Nigerian Ports of Crisis

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Eromosele Abiodun posits that resolving the impasse over Intels Nigeria’s monopoly in the handling of certain types of cargoes at the ports, will require the input of terminal operators and other relevant stakeholders in the maritime sector in order not to destroy the gains of the concession policy and erode existing and potential investments

Following the calamitous multi-year port congestion that gripped the nation’s ports and arrested Nigeria’s development for much of the oil boom years of the 70s, the federal government made efforts to reform the system. The efforts never yielded reasonable fruits as corruption and inefficiency reigned, denying government the needed revenue from the sector.

As a result of the painful experiences of congestion in the 70’s, the federal government again made efforts to reform the Nigerian Ports Authority (NPA) in the 1980s.

Consequently, the NPA Management was restructured into 4 zones- Western, Central, Eastern and Headquarters, The government also created Nigerian Ports Plc. However, the policy failed abysmally due to rear-guard action from the diehard culture of centralisation. Government interference was rife and patronage and self-enrichment by some government officials overseeing chunks of the maritime sector went to a new level. Foreign exchange earnings from Nigerian Ports Plc disappeared into private pockets and port infrastructure was allowed to rot.

In a bid to arrest the situation, the federal government in 2001 came up with the idea ports concession to qualified private operators.

A Dutch firm, Royal Haskoning BV was commissioned to study Nigerian ports preparatory to the reform.
The resulting report, called Haskoning Study was submitted to the federal government and was accepted as a cogent x-ray of the Nigerian seaport system. The report criticised the over-centralisation of administration that saw NPA function as both regulator and operator; the overlap of authority in the system and the duplication of efforts.

It recommended a “Landlord” port administration model where government’s role would be restricted to policy formulation while private operators undertake the day to day running of terminal operations, stevedoring, warehousing; and investments in port equipment and infrastructure, among other activities. The report called for NPA to be unbundled into three zones and for concessions by open bidding.

After examining the report, the National Council on Privatisation (NCP), endorsed the “landlord” model, and under a new transport policy, NPA was given the role of technical regulator to manage the ports for which there were no bids. The National Transport Commission (NTC) was to become commercial regulator while National Ports Commission would become overall coordinating agency for the ports sector. Five landlord port authorities were slated for Lagos- the Niger Delta; Port Harcut; Calabar; and the inland ports. A total of 25 concessions were identified in 11 ports and there were bids from 110 companies to manage eight ports- Bonny, Calabar, Koko, Port Harcourt, Sapele, Apapa, Tin Can & RORO.

With bids submitted by March 2005, concession commenced in 2006 with 20 concessions concluded. In March 2006, the concessionaires commenced operations.
The flagship concession, Apapa Container Terminal was signed in March 2006 with APM Terminals, which had taken over P&O Nedlloyd earlier in the year. The Danish shipping firm, A.P. Moller (APM Terminals’ parent company beat 25 other bidders to the 25-year concession.

Doing Business in the Ports
Prior to the concession of ports to private operators in 2006, doing business in the nation’s ports was a hellish experience laced with myriad of problems, some of which were; turnaround time for ships which took too long making businesses to brace themselves for weeks if not months of endless waiting before their cargo could be loaded or discharged.

“Most of the few cargo-handling facilities owned by the NPA were moribund, so shipping companies had to hire such facilities from private sector sources, leading to extra costs. Dwell time for goods in port was so long that overtime cargo filled the most active seaports and led to massive port congestion. Labour for ship work was controlled by a mafia that controlled dockworker unions and had no scruples supplying less than the manpower paid for. Many port premises that could have been put to good use were abandoned, giving maritime businesses less options.

“In the road sections of the ports, massive portholes were the norm, rather than the exception, and this did nothing to reduce waste of man hours brought about by snail-like movement of goods to and from the ports. The resulting congestion led to consignments becoming untraceable as if they suddenly disappeared into thin air, and in such cases, NPA often seemed helpless in effecting the return of such absconded cargoes, to the chagrin of hardworking businesspeople. As a result of porous entry points, dangerous miscreants also known as wharf rats swarmed the ports to also eke out their daily bread, leading to predictable tales of woe on the part of responsible business people, “said a leading operator.

