Bello: There is Huge Regulatory Gap in the Transport Sector

07 Jun 2013

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Nigerian Shippers Council

The Executive Secretary and Chief Executive Officer (CEO) of Nigerian Shippers Council (NSC), Mr. Hassan Bello, spoke with Francis Ugwoke on the regulatory challenges in the nation’s transport industry, and efforts to address the issue of  high risk premium charged by European shipowners over claims of piracy in West African territorial waters, among other issues. Excerpts:

Protecting the Interest of Shippers
The issue of intervention on behalf of shippers is not a Nigerian thing, it is international. The United Nations Conference on Trade and Development (UNCTAD), and the World Bank recommended public, government intervention in the matter of relationship between carriers and shippers. There are two parties in the contract of freighting - the carriers and then the shippers.

And the Nigerian situation and other African countries was that the odds were against the shippers because they were weak. They were fragmented, they were not organised, while the carriers are financially heavy, they are organised. So, there was tendency to exploit the shippers. Now, what happens if this is the case, if this happens, that means there is no balance? That means there is no level playing field, which is the atmosphere needed for shipping to thrive.
So, governments or the UNCTAD deemed it fit to recommend the setting up of shippers’ council. This was done all over Africa, Asia and even Europe. All they do is to protect the interest of those who buy space in ships, that is the providers and users of shipping service. So, the Nigerian Shippers Council is a countervailing authority. With government order, it will take the interest of the demand side of the equation in shipping.

Piracy and Increase in Charges
The issue of piracy is a matter of evidence. And we have been saying that what we have is not the issue of piracy, it is pilfering or at most offences committed on board the ship, robbery. It is prudential issue really, because I think piracy means the whole seizure of the ship, and so on and so forth. But if you look at few cases, pilferage, port rat, cases of armed robbery, may be aboard the ship, these are completely different from piracy.
It is therefore wrong for anybody to increase either the risk premium, because that is what is happening to add to the Nigerian bound cargo or vessel. And I think we have taken up the issue. We are discussing this at the highest level.

Shipowners change of mind
The European shipowners will definitely change their mind. They will do so.

Council Functions and Cases
We have handled many cases. We have Shippers Complaint Unit that is strategically placed to handle day to day issues on behalf of shippers in their shipment. Sometimes, their cargo is not delivered, it is mis-delivered, or not delivered or delayed, and you have issues coming up. All these we have been able to mediate. We have been able to authoritatively see that there is restitution or there is redress for Nigerian shippers.

If I may give some examples, Niger Delta Power Holding Company Limited and APMT, a lot of issues, application of federal government 70 per cent waiver for Nigerian independent  power project overtime cargo and all that type of thing. When this was brought to our attention, we statutorily intervened and we have substantial waivers with APMT amounting to N13 million, then the shipping company also waived the sum of N8 million.
We have so many of these, Bi-Courtney at the MMA2 had an issue with the shipping company on containers, we intervened and very amicable settlement was reached. We have this on daily basis and this is having an effect on the economy.

Complaints by Importers and Freight Forwarders
It is true that there have been excessive charges at the ports and this is in fact surprising because the whole essence of port reform, one of the cardinal issues is to reduce cost. But I will attribute that to pioneering problem, and secondly, our ports. They have physical limitations, because one of the things which NSC is geared to achieve is to reduce the cost of doing business. Now, cost is one of the indicators of efficiency of the port or its ability to compete.

That is why some people would rather take their cargo to another port, because it is a question of choice. You can decree a hub and say Nigerian ports must be hub. If I want to bring my cargo, I have to see what the turnaround time for the vessel is, what is the dwell time for cargo, how far can I clear my cargo or how soon. What is the cumbersome procedure? These are things which we advocated, for Nigerian ports to be more different and the cost is one of the things.
We have had to reduce the charges first time. There were many charges; we had to reduce them to seven. We are empowered by our Act to negotiate tariff and port charges with terminal operators and this we have been doing effectively. So, I think by and large with the added momentum of port reforms, the cost will reduce in time and drastically too.

Update on the Shipping Charges
There was a time about 24 shipping companies took NSC to court over the local shipping import regulations which were made to NSC Act. This Act specified or provided that local shipping charges, that is international handling charges and so many of them cannot be increased without recourse to NSC. The council to the exclusion of all other agencies has the right to negotiate these charges and to publish these charges.

