Lagos Free Zone aims to list by 2026, targets 200 tenants
12 June, 2024
Companies including Kellogg's, Colgate-Palmolive, Stanbic IBTC, Indofood and Tata are already present in the free zone.
Nigeria's first private free trade zone, promoted by Singapore-based Tolaram Group, is looking to list on the stock exchange of Africa's most populous nation in the next 24 months, a top executive told The Africa Report.
The listing will allow more Nigerians to "benefit from the value that is going to be created from Nigeria's first modern port-based free zone," with the capacity to house 200 companies when completed, Tejaswi Avasarala, deputy CEO at Lagos Free Zone (LFZ), said in an exclusive interview at the Africa CEO Forum in Rwanda.
The Nigeria Export Processing Zones Authority announced in February last year that plans were underway to begin the listing of free trade zones and zones' enterprises on the capital market, saying the best governance structure and framework to drive the initiative was also being worked on.
"We continue to engage with the Nigerian Stock Exchange and other stakeholders to ensure the framework for listing of free zones in Nigeria is conducive and clear in terms of the procedures, the dos and don'ts, and the rules of engagement. We are making steady progress on that," Avasarala said.
"It is difficult to put a timeline on it now but if you want to know our interim targets, we want to do that within the next 24 months," he said.
Half of land for Phase I occupied
The free zone sits on 850 hectares, with less than a fifth of the area currently occupied by Kellogg's, Colgate-Palmolive, Stanbic IBTC, Indofood and Tata, among other companies.
Over the last 10 years of the project development of the free zone, we have attracted more than 35 companies that are now registered inside the free zone," Avasarala said.
He said about $2.5bn of cumulative investments have gone towards creating physical assets in the free zone.
"All these assets have created about 15,000 jobs and today we contribute almost 1% to 1.5% of the entire revenue of the Nigeria Customs Service. We have come a long way, but the journey is long, and we continue to be committed to unlocking the full potential."
In phase one of the LFZ project, Tolaram is developing 300 hectares, out of which about 50% is occupied currently, according to Avasarala.
"By the final phase rollout, we are expecting to host anywhere between 150 to 200 companies. In this industry, developments are typically long-term projects in nature. But we are expecting to be completely occupied within the next 12 to 15 years," he said.
He said to ensure long-term energy security for every tenant in the free zone, the company had signed a long-term contract with a consortium of three major Nigerian oil and gas companies.
"We have come together in a unique joint venture to connect Lagos Free Zone with the national gas transportation architecture. This will enable tenants inside the free zone to tap into the natural gas reserves of Nigeria which we know are the biggest in the continent," he said.
Avasarala added the groundbreaking ceremony for laying gas pipelines started in January this year, saying supply is expected to start in the fourth quarter of this year or Q1 2025.
"The pipeline in the first phase is going to have a design capacity of 40 million scf per day but that is not going to be limited," he said. "As and when demand reaches 70-80% of the design capacity, we will continue to expand the pipeline capacity by laying new routes."
Currently, compressed natural gas brought in by trucks and then decompressed is used to fire up captive power plants for electricity supply in the free zone.
"But that is not scalable, and that is the reason why we are embarking on the pipeline project," Avasarala said.
Lekki port making huge impact
A major facility supporting the free zone is the Lekki Deep Sea Port, which occupies 90 hectares and started operations in April 2023 after the completion of construction in October 2022.
"We completed the land acquisition process for Lagos Free Zone in 2012, and the port was under development between that time and 2020, which is when we reached the financial closure on the port project," and started "the real active promotion" of the LFZ, Avasarala said.
"Despite the port operations only having started recently, we have on the free zone side obtained significant traction in terms of attracting new businesses that want to grow within Nigeria," he said.
The biggest difference the port has made is the realisation of Nigeria's dream of having the deepest seaport along the West African coastline, according to Avasarala.
He said the country's port infrastructure which was based on facilities developed in the 1920s and 1930s had a few rounds of modernisation, but that it continued to be limited by the design of the assets and the ports could match up with those in Shanghai, Dubai, and Singapore.
"With Lekki port, that has changed. We now have a deep seaport with a draft depth of 16.5 metres, and within the first one and a half years, we have had at least two or three pioneering achievements," he said, citing the berthing of Nigeria's first transshipment vessel and first 14,000 TEU vessel.
"Going forward, we are confident that Lekki port will become the gateway port for the entire trade into and out of Nigeria while other ports will become feeder ports that will be serviced through feeder lines, whereas Lekki port will be serviced through mother vessels," he said.
Companies in the free zone using Lekki port for importing raw materials receive their containers within 36 to 48 hours of the arrival of the vessels as against two to four weeks while using other ports in the past, according to Avasarala.
"So, all that inefficiency which earlier used to be passed as a cost to the importer is now getting addressed through the modern port infrastructure at Lekki port and the industry ecosystem within the Lagos Free Zone," he added.