Intels Monopoly Bid Challenged
Meanwhile, the appreciable progress recorded in the sector in the last 11 years may be at risk if the NPA fails to address the post concession crisis that operators blamed on Intels Nigeria Limited monopoly bid.

Since April 27, 2015 when the NPA issued circular directing owners of private jetties that handle oil and gas cargoes to relocate their operations to designated ports in the South-South, the sector has been embroiled in crisis, leading to accusations and counter accusations. The directive was perceived as a death warrant handed down to some companies in the maritime sector. Recently, terminal operators and private investors in Nigerian ports called on the federal government not to grant monopoly for handling certain types of cargoes to Intels Nigeria Limited so as not to destroy the gains of the concession policy and erode existing and potential investments in the sector.

Their call came on the hills of the firm’s claim of monopoly of oil and gas vessels in the port despite enjoying massive remuneration from the federal government for its facilities.
In a chat with officials of the Nigerian Ports Authority (NPA) recently, the General Manager of PTOL Terminal Limited, Mr. Henry Cline decried the situation stressing that the diversion of cargoes from the port to Intels under the guise of oil and gas is a challenge that must be resolved.
He added that the term oil and gas is used by Intels to monopolise the operation of such cargo in Rivers port.

Another stakeholder noted that the Seaport Terminal Operators Association of Nigeria (STOAN) and all the terminal operators in Nigeria have made it clear that Intels have no such entitlement.
She said: “Intels is a concessionaire, what that means is that the government gave them their facilities to run on behalf of government. Intels has been so privilege as a concessionaire others because government pays for their facilities.

No other concessionaire has that privilege. So the whole maritime industry has accepted that government is paying for Intels’ facilities whereas the rest of us have to pay for ourselves. What we will not accept is this monopoly; we won’t accept it because in 2007 and 2008 when that monopoly was there before it killed the industry.

“We would not accept it because many of us have invested hundreds of millions of Dollars in the intervening 10 years and there is no way you can tell people to invest and have a level playing field, give them licence to operate and again tell them they have to handle their business with Intels. Intels will be killing themselves if they insist on it. Despite their pronouncements, Intels is not bigger than Nigeria, if they kill Nigeria they will be killing themselves. Our position is that there must be no monopoly and that we have no issue with Intels, “she said.

She added: “Our position is that their needs to be collaboration among industry stakeholders and we strongly encourage government, the private sector and even Intels that we need to seat round the table and decide how we need to move forward. We need to recognise that there is no future for Nigeria without all of us coming to work together.

NPA, NSC Kicks

The immediate past Managing Director of Nigerian Ports Authority (NPA), Habib Abdullahi had before his removal from office said the $3.8billion Floating Production Storage and Offloading (FPSO) project is responsible for the ongoing face-off between INTELS and other operators.
He stressed that the dispute, if not handled properly is capable of diverting foreign investments recorded in the maritime sector to other countries.

Recently, the Director, Commercial Shipping Services, Nigeria Shippers’ Council, (NCS) Mrs. Dabney Shall-Homa asked the federal government not to grant monopoly for handling certain types of cargoes, which some have classified as oil and gas cargo, to Intels Nigeria Limited, which operates primarily in Onne, Delta and Calabar ports.

Shall-Homa gave the advice at an industry stakeholders meeting with the Minister of Transportation, Rotimi Amaechi in Lagos.

She said: “If there is any agreement which has been signed as a contract between parties, there is need for government to tinker with the contract because the intendment of that contract is to create a cartel and not to create a level playing field which is the spirit for concession.

“The concession agreement that were made has certain critical pillars. One of those critical pillars is to ensure that there is no evidence of monopoly and abuse of dominant position and to create a level playing field and in doing so competition will be promoted between the players.”

She also argued that there is no cargo classification known as oil and gas in any part of the world. She said seaport terminals are classified as multipurpose, container, bulk or general cargo terminals.

“We have been in this shipping industry for 32 years going forward. There has never been any classification as oil and gas. When we put that on our gazzete as shippers’ council seeking to identify cargo coming into Nigeria and we distinguish oil and gas, we were asked by our colleagues internationally from which index did you get oil and gas?