The shipping companies went to court but they lost on two instances… because we cannot have anarchy in the name of privatisation. Both parties must adhere to the international way of doing things. And they are aware we are advocating that there are international ways of doing things. So, when the case was withdrawn, we had a MoU with the shipping companies. The reason is that shipping mechanism is being regulated by and large by the law of demand and supply and other economic laws.
But I have seen some few terminals trying to lord it over shippers to increase charges arbitrarily unilaterally and NSC will ensure that this practice is stopped. But we have by and large co-operations from shipping companies and terminal operators. Many of them will come here that we negotiate charges. We are in the process of getting these charges approved as the Ministry of Transport will soon release it… and we will publish it. So, the issue of arbitrary charges will be a thing of the past very soon.

Empowering the Council
I think it will not be totally true to say that the council is not empowered. But what is happening is a fusion of time over the dynamic international trade. The law that set up NSC was enacted in 1978 and now, so much water has passed under the bridge. There have been a lot of tremendous changes in the way of doing trade; the law could not match these developments.
And these developments needed to be codified, we have electronic commerce, we have electronic bill of lading, we have  door to door delivery of cargo, inter-modalism, multi-modalism, use of inland waterways, but most significantly, what we have is increased participation of private sector  in the  provision of not only infrastructure but services. With this, the equation has changed. So, institutions will have to adapt to that.

Now, if the Ports Authority, which is the government public authority, was handling cargo and doing everything, all you have to do is to call meeting. Both NSC and NPA         are under the Ministry of Transport. But now there is a change in nomenclature. There is a change in system, there is a change in service delivery; there is now a change even in customs trade because the private sector is now participating. So, the mechanism for coming to an agreement has changed.

And that is why the law of 1978 may not at all times be capable of addressing those rapid regulatory changes that have taken place. But still, if you look at the core function of NSC, it is equipped to advise the government on adequacy of facilities, standardisation of facilities.  It will advise the government on array of issues concerning shipping in the sense that if you look at the law, the NSC is an umpire in the relationship between service providers and the users of shipping services.

Penalty for Disobedience
There are sanctions in the law, fine and even imprisonment. It has not been able to be utilised as such because there must be some leverages in shipping. Shipping should not be seen as connected with penal thing. It should be negotiations and agreements. But the Nigerian Government focuses more on shipping and you have seen the result. There will be competition, rail is coming up, and it is already carrying cargo. There are inland waterways. So, it is my choice on how I carry my goods. Then, there are terminals. Some terminals are more expensive than others. So, I will patronise the terminal that is less expensive for my cargo. So, sometimes, these are eliminated not by direct intervention but by institutional changes.

Sanction for Erring Operators
Indeed, we have sanctioned. Not penal sanction, but the penal sanction is that Shippers Complaint Units… they go and intervene and in most cases they respect our intervention. We have a mobile Unit that goes round to say…. You cannot do this, and we receive at least 10 complaints per day.

Arising Challenges
There are challenges actually. And it is to adapt NSC to perform its role. Things have changed and we take cognisance of changes in international trade. So, there must be an operating law that is in line with modern practice. So, we have challenges of regulatory and legal framework. And I think this is being addressed. This is being addressed because there are many changes. NPA cannot have the law that they had. Nigeria Railway Corporation Act was of 1955.

If we are going to invite private participation in running of railways, then you cannot have 1955Act. All these things have to change to meet what is at present. So, this is one of the things. Secondly, it is funding. We have had occasion to make representations to the executive arm of government and even the National Assembly on the proper way of funding NSC, which is a law, NSC Stabilisation Act which is one per cent of freight paid by shippers. NSC has never been funded by government.
They are funded by people they are set up to protect. So, shippers also pay one per cent of freight, import, export through all the entries, the sea, air and land borders. Now, this has not been effectively done, and we are pushing effectively to see that this is done because the functions of NSC have transmogrified.

Bill on Ports Regulatory Agency
The Council has always handled regulatory functions. The statutory functions of the council are advisory and regulatory. As I said, that things have changed, so you need a change in law for us to come as a regulatory body fully… taking into consideration that the private sector is controlling things now. What is the NCC doing? It is to control the private sector. What is the CBN doing?... it is to control what is happening in the banks. What is NAICOM doing in the insurance industry… so there is a huge regulatory gap in the transport industry.

Why should it be different? Why are all the sections of the industry being regulated? What is happening to transport? And we are not even heavy handed regulatory body. We are moderated. You have to moderate these things. The functions of a regulator are what we have been doing. We encourage private participation in the service delivery. We encourage competition. We are against monopoly. We are against abuse, dominant market position. We are also designing ways of settling dispute.
We want to control the entry and exit into the industry so that we emulate countries. We want to see that delivery of service is according to world standard… and we have to align the Nigerian transport industry to the world economy because by and large the transport system of the country reflects the seriousness or otherwise of that country.

