Nigeria’s Ports of Chaos

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Eromosele Abiodun x-rays the recent protest by a coalition of the two industrial unions in the maritime industry over the contentious amendment of the NPA Act

Like every other sector of the Nigerian economy, the maritime sector is bedevilled by many challenges that look impossible to resolve. Despite the fact that the federal government rakes in trillions of naira from the sector on a yearly basis, little attention is paid to the worrying decay the industry has suffered over the years.
Prior to the concession of ports to private operators in 2006, doing business in the nation’s ports was a hellish experience laced with a 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.

Before the concession, most of the few cargo-handling facilities owned by the Nigerian Ports Authority (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.
Following the concession, there has been an improvement in port operations in areas relating to anchorage/berthing, ship turnaround time, throughput time, clearance and yard handling. Despite the modest improvement the concessioning has brought to the ports, misplaced government polices has remained the bane of the sector. This has led to massive revenue loss for operators.

For instance, a recent report by top global accounting and audit firm, Deloitte revealed that Terminal Handling Charges (THC), which is the main revenue stream of terminal operators, declined by 22.4 per cent between 2006 and 2016 as a result of depreciation of the naira and inflation.
The report revealed that at the beginning of port concession in 2006, THC collected by the operators stood at $232 per TEU but declined to $180 per TEU by 2016.

According to Deloitte, “The THC is the main source of revenue for the terminal operators. This is the payment received from transferring cargo from ship/quay side to the yard for release to clearing agents/customers.”
According to the report titled, “Public Private Partnership (PPP) as an anchor for diversifying the Nigeria economy: Lagos Container Terminals Concession as a Case Study,” during the same period between 2006 and 2016, the terminal operators business was adversely impacted by the rise in Consumer Price Index (CPI)/Inflation, with the CPI Nigeria rising to over 177 per cent since 2006. It said foreign exchange (FX) fluctuation also impacted the value of the THC with over 224 per cent FX depreciation between 2006 and 2016.”

The report, which was released by Deloitte Nigeria’s Director of Strategy and Operations, Bola Asiru; Senior Manager, Oladotun Bamigbetan and two others, stated that if the terminal operators were to adjust the THC yearly in line with changes in foreign exchange and Nigerian CPI, the rate should have increased to N185,112 per TEU.
“In real economic terms, the operators are losing revenue by not adjusting their THC in line with market realities, ”Deloitte stated.

The firm said the FX challenges that Nigeria faces as a result of the fall in global oil prices is further pronounced for terminal operators as a large part of their (capital expenditure(capex) and operational costs are in US Dollars. It said the operators’ dollar denominated costs includes equipment acquisition and maintenance costs and payment of lease fees to the Nigerian Ports Authority (NPA).

It said: “83 per cent of Terminal Operators revenues are received in Naira, 17 per cent is received in US dollars. Terminal Operators have to constantly source for US Dollars through the parallel market at very high rates in order to meet their statutory and operational cost obligations.”

The firm further stated that terminal operators face huge challenges in the area of storage as the terminals are used as “cheap storage warehouse alternatives” by cargo owners.

“The current policy provides for a free three days storage after which a charge of N900 is applied per day and regulated by the NPA. Importers take advantage of the low storage charges offered by the terminal operators to store their imported goods at the terminal as opposed to offsite warehousing facilities that charge as much as N60,000 per day. This leads to congestion at the terminal and hinders the productivity and storage capacity of the terminal,” the report said.

Deloitte further stated that during the 10-year period under review, terminal operators made huge investments on the acquisition of modern cargo handling equipment; development of port infrastructure such as buildings, quays and storage yard; lighting; automated tracking system; trainings and supply of electricity.

Shipping Companies Deserts Nigeria

Before the Deloitte report was released, 20 shipping firms had left Nigeria over low business, intense hardship imposed by poor government policies. Also, 1000 maritime workers have lost their jobs, Maersk the leading operator in the sector reduced crew by 400. In the same vein, dockworkers were said to be groaning under threats of $7 billion cash call and deficient import policies

This is just as Dockworkers Union of Nigeria (DUN) lamented that over 3,000 workers have already been laid off by various shipping companies, terminal operators and logistic companies, owing to lack of financing and poor import policies of the federal government.

