How Escravos will Benefit from Nigeria’s $27bn Deal with Japan

By Yange Ikyaa

A recent deal between Nigeria and Japan will see one of Nigeria’s most important energy hubs benefit from a $27.29-billion investment for the development of an important oil and gas project.

The project, which is said to be located in Escravos at Gbaramatu Island/Omadino in Warri South-West Local Government Area of Delta State, is a development project to be implemented through a Joint Venture Partnership (JVP) with an indigenous Nigerian company, Mercury Maritime Concession Company Limited (MMCC).

Valuechain learnt that EDIB International Limited, a high net worth company from Hong Kong, has expressed its willingness to provide the funds needed for the development of the $27.29-billion project, which is known as the Escravos Seaport Industrial Complex (ESIC). This was disclosed by the Chairman of EDIB International Limited, Chief Kwame Springer,  through their consultants, Blue Dot Wealth Limited, headed by Mr. Alexander Takpi-Young. The deal indicates that EDIB International Limited is seeking government security regarding its intended $27.29 billion funding of the ESIC project.

The security being requested by EDIB is said to be as a result of the 50-year concession deal to Build, Oerate and Transfer (BOOT) the ESIC deep seaport project. In this regard, EDIB International Limited is requesting that the Federal Government of Nigeria (FGN) and the Local Government provide written confirmation of the Free Trade Zone (FTZ) in the country to provide security and confirmation of the project to be financed by EDIB International Limited.

On the part of the Federal Government of Nigeria, EDIB has demanded that the financier’s $27.29 billion investment is returned with profit, and the concession deal term is to be increased to 99 years for the ESIC project to secure funding from EDIB International Limited.

However, it is intended that under the ESIC project deal, the ownership of ESIC Deep Seaport sub–project of ESIC will revert to the Federal Government of Nigeria at the expiration of the 99-year concession period to be granted to MMCC.

Rear Admiral Andrew Omaolo Okoja (rtd) of MMCC stated that the decision by EDIB International to finance the ESIC project is consequent upon the November 2020 provisional approval granted by the Nigerian Federal Ministry of Transportation to MMCC to develop the ESIC project, in addition to the reviewed confirmation letter of August 2023 by the same Ministry.

His words: “The decision was also consequent upon the May 2022 Delta State Government approval to lease 31,000 hectares of land located at Escravos to MMCC to host the entire ESIC project. ESIC project commenced in 2019 and aims to develop 31,000 hectares of project land in Delta State into a Deep Seaport, Crude oil refinery, Gas Complex, Free Trade Zone/Industrial Park, Independent Power Plant (IPP), Airport, Nature Conservation Park, etc.

“It is a development that promises to massively open up the seven (7) beneficiary states in Nigeria to Foreign Direct Investment (FDI) in the areas of trade, commerce and industry. ESIC will transform the economies of these states from a rural-driven economy with sprinklings of urban development to a metropolis driven economy of international dimension.

“ESIC Deep Seaport which is the backbone of ESIC project will serve as a gateway seaport with multi – modal transportation connectivity to hinterland destinations in Nigeria and beyond by marine, rail and road means of transportation: thus providing cargo flow multiplier to ESIC deep seaport to effectively serve more than seven (7) States of the Federation and the Federal Capital Territory (FCT) Abuja.”

Okoja further explained that as a gateway deep seaport, the ESIC Deep Seaport will be able to service all Inland ports along the River Niger when the River Niger Canal project in partnership with Suez Canal Authority (SCA) of Egypt, which is also in the pipeline, comes on stream.

Valuechain findings show that this “canal/International marine highway” project is a 600-kilometres ESIC seaport to Baro in Niger State, a project which is expected to open up the canal to a depth of 10 meters to enable it take vessels up to 100,000 metric tonnes.

According to the MMCC Chairman, the seven direct ESIC-Project beneficiary states, namely Delta, Edo, Bayelsa, Imo, Anambra, Kogi and Niger, by their contiguous location in and along the road, rail and marine transportation corridor of the ESIC Project, will be admitted as equity partners of ESIC project and thus have the right of use of ESIC project capacity. The Federal Capital Territory (FCT), Abuja, will also equally join the seven states as an equity partner.

The Escravos–Lagos Pipeline System (ELPS) is a natural gas pipeline built in 1989 to supply gas from the Escravos region of Niger Delta area to Egbin power station near Lagos in Nigeria. Furthermore, subsequent spur lines from the ELP also supply Delta power plant at Ughelli, Warri Refining and Petrochemical Company at Ekpan, Uvwie, the West African Portland Cement (WAPCO) Plants at Shagamu and Ewekoro, as well as industries at Ikorodu and at City Gate in lkeja, Lagos.

Also, since the NIPP power plants were built in Nigeria, the ELPS has been the major gas supply artery to the power plants, which are located mostly in the southern part of the country.

The pipeline starts at the Escravos Gas Plant (EGP), operated by Chevron which has 680 million cubic feet per day (19 million cubic metres per day) capacity. The EGP facilities deliver 215 million cu ft/d (6.1 million m3/d) to the domestic gas market by Escravos–Lagos Pipeline. Also, a quantity of 170 million cu ft/d (4.8 million m3/d) is transferred from Escravos to the West African Gas Pipeline.

Other plants benefiting from the Escravos system include Odidi gas plant operated by Neconde with actual capacity 40 million cu ft/d (1.1 million m3/d), Utorogu gas plant operated by NNPC which has capacity 360 million cu ft/d (10 million m3/d), with ongoing upgrading to 510 million cu ft/d (14 million m3/d), and Oben gas plant operated by Seplat with capacity 300 million cu ft/d (8.5 million m3/d).

Bilateral trade between Nigeria and Japan has been growing from year to year and in 2021, Nigeria exported $769 million worth of goods to Japan. The main products exported from Nigeria to Japan were petroleum gas ($513m), raw aluminum ($138m), and other oily seeds ($74.8M).

During the last 26 years, the exports of Nigeria to Japan have increased at an annualized rate of 7.67%, from $113 million in 1995 to $769 million in 2021.

Then, in 2021, Japan exported $388 million worth of goods to Nigeria, and the main products exported from Japan to Nigeria were artificial filament tow ($53.8m), synthetic filament tow ($49.3m), and delivery trucks ($31M). During the last 26 years, the exports of Japan to Nigeria have increased at an annualized rate of 3.03%, from $179 million in 1995 to $388 million in 2021.

This is according to the Observatory of Economic Complexity (OEC), an online data visualization and distribution platform focused on the geography and dynamics of economic activities.

The OEC integrates and distributes data from a variety of sources to empower analysts in the private sector, public sector, and academia. It is currently designed and developed by Datawheel, but it began as a research project at MIT’s Collective Learning Group (former Macro Connections Group).

While the OEC was the Master Thesis of Alex Simoes (2012) and was directed by Professor Cesar A. Hidalgo, in 2012, it was spun out of MIT as an open source project and has been refined throughout the years, hugely expanding its technical and analytical capacities in the process.