#1ONDIPA INVESTMENT MOTION AGENCY 70000 € και#2Port of Ondo Feasibility study for a deep sea port Final Report presentation to stakeholders 24 January 2019 A mtbs maritime & transport business solutions#3Feasibility Study for a New Deep Sea Port A project between Ondo State Government/ONDIPA - with MTBS and Amiable Consultancy and Logistics Services Limited ✓ Ondo State Development and Investment Promotion Agency (ONDIPA) has engaged MTBS to prepare a 'Feasibility Study / Conceptual Master Plan for the Development of Port of Ondo Multi-purpose Deep-Sea Port at Erruna/Ogboti, Ilaje LGA, Ondo State'. ✓ The Contract has been signed in September 2018. ✓ The objective was to conduct a comprehensive and commercially inspired feasibility study for the development of multi-purpose deep-sea port at Ilaje Local Government of Ondo State Government of Nigeria 2 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#4Introduction to MTBS Services and Solutions Strategy Finance Value & Business Strategy Port Sector Reform Port Policy Public Private Partnerships Institutional & Regulatory Change Organizational Reform & Alignment Value Creation & Protection Financial Modeling and Analysis Feasibility Project Structuring & Packaging Business Case Risk Valuation, Allocation, Mitigation Strategy Financing Valuation Transactions Financial Structuring Project Finance Due Diligence Transaction Strategy Transaction Management Procurement of Finance Investment / Divestment Merger & Acquisition Documentation & Contracts Tendering & negotiated Solutions Financial Solutions Legal Solutions 3 24-01-2019 | Port of Ondo | Final Report Presentation Valuation Transactions mtbs#5MTBS in the Region MTBS is particularly active in Africa, with over 40 projects in West Africa and 11 in Nigeria alone . • • MTBS is a world-renown, independent advisor in the maritime and transport sectors MTBS advises public, semi-public and private clients across the globe on strategy, valuation, transactions, finance and M&A MTBS is particularly active in Africa, with over 40 projects in West Africa and 11 in Nigeria alone Successful Transaction Ongoing Transaction Completed Port Project 4 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#6MTBS's Clients in the Port & Infrastructure Sector Comprehensive project approach thanks to a diverse Client Base IPC Authorities GTOS Industrials WWLICA Port of Melbourne Marsa Maroc EGA الإمارات العالمية للالمنيوم Port of Butterdam ROSMORTORT LUKA KOPER Port of Koper SILPORT TRANSHE vancouver Governments IFIs Banks ARM TEHMINIALS FRIGO BALTIC GOBIERNO A ACS GATION OF CAR STATES Pacific DCT.GDANSK SA موانئ دبي العالمية DP WORLD EUROGATE International Container Terminal Services, Inc. HPH LUKA BUJEKA VINCE PORT AUTHORITY HHLA Port of Amsterdam Port of Antwerp BRAIN BUR GRIMALDI GROUP LAFARGE NOIGATION MARITIME Oando SOLVAY العربي anb afe CITADEL CAPITAL EMERGING AFRICA INFRASTRUCTURE FUND CITADEL CAPITAL European Bank Bank Ecobank FHN Capical ADA of the brand IFC Corporation International FMO THE CHANDRY HELLENIC REPUBLIC ASY VELOPMENT UND HSBC THE WORLD BANK RAND MERCHANT BANK TRADE MARK GLOBAL public ereerprises "FORTS HOLDING TOYOTA TRUBHO CORPORATION UNCTAD 5 24-01-2019 | Port of Ondo | Final Report Presentation Standard Bank Standard Chartered mtbs#7The Process: Feasibility Study of Port of Ondo Presenting the key results from the Final Feasibility Report ... MARKET ANALYSIS PORT LOCATION & SITE ASSESSMENT Commercial PORT DESIGN SELECTION Purpose of the Port Port Master Plan Way Forward Port Feasibility PORT LAYOUT OPTIMISATION FINANCIAL & ECONOMIC FEASIBILITY INVESTMENT DECISION & IMPLEMENTATION PLAN INSTITUTIONAL & PREFERRED PPP STRUCTURE NEXT STEPS Technical 6 24-01-2019 | Port of Ondo | Final Report Presentation Financial Implementation mtbs#8Key Results from the Final Feasibility Report It is recommended to take an initial positive investment decision to take the project to the next preparation phase: the Outline Business Case (OBC) The feasibility of the Port of Ondo Project is confirmed from the following perspectives: Technical feasibility: The 'Artificial Island Port - Single Basin' is considered technically feasible and attainable. Institutional, regulatory and organisation: The legal and regulatory framework can accommodate the development of the port of Ondo as a Port Development Management Company (PDMC). A suitable organisation can be established for this purpose. Financial feasibility: The business case indicates a positive overall financial feasibility with a post-tax Internal Rate of Return of 12.1% and a Net Present Value of USD 295.2 M (based on a real WACC of 10.4%) for a budgeted USD 1.3 B investment. Economic feasibility: From a national perspective the results are positive. The Economic Internal Rate of Return (EIRR) is estimated at 10.5% and the Economic Net Present Value (ENVP) is approximately USD 2.0 B USD (based on a social discount rate (SDR) of 5.4%). 