Singapore based Tolaram group is closing financing deals to build the busiest port in West Africa. The company famously known for “indomie” noodles will build a $1.1 billion port, delving into ports and cargo business.
A report by Financial Times reveals that this is Tolaram group’s biggest investment, with analysts suggesting that the Lagos port will be the biggest in West Africa.
China Development Bank has provided $630 million, whereas Tolaram sourced the remaining $ 470 million from China Harbor Engineering Company. At the same time, Tolaram will own 22% of the port.
Other owners of the project include China Harbour Engineering Company with 52%, Lagos State Government with 20%. The Nigerian Ports Authority will own 5% of the project.
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Tolaram’s investment in Nigeria stems from its dominance in the country, as well as the significant revenues from Nigeria.
The firm began importing Indomie to Nigeria in 1988, growing its business from scratch to $900 million in sales. The investment in the port is expected to improve its already-dominant profitable position.
Tolaram to tackle poor road access first
While the company is keen to take up the investment, Nigeria still has a lot to do regarding its infrastructure. Previously, analysts lamented that poor road access to the port posed a significant challenge for the movement of goods. At Apapa, the main port in Lagos, a truck could wait for as long as a week before it could pick up goods.
“Unless considerable development is undertaken in surrounding areas, I can only see this adding to the problem,” says Daniel Clemenson, a local analyst.
In the case of the new port, infrastructure plays a more significant role as roads around the port connect to a new oil refinery by Aliko Dangote.
Haresh Vaswani, Tolaram MD for Africa, notes that roads are the main priority, mainly because of the shared access between the port and the refinery. Nevertheless, the government has promised to build three of the six roads needed for the project to work. Mr Vaswani thinks the company might have to construct the other three.
