Can AMCON Rescue Tinapa?

Tinapa-resort-Calabar-editedDespite daunting challenges, the Asset Management Corporation of Nigeria, which took over the management of Tinapa recently, is poised to resuscitate the business and leisure resort

The excitement it elicited at inception was infectious. Tinapa Business and Leisure Resort was envisioned to be a world-class integrated business and leisure resort, the first of its kind in Nigeria. It was designed to catapult Calabar, with its huge tourism potential, into the league of great international free trade zones, FTZs, like Dubai and Hong Kong. Donald Duke, then governor of Cross River State and initiator of the project, said Tinapa would boost business and tourism not only in the state but Nigeria as a whole.

This explains the excitement Olusegun Obasanjo, then president, felt when the project was presented to him in Abuja in 2004. “Now, hearing and feeling it, seeing it and almost tasting it, I know what it is all about and I’m very happy, very delighted that I’m part of the history of Tinapa,” an elated Obasanjo had declared at the commissioning of the impressive resort in 2007, adding that “Calabar was the perfect site for such a dream and Donald Duke the perfect man for making it a reality.” Sam Anani, former chief executive officer, CEO, of Tinapa, had disclosed that the United Bank for Africa, UBA, had provided the seed capital of N5 billion with which the construction process was commenced.

However, Tinapa, built at an estimated cost of N50 billion, had since turned out a huge disappointment, an ambitious idea that failed to deliver on its promise. The failure of the federal government to issue a gazette endorsing the resort as a FTZ at inception has been blamed for its teething problems. It took over two years for the Cross River State government to wade through bureaucratic bottlenecks common with government to be able to secure the gazette, and by this time, many potential investors had become sceptical of the whole idea and changed their mind about investing in Tinapa. Unable to attract the projected 2,000 to 3,000 visitors daily, the management of the resort ran into troubled waters, unable to service the debts incurred in the course of deploying its infrastructure.

It was this failure to redeem its debts and run the resort profitably that compelled the Cross River State government, which guaranteed the loans for the project, to concede the management of Tinapa to the Asset Management Corporation of Nigeria, AMCON. This followed a memorandum of understanding, MoU, signed by the two parties, with a view to reviving the resort. Before announcing the handover deal last October, Liyel Imoke, governor, Cross River State, had written a letter to the State House of Assembly requesting for approval to do so. With the request granted, Imoke proceeded to formally announce the plan. Citing reasons for the decision, the governor regretted that Tinapa, since its inception in April 2007, had failed to meet the goal for which it was set up, which is to become the hub of business and leisure in Nigeria.  As a way out of the situation, he said that, “the most viable option to salvage the Tinapa Business and Leisure Resort is to seek private sector equity investment and divestment of significant interest of the state in the project.”

Giving an insight into the debt burden that crippled the enterprise, Bassey Ndem, managing director of Tinapa, and a former commissioner of land and housing during Duke’s tenure said: “In 2005/2006, Tinapa took a loan from Union Bank. Although N10 billion was sought, N8 billion was actually disbursed. It was supposed to be repaid after about

three years. For obvious reasons, Tinapa could not repay that debt bordering on the lack of the gazette and so on and the debt began to mount. The debt rose from N8 billion to N13 billion.”  In the midst of all these, Union Bank became distressed, leading to AMCON taking over the bank’s assets and liabilities of which Tinapa’s debt was one of them. “By the time AMCON finished all its processes, verification of debt and so on, the Tinapa debt had become booked at N18 billion as a result of the compound interest,” Ndem said. Kayode Lambo, head, corporate communications, AMCON, however told the magazine that Tinapa’s current debt stands at “approximately N26 billion” including accrued interests and that, apart from Union Bank, “the company is also indebted to other institutions including contractors and consultants who have provided services to Tinapa and other financiers.”

Having taken control of Tinapa over its indebtedness to some financial institutions, AMCON planned to sell its assets and recover whatever it could. But when its team met with officials of the state government in Calabar and listened to the Tinapa story, they realised that even in its state of absolute deprivation, Tinapa was still a beacon of hope and light for the entire region. Ndem told the magazine that both parties shared ideas on how to revive Tinapa, after which the AMCON team left and later returned to indicate willingness in resuscitating the business and leisure resort.

According to Lambo, AMCON will proceed to implement other aspects of the agreement meant to turn around Tinapa, one of which is the injection of funds.  “The only feasible restructuring plan applicable to Tinapa was to convert its existing debt to AMCON into equity and for AMCON to provide the additional funding needed to turn around the business,” he said. Earlier, Mustapha Chike-Obi, chief executive officer, AMCON had disclosed: “After Tinapa has been made profitable, we will privatise it just like we are doing to the three bridged banks we took over.” However, Lambo said that AMCON is currently shopping for a “retail, resort and hospitality operator to provide a well thought-out operating model for the business as well as oversee the management of the business.” AMCON is expected to inject about N29 billion to revive business activities in Tinapa before its privatisation. Ndem described the coming of AMCON as a much needed lifeline, akin to a breath of fresh air needed to resuscitate the ailing resort.