Cost of Doing Business in Nigeria
I have already said there are teething problems…. capacity and so and so forth. But I think there are pangs of them you experience when you introduce something as phenomenon as port concession. But these are temporary things. The moment we have more ports, Greenfield development in Lekki, Badagry and Akwa Ibom, you will see that these things will reduce drastically, and shipping cost will have to come down, because it is competition. It is not monopoly.

State of Inland Container Depots
The ICDs or dry ports were one of the first set of infrastructure to be developed using the public private partnership. So, you will agree with me that there will be teething problems. At that time, there was no Infrastructure Concession Regulatory Commission (ICRC). But the most important thing is that the concept of dry ports is extremely relevant, not only to the transformation agenda and the transport changes, but also to the economy.

What we are doing is to bring the shipping services to the doorsteps of shippers. And this is to galvanise exports. If you look at all what is happening in the economy, the economy now is geared, and it is apparent, towards production. We have tremendous transformation in agriculture, and we have transformation in the mining sector. We have transformation in the small and medium enterprises… we have also in oil and gas sector. But if you don’t have in the transport sector, all these will be in vain.

So, bringing the dry port to the people is to remove the perennial congestion at the seaport, because port is not a dwell place for cargo. It is a transit place and they are evacuated to the hinterland where the dry ports are for quick examination. You pay duty, Immigration, Police, all other paraphernalia of ports are there. Secondly, as I said, it will reduce transport cost. Even if you are doing cashew nut business in Benue state, you have to transport them all the way to here…you put them in a dry port and cut cost.

So, we had to give them legal framework… that is ports of destination and ports of origin. The Ministry of Transport has already set up a Committee and I am very sure, very soon, the moment these things are gazetted, the shippers will recognise them. They can consign cargo to them. So, you don’t have Liverpool to Lagos… you have Liverpool to Isiala Ngwa in Abia State.
And these things will not be examined in Lagos but in the dry port. We are seeking the cooperation of the Nigeria Customs Service, all terminal operators at the seaports because they have to buy into this. And you can see that it is a whole package.
Security Threat to ICD Project
What security situation? There is no security threat… we still trade and will continue to trade… and you will be amazed by the amount of trading going on. We shall never be downtrodden by security challenges.

Truck Transit Park
It is to ease movements of goods. You know access to ports is one of the most important things to measure the efficiency of the port, no matter how efficient a terminal operator is, if you don’t have access, like road, rail...even inland waterways to evacuate these goods to their destination, then there will be a lot of problems. What we have now are trucks that are very old carrying these cargoes. They break up or park anywhere. You see them at Ogere and somewhere near Abuja, where trucks are indiscriminately found.
It brings damage to cargo. This means delay in delivery, which is a crucial thing…a lot of economic waste. We are pursuing this with private sector participation. We are already meeting with Kogi State government where we are looking for land. And this will be Model One so that all these trucks converging from many places have a place to rest before embarking on their journey.

Interested States
We are doing this with ICRC. It is a preliminary thing, but we are gearing up. But we have even had enquiries from private investors, but you know we have to formalise it. There are lots of processes, financial issues and so and so forth. But it is a deliverable project and the NSC is on top of the situation.

Completion of Project
There are certain issues, like the ICRC, then having transactional advisers, having to go through transparent bidding for the concessioning and the building, the agreement and many  of them, because we want to put in place world standard facilities, which everybody will see.

Hitches to the Project
I told you ICDs were having teething and pioneering problems, but here we correct all the mistakes of the past. We know what we are doing with this, and we surely will deliver this.

Hassan Bello
Hassan Bello joined the services of Nigerian Shippers’ Council in 1998 as a Deputy Director and Head Legal Services, from the Ministry of Justice, Sokoto State. He was also in Sokoto Investment Company Limited where he rose to the rank of acting Managing Director/ Chief Executive Officer.

He is a graduate of the prestigious Ahmadu Bello University, Zaria where he bagged a Bachelor of Law, LLB and Masters of Law, LLM. Bello had attended other courses with the University of Southampton for a Maritime Law Summer Course; Lloyds Maritime Academy on Time and Voyage Charter Parties; Lloyds Maritime Academy in various courses on Carriage, Contract of Affreightment, Shipping and many other professional maritime courses and seminars. He is a member of notable professional bodies, and a Fellow, Nigerian Institute of Shipping, Fellow, International Dispute Resolution Institute, Member, Chartered Institute of Arbitrators.

He was a member and Spokesperson of the Nigerian delegation to the negotiation on International Carriage of Goods Wholly or Partly by Sea (Rotterdam Rules), Member Ministerial Panel of Inquiry into the affairs of the Niger Dock Plc, Member Ministerial Committee on Cabotage Policy and Law and many others. His professional experience spans from Company Law and Practice; Regulatory Framework Enforcement; Carriage of Goods; Litigation and Arbitration.

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