7 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#9Project overview The proposed port at Ondo State is an artificial island port A. Free trade zone B. Connecting road C. Bridge across river and dam D. Trestle bridge E. Causeway F. Port Island G. Approach channel B 10.0 8 24-01-2019 | Port of Ondo | Final Report Presentation F E 5000m Waverose no Scale mtbs#10• Why a Deep Sea Port in Ondo State? Focus on niche markets which can be developed quickly and provide enough traffic and business to justify port development. The port should take advantage of the geographical position. Create maximum value and synergies between free trade zone and port activities. There is a national need for new port capacity. 1. Macroeconomic Assessment Nigeria 2. Microeconomic Assessment Ondo State 3. Port Sector Assessment Nigeria Which national need can be satisfied by developing a port in Ondo State? Which state-level need can be satisfied by developing a port in Ondo State? Which national port sector inefficiencies can be resolved by developing Ondo port? Macroeconomic Opportunities Microeconomic Opportunities Recommended Target Markets Port Sector Opportunities Commodities to focus at in Phase I of the project supported by market analysis: • Niche markets that are easily captured: RoRo and offshore supply base (OSB); . Cargo overflow from other ports: coastal containers; and, • Local exports: General cargo, break bulk, agribulk (multi-purpose), bitumen and cement 9 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#11Benefits of Developing the Port of Ondo Take advantage of the port's geographical position in central Nigeria Foreign Investment Jobs Logistics Industry PORT OF ONDO National Trade $ Local Trade Benefits 10 24-01-2019 | Port of Ondo | Final Report Presentation Shipping mtbs#12Employment will increase fast after completion Education and training will become vital roles in the new port Direct and indirect jobs: Port: 7,000 to 10,000 FTZ: 9,500 to 10,000 Total initial employment estimated at 20,000 jobs Direct jobs But... common multiplier at ports: 1 job in the port may lead to 2 to 4 jobs Direct jobs FTZ in the region............ Education and training will be vital roles for the new port Indirect jobs 11 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#13The Nigerian Geographic Centre Road Congestion National Need for Port Capacity Port Demand > Port Capacity Insufficient Port Infrastructure PORT OF ONDO Mineral Agriculture Exports Exports Facilitate Trade of Local Resources Close to Offshore Oil and Gas Fields Consumer Goods Imports EXOTAX#14Ondo State Mineral Resources Ondo State has abundant and underutilized resources suitable for exports A Ca Alluvium Tm Clays & sales with limen TI Clays, sandstone, Lignite & shale 10c Coal sandstone & shale Kuc Falsebeded sandstones coal & shale Lg Lagoon Rock and minerals Ondo State has abundant and underutilized resources: . AKUR . Pxg . Kb. Medium & coarse-grained fets pathic sandstone 000000 Pcg: Older Grande Peg Quartetes Op: Sand & Clay Kro: Shale & Mudstones Pcb Undifferentiated basement complex Pam Undated mala-sad-ments . . • • Oil & Gas proven reserves: 37B barrels; Bitumen estimated reserves: 42B barrels; Silica sand estimated reserves: 3B tons; Kaolin estimated reserves: 3B tons; Ball clay estimated reserves: 3B tons; Limestone estimated reserves: 3B tons; Granite estimated reserves: 100M tons. Oil and Gas Ondo State is the 5th largest oil producing state of Nigeria with 60,000 barrels per day; Port of Ondo is able to facilitate mineral exports 00000 13 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#15Ondo State Agricultural Resources Ondo State provides a well-founded bases for the exports of locally produced agricultural commodities Land