ABG Shipyard in talks for shipbuilding joint venture in Nigeria

ABG Shipyard is in talks with the Nigerian government and private equity investors to build a shipyard in Nigeria through a joint venture in which the Indian company will hold a 40 percent stake.

ABG Shipyard, India’s largest shipbuilding firm, will provide technical expertise for the African venture and have management control for a period of 20 years, Chief Financial Officer Dhananjay Datar told Reuters on Tuesday.

"The timeline could be three or four years from now. We are the technical partner so there is unlikely to be a big investment from our side," he said over the telephone.

The investment details were yet to be finalised as the discussions were in initial stages, but a majority of the investments would come from the private equity partners and the Nigerian government, Datar said. Nigerian Partners are expected to include Nkrah Investment Ltd (which provides marine services and logistics) and BGL Private Equity Ltd (a subsidiary of BGL Plc, a Nigerian investment bank).

According to Nigeria’s Tribune newspaper, local investors will own 50% of the project and the local government of Cross River State will own the balance of 10% in exchange for providing land and infrastructure to the new Calabar Shipbuilding Yard.

The first phase of the investment is estimated to be worth US$100 million, according to the Wall Street Journal, but the entire project could be worth US$800 million to US$1 billion. More than 5 000 Nigerians will be employed, Online Nigeria reports.

The unit will build large offshore and cargo vessels, Datar added. However, it would also build oil rigs, support and offloading vessels, liquid natural gas carrier ships, container carriers and military equipment and ships for the Navy. 

Executives said the proposed venture would be the biggest shipyard in Africa and would do much to renew Africa’s ‘second hand’ ship fleet. The Nigerian Tribune said existing shipyards do not have the capacity to build new vessels and mainly focus on repair work.

In February, the company had said it expects fresh orders worth up to 30 billion rupees in calendar 2011, the bulk of it from the booming offshore and defence sectors. It has also received government approval to foray into defence-related contracts.