ABSTRACT: Ports are vital for the health and well being of any nation’s economy and are the main transport method for international trade. They also handle several million international passenger journeys annually. This industry is also a major employer of labour. Ports constitute an important economic activity in coastal regions. Ports are also important for the support of economic activities in the hinterland since they act as a crucial connection between sea and land transport. Nigeria is a developing coastal country, with a land area of 910,770 km2 and coastline of approximately 853km facing the Atlantic Ocean. The government of Nigeria has embarked on vigorous infrastructural developments, and to this end, has opted for the improvement its port facilities. This study is on the evaluation the feasibility of a Port expansion investment in Lokoja, Kogi state of Nigeria. The expansion is designed to increase the cargo handling capacity, increase efficiency and provide a fresh milk terminal, among others. Using the data from the project and other secondary data obtained from government and other sources, this study appraised the financial feasibility of the Ganaja Port expansion project, by analysing the ‘with’ and ‘without’ project cases, to derive the ‘incremental’ project. In order to identify those variables that will have the greatest impact on project outcome, a sensitivity analysis was carried out, and the results from those were made dynamic by a Monte Carlo risk simulation so as to measure its riskiness. The results from the financial analysis shows a sufficiently positive Incremental NPV, and sensitivity analysis indicated that Inflation rate, annual cargo tonnage, and operating costs are the critical variables that could significantly affect the project outcome. The results of the risk analysis shows that even though the above variables have significant effect, they will not yield a loss as there is 100% certainty of a positive incremental NPV. This study indicates that it is a financially viable improvement endeavour and without risk of a negative outcome. The study therefore recommends the execution of the expansion project. Keywords: Water port expansion, risk analysis, incremental net present value, financial analysis, investment appraisal. …………………………………………………………………………………………………………………………