cultivation and agriculture Ondo State's tropical climate is excellently suited for the production including: . Rubber; Palm oil; • Cashew nuts; . Timber; . Cocoa; Undisturbed Forest Disturbed forest Mangrove forest Forest plantation Woodlands Tree crop plantation Intensively cultivated lands Settlement Water bodies Rock outcrop Drainage networks Road networks Administrave boundaries • Yams; Cassava. In fact, Ondo State is leading cocoa producing state in Nigeria. Port of Ondo is able to facilitate agricultural exports 14 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#16Cement Bitumen Exports Industrial Activity PORT OF ONDO Logistics Services#17Imports Vehicles Consumer Goods#18Port of Ondo Market Competitiveness Take advantage of the port's geographical position in central Nigeria Nigerian Deep-Sea Ports Deep-Sea Port Location in Nigeria No Hinterland Congestion Port Basin Depth Access Channel Depth Access Channel Length Containerised Cargo Non-Containerised Cargo Dry Bulk Liquid Bulk Port of Ondo Lagos Lekki Akwa Ibom Main Ports in Nigeria A:Lagos ports B: Lekki development C: Port of Ondo (proposed) D. Warri E: Onne F: Port Harcourt G: Akwa Ibom (proposed) F: Calabar Offshore Industry Classfication • Good/yes Medium Poor/no Port of Ondo has an excellent geographical location to serve the Nigerian hinterland Port of Ondo can relief pressure from congested Lagos . Port of Ondo will have sufficient depth to handle Post Panamax vessels . Port of Ondo is situated in close to the offshore oil fields and has abundant underutilized natural resources that can be traded via the port. 16 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#19Port of Ondo Market Potential There is a commercial rationale for developing port capacity in Ondo State States with Market Share Potential Market Share in Nigerian demand Ondo Edo Kogi State State State Containers & General Cargo Vehicles Agribulk Ekiti Kaduna Osun 9.2% State State State Market 9.2% Market 2.8% Market Share Share Share Market Demand Projection for Port of Ondo in 2050 Bitumen Cement Offshore Containers Multipurpose Vehicles 1.3 M 1.5 M 0.4 M TON pa TON pa TON pa 2.3 M TEU pa 1.7 M TON pa 0.4 M CEU pa 17 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#20Port of Ondo Location The most favorable location for port development is in section 3 due to its landside and nautical connectivity and available space The four potential port locations have been assessed. Location 3 is identified to be the preferred location for port development Preferred Location: Option 3 • 18 1 2 OFTZ Salawa Odo Options 2 3 Akotogbo Shabomi Nautical access ++ -+ -+ Natural shelter I . Igbekebo Land accessibility + -+ + e 3 4 CAFELD 24-01-2019 | Port of Ondo | Final Report Presentation Opuama Structure of the land Available space Ease of implementation Environmental impact Communities I ! I } : I ¦ ++ : I I . Jakpa MCA Score -7 -11 -4 -12 mtbs#21Port of Ondo Natural Conditions Geography Located in Central Nigeria connected by a direct road link to the hinterland. Ample land available for development within proximity of offshore installations. Topography Characterised by wetlands with top layers of clay around at the FTZ location The land in the FTZ is approximately 1.0 meter above the water level. Bathymetry Gentle sloped "silted sand" seabed without obstacles in port and channel area. Existing mud flows in NE direction up to 3.0-3.5 km from the shoreline. Meteorological • • Dominant wind direction is SSW to S with average speeds up to 8.0 knots. Humid and hot (24-35 °C) climate with much rainfall in June and September. Metocean The wave direction is rather constant and coming from the SSW to S angles. Wave heights characterized by ocean swell between 1.4-3.0 m. Tidal flows indicate a difference between MHWS of 0.95m and 0.7 m at MHWS. Seismicity The project site is not a seismically active zones 19 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#22Port of Ondo Site Conditions The 75km shoreline of Ondo state is challenging for the development of a deep sea port and is characterized by wetlands and mud sedimentation Wetlands OFTZ Mahin • Parallel coastline river Local Settlements Mud sedimentation Coastal characteristics at Ondo State are homogenous across the entire shoreline: . No islands in front of the coast; There are numerous small creek outlets