SA companies in line for contracts in Port Harcourt “New City” development

South African companies are in prime position to land contracts to the value of R2 billion (US$282 million) for the New City development in Port Harcourt, the capital of Nigeria‘s oil producing area.

The massive infrastructural development was outlined to delegates at a recent investment forum in Durban, ahead of the calling of international tenders for the first phase later this month. Durban is a twin city to Port Harcourt.

South African engineering company Arcus Gibb is principal consultant and partner on the project and has drawn up the master plan.

The New City development will be built alongside the existing Port Harcourt metropolitan area. Opportunities in the development’s first phase cover the sectors of power; water supply and reticulation; solid waste management; ICT; urban transport, and the construction of housing, commercial offices, industrial parks; and a golf course and clubhouse.

Port Harcourt in the Niger Delta is Nigeria’s second biggest city after the commercial capital Lagos and it is the capital city of Rivers State, which is home to 60% of FDI in Nigeria because of the oil industry.

Aleruchi Cookey Gam, administrator of the Greater Port Harcourt City Development Authority (GPHCDA), which is helping to fund the development to the tune of $2.5bn, said the project’s first phase had passed through the design stage and was now moving to implementation. Tenders for contracts are to be advertised globally within the next few weeks.

She said $2.5 billion in investment was currently going into Port Harcourt, a city of two million people. The state, which had a population of 5.5 million, contained 40% of the oil in Nigeria and that was set to grow, she maintained.

She said the new city had been envisaged as a solution to the growing urban problems resulting from the fact that it was the fastest growing city in the Niger Delta and the country. “There is therefore a need to control its development.”

She describes Port Harcourt as the “jewel in Nigeria’s crown”, saying the old garden city, as it used to be known during the colonial era, needs to be reawakened.

South Africa is a key source of investment, contractors, suppliers and services for projects in Nigeria, one of the fastest growing markets in Africa. The oil giant is one of South Africa’s biggest trading partners and its biggest investment destination in West Africa.

The New City project was launched by the government of Rivers State in 2009 and aims to address the urban sprawl that has resulted from rapid urbanisation. The current population of the Greater Port Harcourt area is two million people – while the existing infrastructural backbone was only designed for the 5,000 people who lived there in 1912. The two “cities” will eventually be joined together as one large metropole.

Durban mayor Obed Mlaba, opening the investment forum, said the coastal city’s twinning agreement with Port Harcourt was in line with the South African government’s vision to help develop the African continent. “We believe that unless Africa can develop itself, no one will. And if Africa does not determine what it wants to do, no one else will. Africa cannot be strong if it is not strong in its own back yard.” Durban is currently training 30 officials from Rivers State.

Arcus Gibb executive director Nick Ras said his company regarded Nigeria as a primary growth area and had made a strategic decision to grow its business there.

Port Harcourt currently has an international airport and airlines such as KLM, Lufthansa and Air France fly directly to the city, mostly to cater for the oil industry demand. There are also two ports, one of which – Onne Port – is an oil and gas free zone, while a third port is planned for an island just offshore from Onne to cater for growing demand. The only other port along the Atlantic coastline besides those in Lagos is in the smaller city of Calabar to the east of Port Harcourt.

Trevor Juul, CEO of South African property development company SBT Juul, which is already involved in several major projects in Port Harcourt, said the area offered a return on investment of about 25%. Developments the company is involved in include an airport hotel, scheduled to open in 2011, a leisure and shopping centre inspired by Montecasino in Johannesburg, and a large ICT park. “We see Rivers State and Port Harcourt as Nigeria’s most exciting opportunity,” he told the audience of South African service providers, potential investors, property developers and funders. SBT Juul is also building Jewel City, another shopping complex.

Dianna Games, Honorary CEO of the SA-Nigeria Chamber of Commerce, said South African companies should not miss opportunities currently on offer in Nigeria, and particularly in Port Harcourt, as the business environment there was improving and competition was increasing rapidly. Waiting could significantly increase the cost of entry into a populous and potentially very lucrative market, she said.

Games said South African contractors have an excellent opportunity to enter Nigeria through Port Harcourt’s New City, but warned that South Africa was not the only country being courted for investment and services.