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Transport: A Sector in Search of Economic Regulator

05 May 2013

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Hon. Ifeanyi  Ugwuanyi, Chairman,  House Committee on Maritime

The transport sector as a whole, beginning from road, rail to sea, has no regulator, a development that has placed the fate of the consumers of the various services of the sector  on the service  providers. But a bill on the  establishment of a National Transport Commission (NTC), pending before the National Assembly appears to be the only hope  for consumers of transport services, reports Francis Ugwoke

The nation’s transport sector has not been lucky. The present state of the industry, including  road, rail and  the  seaports  show that it is one area where stakeholders have had to contend with  so many issues. And this is because the sector has no economic regulator, a development that poses a big challenge to the nation’s transport ministry. The problem has always been there, and as one observer  would put it, Nigerians are used to any bad situation.     Operators of commercial transport have been lords to themselves.  And for the rail services, one can understand  as the services  have been off and on, and never reliable.          

But if the seaports had no regulator prior to concessioning  of the ports,  the argument is that the situation cannot be allowed to continue after the ports  were leased to private operators.  And this is for obvious reasons. The current situation in the  sector is that  shipping companies  and terminal operators  have been having a field day with high tariff regime that has impacted  heavily on shippers in the country. It is even worse on the road transportation area.  In all, the result has been high cost of goods and services transferred to the final consumers and indeed commuters.  The expectation before  the  reform programme in 2006 was that  the ports industry would be sanitised  with cost of doing business  better than  what was the case before , but this has not been so.  

  The worry of industry stakeholders is that the  Federal Government  has not helped matters with  the conflict between the National Assembly and the  Transport Ministry  on the Ports and Harbour Bill. While the  Bill  has gone through the first reading   in the  Senate and the House of Representatives,  the Ministry of Transport is  still working on  a Draft of the Bill which  it said will first go through the Federal Executive Council (FEC)  before being sent to the National Assembly.  To industry stakeholders, this will indeed delay the whole process of giving birth to the much desired regulator in the transport industry as a whole. Except of course, if the National Assembly ignores the executive bureaucracy  and goes ahead with  what is already  before it.

Types  of  Transport Regulation
Experts hold the view that  in the transport sector, there are four areas  that require regulation. These include economic, technical, environmental and administrative.  What is currently being sought at the  National Assembly  for the ports industry is economic regulator or commercial regulator. What is not clear is whether there will be one regulator for the whole transport industry.   But  the regulator as it affects the ports  is expected to intervene in all areas of   operation, in terms of setting or controlling tariffs, revenues or profits, controlling market entries or exits. 

  In the shipping sector, the Nigerian Ports Authority (NPA), terminal operators , shipping companies and freight forwarders, truck owners  all have tariffs and charges. But  the worrisome thing is that there is no agency  that checks  them to ensure  that their charges and tariffs are competitive.  

Road, Rail Sector
In the rail sector, a similar thing happens as the Nigerian Railway Corporation sets its own tariff without  any agency regulating it. In the road sector, it is the same as there is no regulator.

   The truck owners can fix any transport rate and the importers must comply or their goods will remain in the ports. And outside the ports,  commuters  have had to suffer in the hands of transport operators who can at any point in time  decide to collect any rate they desire. 

Quality of Services
Whether in the shipping sector, rail or road sector, the common issue is the unreliability of services offered.  And the matter is worsened each day as there is no agency  to check the services providers as they decide  what quality of services to provide. This explains why importers will still be forced to pay for demurrage at the ports  even in cases where the fault  was  either the shipping companies or terminal operators  whose poor services  may have been responsible for the delay of goods delivery, like in the case of positioning containers for examination.  Lack of enough cargo handling equipment has led to many importers spending more time in the ports  in which they are charged demurrage in most cases.

Checking Market Entries and Exits
In the shipping industry, stakeholders complain that  each agency sets its own standards for entry into and exit out of the sector. Incidentally, there is not one agency that plays the role of checking  these agencies  and their customers, a shipping  expert  who pleaded anonymity told THISDAY.

Way Forward by Experts
Noting that there is regulatory vacuum in the transport industry,  stakeholders said that it is time to fill this vacuum for  the benefit of the national economy and the sector. Calling for the establishment of a National Transport Commission (NTC) to fill the vacuum, a maritime economist, Chief John Adekoya  said that the Federal Government has two options. Adekoya said government can either build a new commission from the scratch or it can transform one of its existing  agencies to perform the function of the   commission.    
He  argued, “a cursory look at existing  federal government agencies would show that the Nigerian Shippers Council  is best suited to perform the much needed economic regulatory functions in the transport sector  due to its  experience  in the area of regulation of local shipping charges”.

He  however argued that the  “option of setting up an economic regulator  from the scratch would amount to a duplication of functions of the NSC and constitute an unnecessary cost burden on the government”. On how to transform NSC into a regulator, Adekoya  said there were two ways, adding that it  could be through the National Transport Commission Bill before the National Assembly or pursue the amendment of the extant  Shippers Council Act to give the  Council  express economic regulator functions.

  On  how the interest of Nigerian shippers will be protected if the Council is transformed, Adekoya  said that the agency will be  expected to create a more level playing field for suppliers and users of transport services  for the advantage of shippers.
He also said that under this arrangement, there ought to be adequate consumer protection activities within the functions of an economic  regulator.

He equally added that the economic regulator  will empower shippers through the encouragement of active private sector participation of trade groups and other organised private sector organisations.  He  observed that already, the Council has created Shippers Associations which contribute in solving part of shippers problems with the introduction of Cargo Defense Fund.

Tags: Business, Nigeria, Featured, Hon. Ifeanyi Ugwuanyi, CHAIRMAN

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