resulting in muddy beaches; The coastal land dominantly comprises flat wetlands; Everywhere along the coastline rivers exist running parallel to the shoreline; Local Settlements directly near coast. Ondo State Resettlement Action Plan The Ondo State Government commenced with resttlement of affected communities in line with World Bank Standards 20 20 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#23Port of Ondo Layout Selection The Artificial Island is determined to be the preferred option Legend Design Option 1: Dig Out Design Option 2: On the Coast Design Option 3: Land Reclamation 2 Port Infrastructure Breakwater Required Dredging Causeway Pier Artificial Island Wave Direction Design Option 4: Artificial Island . Analysis showed that the artificial island is the best options because: It has the initial lowest investment; 1 . It does not interfere with the coastline; • It has no impact on the river deviation; • It has limited effect on shoreline encroachment; . It lies outside the mud stream bandwidth; . . It requires less (maintenance) dredging; It has an improved security perspective. The 'dig-out' is the second best scoring high on both hinterland access and land availability. 21 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#24Port of Ondo Layout Optimisation The artificial island is the best options from multiple perspectives The artificial island starts at 2.8 km from shore ... to stay away from the mud sedimentation to balance the dredging and reclamation volumes to balance approach channel and causeway costs to reduce the impact of the port on the coastline to reduce the impact of the port on coastal settlements ... to increase security of the port vis-à-vis an onshore port to ensure that fishery activities can be maintained 116.6ha is reserved for future expansion along causeway 21.5ha is reserved for container terminal expansion Port of Ondo Final Design Buildings Fe Surian Key Pavement Unpaved Future Buildings Shunting yard 000 Gate Open storage Sios RoRo Reefer area Container area 22 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#25Port of Ondo Key Parameters Description of the general port area Key characteristics 1. Approach channel CD -16.5 m 2. Basin depth CD -15 m for Container and Multipurpose vessels 3. RoRo and Cement berths at CD -11.0 m 4. Two Bitumen berths CD -11.0 m 5. Bunker supply berths 4. Port services pontoon for pilot boat and tugs Ready for Post Panamax vessels of 9,000 - 10,000 TEU at 14 m arrival draught with option to deepen for 14,000 TEU vessels! 23 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#26Port of Ondo Bill of Quantities The initial investment requirement is USD 1.3 billion. Bill of Quantities Summary Preliminary Costs Engineering and supervision Moblisation Civil Works M USD 98.6 32.9 65.7 1,057.6 Dredging and Reclamation 273.8 Civil Works and Buildings 431.5 Landside Connection with FTZ 116.3 Contingencies 236.0 Equipment 154.3 General 1.4 Container Terminal 74.4 Multi-Purpose Terminal 18.4 RoRo Terminal 0.3 Offshore Terminal 6.9 Cement Terminal 9.0 Bitumen Berths 5.0 Buildings Worksh Marine Services 19.8 IT 5.0 Contingencies 14.0 Grand Total 1,310.4 24 24-01-2019 | Port of Ondo | Final Report Presentation Key Pavement Unpaved Future Buildings Amenity Building Shunting yard Funk Sum OOG Crane Per Substation Gate Wwwhouse Open storage Fire Station Tugba Marine Workshop Silos RoRo Reefer area Container area mtbs#27Port of Ondo Feasibility The Project is considered both economically and financially feasible Financial feasibility: The business case indicates a positive overall financial feasibility with a post- tax Internal Rate of Return of 12.1% and a Net Present Value of USD 295.2 M (based on a real WACC of 10.4%) for a budgeted USD 1.3 B investment. Financial Feasibility Inputs (in real terms) Financial Feasibility Outputs K III III WACC 10.4% IRR 12.1% NPV PBP $ 295M 10 years Traffic CAPEX OPEX Taxes Revenues Economic feasibility: From a national perspective the results are positive. The Economic Internal Rate of Return (EIRR) is estimated at 10.5% and the Economic Net Present Value (ENVP) is USD 2.0 B USD (based on a social discount rate (SDR) of 5.4%). Economic Feasibility Inputs (in real terms) Financial Feasibility Outputs K SDR 5.4% EIRR 10.5% Incremental Incremental Incremental Traffic CAPEX OPEX Transport Cost