisoner to short-term oil-price related volatility and domestic risk factors. Among the negativesare the weakness of the Nigerian-flagged merchant fleet, continuing port congestion, corruption and poorsecurity. Elsewhere in the freight sector, we continue to expect road haulage to lag behind GDP growth as a resultof the disastrous state of the road network, although there will be some recovery as privately run tollroads are introduced. Rail freight will also lag behind because of the investment slump in this sector - thegovernment’s announcement of a recovery programme will not boost traffic until after 2011. We factoredin a downturn for airfreight, following the catastrophic accidents of late 2005. However, there are signs ofa turn-around following Virgin Nigeria Airways’ relatively successful launch. We have also further cutback our projections for pipeline throughput, given the range of attacks on pipeline infrastructure in 2006and into 2007, which led to significant cuts in Nigerian crude oil exports. Combining all these factors, ourconclusion is that total freight volume across the different modes, measured in million tonnes-km, willrise by an annual average of 5.9% in the 2007-2011 forecast period, a little ahead of GDP.The total value of transport and communications GDP will rise to US$7.52bn in nominal terms by 2011,representing 3.5% of Nigeria’s GDP (a low proportion compared with the Africa region). Table of Contents
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