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Low port performance: NPA, terminal operators trade blames for failure

Low port performance: NPA, terminal operators trade blames for failure

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Isaac Anumihe

Managing Director of Nigerian Ports Authority (NPA), Ms Hadiza Bala Usman,  has,  on several occasions expressed  her desire to review the concession agreement with the terminal operators after the expiration of their 10-year contract.

Hadiza gave indication of review the agreement at the last  quarterly meeting for the year between NPA  and the stakeholders in the maritime subsector in  Lagos.

She said that the authority  has set in motion a committee to liaise with representatives of terminal operators with a view to reviewing the  existing concession agreement.

NPA boss assured that  plans are on the way  to actualise this within the shortest possible time.

Since the pronouncement, most  terminal operators have become jittery over their fate as some of them who have operated below acceptable mark  might be eased out of the system  or forced  to up their game.

However, they (operators)  have  accused the Federal Government of  failing to provide facilities to the ports which were part of  the bargain in the concession agreement.

In 2006, the Federal Government concessioned the ports to private enterprises because it  believed  that NPA,  as a Federal Government agency,  was not generating enough resources to the Federation Account. To this extent,  it decided to divest from the management of the operations of the ports, because, according to it, government has no business in business.

To achieve this, it introduced a public private partnership approach and applied the landlord model, which removed the responsibility of port regulations  and operations from the government (NPA) and assigned port operation to private terminal operators. This gave rise to the concession of 25 terminals to private operators  with lease agreement ranging from 10 to  25 years in 2006.

The overall objective of the concession was to modernise the ports as well as develop them into a hub of maritime businesses in West and Central Africa.

But 10  years after  the concession, the ports are still at the gruff stage due to  the failures of both the government and the terminal operators to make the ports the maritime hub in West Africa.

It is against this backdrop that both parties have traded blames against each other for their failures.

While the  Federal Government on its part had claimed that some of the terminal operators are not operating at maximum capacity and therefore do not generate enough funds for the government,  the concessionaires have argued that the government  has failed   to  provide essential infrastructure  that could make them perform effectively.

Some of these infrastructure include the dredging of the channels to allow big vessels berth at the terminals. For instance,  Calabar, Onne,  Rivers  and Warri channels have shallow channels to the extent that vessels that should have berthed  in those ports are diverted to Lagos.

Also,  electricity which is supposed to be provided by the Nigerian Ports Authority (NPA) to make 24 hours operations possible, is absent in and around the ports while the  roads within and around the ports are in  decrepit situation thus impeding movements of trucks and cargoes to and from the ports. Provision of rail infrastructure to dispatch bulk cargo to and out of the ports, is completely absent in most of the ports including Tin Can Port. The  poor management of trucks from different parts of the country is the reason for the chaotic situation on Lagos roads.

The trailers that come to Lagos to evacuate cargoes would have been directed to other ports  if they  were operating at full  capacity. Nigerian  waterway  is a high risk area because of the activities of pirates, the extent,  that before vessels  would call on Nigeria, they would demand a special insurance policy for the crew and cargoes. This adds to the cost of importation and goods. Till date, Nigeria has not achieved 100 per cent of International Ship and Port Facility Security Code (ISPS)  while smaller countries in West Africa have achieved it.

Statistics revealed that  the Federal Government   realised  N330 billion ($1 billion) from ports concession’s commencement fee, while equipment sales attracted N17.5 billion ($53 million), just as lease fee earned the government a whopping N1.3 trillion ($4 billion) to make a total revenue from ports terminals to N1.98 trillion ($6 billion).

Apapa Wharf declares over  N29 billion monthly while Tin Can Island Port declares over N1 billion revenue every  month, not to talk of Calabar, Rivers, Warri and Onne ports.

In a recent audit of the ports,  NPA and the Federal Government were indicted for  neglecting the agreement to provide common user facilities like power, good roads  and rail services as well as provisions of berth and navigational aids within the ports for effective operation.

The audit firm faulted  NPA for not keeping the gateways open for ships and for not making the premises to be accessible by sea and land for use by terminal operators in the performance of their operations.

According to the audit firm, the provisions of pilotage, towage, berthing, unberthing and shifting or vessel  services required by all vessels intending to call the premises have partially  been provided by the NPA after 10 years of port concessioning.

However, the terminal operators are crying that their investments of over N200.2 billion are being threatened by the cost of operations which has risen  by 328 per cent at the Lagos container terminals alone.

It was revealed that the  cost of power supply, NPA fees, salaries and equipment maintenance as well as low ship traffic,   were the major key challenges at the  ports.  The recent restrictions  on 41 items  also  plunged the revenue earnings of the terminal operators to 40 per cent. The operators  claimed that they  have spent a cumulative of N3.2 billion extra in meeting up with the agreed payment to NPA than what was initially projected, using the 2006 exchange rate.

Recall that the Foreign Direct Investments (FDI) on port facilities by the container terminal operators, was N200.2 billion as at 2015. Some of the facilities include:  forklifts, cranes, Rubber Tyred Gantry (RTG), mobile crane, trucks, trailers and other building infrastructural needs.

In 2014 alone, concessionaires invested on some port facilities valued at N178.3 billion.

In 2013, they invested N145.1billion; 2012, N111.5 billion; 2011, N90.9 billion; 2010, N72.5billion; 2009, N54.1 billion; 2008, N32.5billion; 2007, N23 billion and 2006, N5.6 billion.

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