Savings Incremental Revenues ENPV $ 2.0B TEXT 25 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#28Institutional Setting and Preferred PPP Model It is recommended to establish a Port Development and Management Company for this greenfield port development to drive the BOOT construction. Institutional Setting "With cooperation from relevant federal state agencies, the of Port of Ondo is legally feasibly." Project Recommended PPP Structure: PDMC Model with BOOT Shareholders Agreement & Share Purchase Agreement Nigerian Port Authority Ondo State Private Investor Port Dues A/A "Nigeria has a well-developed institutional and regulatory environment for creating greenfield ports." Responsibilities and Dependencies Ministry Port Declaration Nigerian Port Authority Master Concession Port of Ondo Development and Management Company JO Concession Agreements Private terminal operator NPA Request Port Promulgation ... NPA Concession Granter Concessionair ICRC transaction preparation and implementation process 26 24-01-2019 | Port of Ondo | Final Report Presentation Quays & Land Breakwater & Access Channel Port management Marine services Handling charges/ Storage fees Portland Infrastructure Pavement & Equipment Users: Shipping lines PDMC model is applied in Nigerian greenfield ports and comprises ... ... Ondo State Gov. and NPA enter into a JV with a private investor *** ... *** ... PDMC obtains master concession to develop/operate the port PDMC is able to drive the BOOT construction PDMC invests in infrastructure and issues terminal sub-concessions Private sector participation limits the public budget requirement PDMC as a seperate entity limits the financial liability ... JV results in an allignment of public and private interests private investors can in develop the port in line with demand mtbs#29Investment Decision It is recommended to take an initial positive investment decision to take the project to the next preparation phase: the Outline Business Case (OBC) Technical feasibility: The 'Artificial Island Port - Single Basin' is considered technically feasible and attainable. Institutional, regulatory and organisation: The legal and regulatory framework can accommodate the development of the port of Ondo as a Port Development Management Company (PDMC). A suitable organisation can be established for this purpose. Financial feasibility: The business case indicates a positive overall financial feasibility with a post-tax Internal Rate of Return of 12.1% and a Net Present Value of USD 295.2 M (based on a real WACC of 10.4%) for a budgeted USD 1.3 B investment. Economic feasibility: From a national perspective the results are positive. The Economic Internal Rate of Return (EIRR) is estimated at 10.5% and the Economic Net Present Value (ENVP) is approximately USD 2.0 B USD (based on a social discount rate (SDR) of 5.4%). Investment Decision: We recommend to take a positive investment decision and to proceed to the next phase: the Outline Business Case 27 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#30Phase Implementation plan Recommendation: present the feasibility studies to NPA and request for port declaration. Initiation Tasks Ondo State Project Initiators Studies < 2020 Transaction Advisory Port Declaration •Feasibility •Commercial •Master plan • Financial • Economic •Institutional Technical studies • Bathymetric •Topographic •Hydrological • ΕΙΑ NPA request to Minister •Technical evaluation • Financial evaluation Minister's Port Declaration • Port declaration •Set-up steering committee ⚫Appoint Transaction Advisor Outline Business Case Preparation tender docs (EOI, RFP/RFQ), evaluation Contract award, negotiation, FBC, Concession contract, ⚫Financial close 2022 2026 Construction Works Port Operations Mobilisation Terminal operators Dredging/Reclamation Infrastructure •Superstructure Decisions Initiate Positive Investment Decision Port Declaration Concession, Construction & Financing Completion & Handover Expansions & Handover 28 24-01-2019 | Port of Ondo | Final Report Presentation mtbs#31Port of Ondo Wel 2924-01-2019 | Port of Ondo | Final Report Presentation#32comes the World mtbs#33Thank you Address Wijnhaven 3e P.O. Box 601 3011 WG Rotterdam The Netherlands Telephone +31 (0)10 286 59 40 Email [email protected] 30 24-01-2019 | Port of Ondo | Final Report Presentation#34RUPALY mtbs