But the magazine’s recent trip to Tinapa reveals the challenge awaiting AMCON in its Herculean task. It will take more than mere change in management and even the injection of funds to revive the resort. Some analysts cite the non dredging of the Calabar River, despite the federal government’s assurances in that regard, as an inhibiting factor to the promotion of business in Tinapa as the implication is that bigger vessels are unable to sail through the waters and effectively utilise the Calabar seaport. At the moment, a source said, only smaller vessel bearing containers berth at the Calabar port. Besides, some stakeholders operating in the business arm of the complex allege that their companies have been having problems importing goods into Tinapa in recent times due to the arbitrary charges imposed by the Nigeria Customs Service, NCS attached to the resort. “The charges are a problem. For the past months, it’s been challenging importing goods into Tinapa because the customs have been requesting for one payment or the other. This leads to containers being delayed and customers are, as a result, kept waiting,” one of them said.

But a customs official in Tinapa, who asked not to be named because he didn’t have authorisation to speak on the issue, denied that the agency had in any way hindered business activity in Tinapa. He said the NCS, as a unit under the federal government, merely ensures that the statute establishing Tinapa as a FTZ is not breached. “The process of regulating activities in Tinapa is a very open and smooth one. The importer brings in his container on transit from wherever and when it arrives the customs officers attend to them; the necessary things the customs are supposed to do are done and the investor or whoever move their goods into their warehouse and shop where they sell to the public,” he said, adding that when customers are through with trading, the usual checking are done at the gate to ensure that people do not exceed the amount allowed by law. “Going by the law setting up Tinapa as a free trade zone, you can buy goods up to N50,000 only; anything above N50,000, you will be required to pay the normal duties which is  tax.” He absolved the customs of any blame regarding how Tinapa had turned out and said that anyone trying to do so was merely seeking to divert attention or find excuses for other people’s failings.

Apart from these, there is also the issue of the monorail project that was expected to link up Tinapa with the airport in Calabar, which had not been constructed. Duke’s successor administration was expected to continue from where he stopped but the Imoke administration chose to focus on building new projects said to comprise a golf course and conference centre near Tinapa in what is insinuated to be his own legacy projects. The failure to see the Tinapa project to its logical end, again, to some people, raises questions about the idea of government as a continuum in Nigeria.

But a source in Calabar told the magazine that the failure of the Imoke administration to complete the monorail project is not so much a case of abandonment but a review of the project.   He admitted that the monorail as planned by Duke was a 13-kilometre project, which groundbreaking ceremony had been done by Duke and part of the project materials bought by his administration but that Imoke did a review of the project and found that it was not economically viable. According to him, the monorail project, as reviewed, will now link Tinapa with the international conference centre under construction. Over the last couple of years, some of Imoke’s aides have had cause to defend their boss over the failure to complete or build the monorail project, with some of them arguing that Tinapa was a gargantuan idea that was either not cut out for a state as Cross River, or just wasn’t promising in terms of its self sustaining nature.

However, Ndem argued that the Imoke administration had over the years helped to sustain and keep the Tinapa dream alive through the injection of funds used in maintaining the place. He said that Tinapa would not have survived to its present state had the state government neglected it. Duke, however, is known to have expressed his disappointment at the way things had turned out with his pet project. “I am absolutely unhappy that the projects my administration started and sunk in huge sums of money are being allowed to rot away,” he once said.

At the moment though, life in Tinapa, is still at its lowest ebb. Sources told the magazine that the only aspect of Tinapa currently enjoying a measure of success is the hotel and recreational sector which is said to enjoy 60 per cent occupancy rate. Although the Tinapa film studio had been largely idle, EbonyLife TV owned by Mo Abudu now operates from there. Ndem says that the hotel and waterpark recreational outfit within the complex make over N80 million monthly, up from N4 million a few years ago. But the trading sector is a let down, as countless shops and outlets in the emporiums remain unoccupied. Nowhere are the likes of Shoprite and Flamingo, two African and Asian retail giants that were advertised in 2007 to have “signed up with Tinapa.” There are few trading concerns dotting the landscape with few customers to attend to. Many of the companies and banks that indicated interest or even opened shops in the emporiums have since backed out or closed shop. Of the banks, at the moment, it is only Union Bank and Ecobank that have branches there.

For now, all eyes are on AMCON to see what magic wand the corporation has to turn around the fortunes of Tinapa. Ndem believes that the coming of AMCON will turn around the resort for good. Lambo is no less optimistic. To those who had long given up on Tinapa, or who believe that Tinapa had since joined the long list of Nigeria’s white elephant projects, Lambo has this to say: “We share the vision of a bright future for Tinapa and will work tirelessly to accomplish that future. We think that a successful Tinapa will have a huge impact on tourism and save Nigeria significant tourist dollars to places like Dubai and South Africa.” The years ahead will tell if AMCON can indeed keep the dream of creating Africa’s most exciting leisure and business resort alive.

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