The workers also blamed the massive retrenchment on the inability of the federal government to meet its joint venture obligation with the international oil companies which are major partners with the marine logistic companies.
Some of the companies that have already made an exit include Mitsui O.S.K Line, Nippon Yusen Kasha, Taiwan’s Evergreen Line, Messina Line, Hapag-Lloyd and Gold Star Line (GSL), among others which were forced to withdraw from the West Africa route due to growing losses as a result of declining volumes.

Maritime Workers Showdown Ports
That is not all. In the last few years, access roads to the port have become a nightmare to businesses leading to the death of many and cargo congestion at the port. Effort to get the federal government to fix the port access roads over the years has failed. In a bid to get government to fix the roads, customs clearing agents and Amalgamation of Trucking Associations shut down process of clearance of goods from the Lagos ports and evacuation of cargoes by withdrawing their services. To ensure effective shut-down of the ports, the Association of Nigeria Licensed Customs Agents (ANLCA) joined forces with the truckers. National President of ANLCA, Prince Olayewola Shittu, told THISDAY that the action will continue until the port access roads are fixed. Shittu said several pleas to government to fix the roads in the past have fallen on deaf ears. He noted that there would be no going back until government takes action. According to him, “We are going ahead with the strike. We will withdraw our services, we will not work. Although some of our people are meeting with government officials now but I know that we cannot just turn round like that, no way.”

Controversy Galore
On Tuesday this week, coalitions of the two industrial unions in the Nigerian maritime industry again cripple activities in the nation’s seaports over contentious amendment of the Nigerian Ports Authority (NPA) Act.
The protests, which took place simultaneously in all the nation’s seaports, was jointly organised by the Maritime Workers Union of Nigeria (MWUN) and the Senior Staff Association of Communications, Transport and Corporation (SSACTAC), Maritime Branch.

Sources close to the union had earlier hinted that the unions decided to embark on the mass protests because there was no response from the National Assembly since the two unions wrote to the lawmakers in June. In the letter, the unions had expressed their opposition to the Bill.

Already, the Ports and Harbours Authority Bill, 2015 which seeks to repeal the Nigerian Ports Authority Act 1955 as amended, has been passed by the Senate and is awaiting concurrent passage by the House of Representatives.
The bill was sponsored by a member of the House of Representatives; Honourable Ossai Nicholas Ossai.
MWUN had earlier petitioned the Speaker of the House of Representatives over the passage of the bill, saying it spells doom and would lead to massive job losses at the NPA.

They also pointed out several economic and security implications of the Bill if passed.
When contacted, Secretary General of the union; Comrade Felix Akingboye had confirmed the imminent protests, even as he refused to give details.

“We are mobilising our members in Lagos, Port Harcourt, Onne, Warri and Calabar for the demonstration. It will hold simultaneously in all the port from 6 am to 6pm on Tuesday. We are opposed to any attempt to further strip Nigerians of our patrimony through further concession in the guise of amending the NPA Act 1955 as amended.

“The promoters of the Bill are only after their personal interests and this is to concession the harbour operations of NPA to private individuals, whereas, all over the world, harbour operation is an exclusive duty of government because of the security implications and huge revenue generation”, he had told THISDAY on Tuesday.

According to him, “If passed into law, the proposed Bill has great security and revenue risks for the federal government and it would lead to mass sack of NPA workers. We have carefully perused the bill and the existing NPA Act of 1955 as amended. We cannot see any deficiency in the present NPA Act that warranted the bill except for the latent intention of its promoters to corner for themselves harbour operations, which is a major revenue earner for the NPA and by extension the federal government without taking into consideration the security implications to the country.”

He advised the government to avoid the same mistakes of the port concession of 2006, which he said, led to the sack of 12,000 NPA workers.
On his part, President General of the MWUN; Comrade Adewale Adeyanju had vowed that the workers would not allow politician and their cohorts to further strip the ports through the Bill.
“We are aware of their plans, when the Bill was being debated, there was no invitation to critical stakeholders, especially public hearing. How can you be amending the Ports Act without taking the opinion of port workers?” We are not going back on this, ”he declared.