Willkie Advises CMA Terminals in Subconcession of Container Terminal Operations of Lekki Deep Sea Port in Nigeria

November 1, 2019

The CMAT subsidiary–operated container terminal will be the principal terminal of the larger $1 billion port project, the largest private investment in infrastructure in Nigeria being developed on a non-recourse project finance basis with a majority of financing raised internationally.

Willkie Farr & Gallagher LLP is advising CMA Terminals (CMAT), a subsidiary of world leader in maritime transport CMA CGM, in connection with the subconcession from Lekki Port LFTZ Enterprise Limited (LPLEL) to a dedicated subsidiary controlled by CMAT of the container terminal operations of the Lekki Deep Sea Port that LPLEL is developing in the Lagos Free Trade Zone, Lagos State, Nigeria. The CMAT-controlled subsidiary, structured as a joint venture with China Harbour Engineering Company (CHEC), will operate the container terminal pursuant to a subconcession agreement signed on September 30, 2019.

The CMAT subsidiary–operated container terminal will be the principal terminal of the larger $1 billion port project, which project will anchor the 800-hectare Lekki Free Trade Zone being developed by Indonesian conglomerate Tolaram Group. With a planned handling capacity of 1.2 million TEUs per year (expected to expand to 2.7 million TEUs per year), the container terminal will be one of the largest and deepest in Sub-Saharan Africa. Port operations are expected to generate 170,000 jobs and to spur significant economic development in Lagos State, whose governor, Babajide Sanwo-Olu, has recently said of the project, “This is a new beginning for us in Lagos. We have achieved another milestone in our efforts to transform the state and accomplish the 21st-century economic ambition.”

The port represents the largest private investment in infrastructure in Nigeria developed on a non-recourse project finance basis and with a majority of financing being raised internationally. LPLEL is a joint venture between Tolaram, CHEC (subject to completion of its equity investment; CHEC is also the company contracted to construct the port), the State of Lagos and the Nigerian Ports Authority (the NPA). The NPA granted LPLEL a 45-year concession in order to develop and operate the port, and the port’s construction (as part of China’s Belt and Road Initiative) is being financed under a $629 million facility agreement that LPLEL signed with the China Development Bank last week. Operations are expected to begin in 2022.

CMAT was selected to operate the container terminal because the project sponsors recognized it as a “world class port operator and can be relied upon to provide international port standard delivery services at par with most modern ports around the world to the Nigerian port customers,” and CMAT is pleased to assume such operations because the port “represents a strategic choice for the CMA CGM Group [that allows them to] pursue [their] commitment to the development of the entire region.”

Willkie assisted CMAT with the negotiation of the highly-sophisticated subconcession arrangements, which were tailored to the unique context of the project. Willkie also assisted CMAT with the negotiation of the shareholders agreement between CMAT and CHEC affiliates.

CMAT is advised by a Willkie project finance team that is led by national partner Michaël Armandou and includes associates Jesse Gero and Maryon Demoulin, and by a Willkie corporate team that is led by partner Annette Péron and includes associate Virginie Sayag, all based in Paris.