“Is there any cargo or terminal called oil and gas cargo? Multipurpose they call it, which could handle anything. We have the general cargo terminals, bond cargo terminals and containerised terminals. That is how terminals are classified internationally and Nigeria cannot be an island because we are trading with others,” she said.

On his part, a former Minister of Interior, Capt. Emmanuel Iheanacho advised Amaechi to concentrate on opening up the market for different players, adding that it would not be fair to restrict the market to a number of people.

According to him, the market should be opened to pave way for competition so that people can have a choice.
“If we say because there are agreements made in the past and we can’t speak beyond the agreement, we are never going to make progress. What we want is a market where people can openly compete on the basis of the quality of service that they can render.

“Supposing an operator was located in Lagos and prefers to receive his oil cargo in Lagos but there is a law which says the cargo has to be delivered in Port Harcourt or Warri; is that fair? That will introduce extraordinary cost that will ultimately be borne by Nigerians who need the services,” he said.

Intels Not a Monopoly
Reacting to the allegation in a statement made available to THISDAY, Intels stated that it is not monopolising the Onne Oil and Gas Free Zone.
The Onne oil and gas free zone which is located in Eleme Local Government Area of Rivers State is home to several public and private own companies including, terminal operators and freight forwarding firms.

Intels won the bid for the concession following the conclusion of the port reforms initiated by the during Olusegun Obasanjo administration.
Intels Head of Public Relations, Mr. Isidore Sambol said there is no iota of truth in the allegations of monopoly against the oil and gas servicing firm.

According to him, allegations that the company is a monopoly fell flat on the fact that there are close to 170 other companies operating at the free zone.
He however stated that some of the companies in the free zone have suffered low patronage, thus leading to their closure in recent times.

Sambol explained that INTELS has operated at the free zone for over three decades and has made major contributions to the socio-economic development of the country.

According to him, “Our unique one-stop shop approach to logistics has halved the cost of logistics in the industry and has saved the Nigerian nation huge money. INTELS through its corporate social responsibility (CSR) policy, has empowered people of the host communities through road networks, healthcare and human capacity building, women empowerment programmes, football tournaments, among others.”

FG Sets Up Committee
To address most of the problems facing the sector, the federal government had raised a committee charged with the responsibility of reviewing concession agreement with operators of private ports terminals.

Members of the committee, set up by the former Minister of Transport, Idris Umar, included Nigerian Shippers’ Council, Nigerian Ports Authority and the concessionaires.
Speaking at an interactive session with Journalists in Lagos, the Executive Secretary of the NSC, Hassan Bello said the committee is to look at the shortcoming of the agreement.

Bello said: “The concession agreement has been there for eight years. Even the operators are clamouring for review of the concession agreement. The agreement has provision for review. What is most important to us is that the agreement right from the time it was signed made provision for the appointment of an economic regulator.”

“This is to take care of new development and changes after eight years of operations so that we can correct them, so that the obligations, the rights, the duties and every part of the agreement can be clearly stated,” said Bello.

Gains At Risk
In a goodwill message delivered at a compliance and monitoring workshop organised by the Nigerian Ports Authority (NPA) recently, Chairman, Seaport Terminal Operators Association of Nigeria (STOAN) Princess (Dr.) Vicky Haastrup, listed several positive developments that have taken place in the country’s ports in the last nine years due to the policy of port concession.

She listed some of the gains to be; rehabilitation and Reconstruction of quay aprons and stacking areas, expansion and Reconstruction of container terminals, rehabilitation of terminal access roads and provision of lightening facilities including generating sets. Others, she added, are; rehabilitation of the sheds/warehouses, reconstruction of drainages, construction of perimeter fencing and gate houses, improved workshop facilities of modern standards, plants and equipment.

“Others are the acquisition of modern state of art forklifts, acquisition of container handlers for cellular trade demand such as gantry cranes, reach stackers, handlers Mafi- tugs etc. Stevedore services and dock labour reforms, stream-lining stevedoring companies, establishment of an acceptable manning scale to ensure high productivity.

“Application of direct interview selection and employment of dock labourers with joint effort of stevedoring contractors under the supervision of NIMASA, elimination of zoning and permanent berth ownership by dock labourers, improved salary structure and better welfare packages, training and re-training as well as capacity building opportunities, “she said.