57 Years of Policy Inconsistencies in Maritime Sector


Eromosele Abiodun posits that the Nigerian maritime sector has been held back by corruption and policy inconsistencies despite the gains of port concessions

Five days ago, Nigeria celebrated its 57th independence anniversary, a yearly ritual to mark years of self rule. And like many sectors of the economy, the maritime sector is as old as the country itself. Just like the country is facing many problems, the maritime sector is also bedeviled by many challenges that look impossible to resolve.
Oil was discovered in commercial quantities in Nigeria in 1956, four years before independence. Before then, maritime activities in Nigeria had largely been stimulated and sustained by export of agricultural products and solid minerals for earning of foreign exchange. The leading agricultural exports then were groundnuts, cocoa, palm produce and rubber. With the discovery of oil in 1956 at Oloibiri by Anglo-Dutch consortium, Shell D’Arcy, the oil and gas sector become the main driver of the economy and of maritime activities in Nigeria.

The state of the ports is a critical factor for efficient maritime operations. Hence the establishment of the Nigerian Ports Authority (NPA) by Ports Acts (Cap 155 LFN 1954) was to create a structural framework for the management and regulation of port operations. The authority executed its first wharf extension project between 1956 and 1961 in Lagos and Port Harcourt ports. Further expansions of Lagos Ports were done between 1970 and 1975, while in 1977, the Tin-Can Island Port Complex was inaugurated to ease the pressure of heavy imports (mostly government cargoes) on Apapa Port. In 1979, the new Warri and new Calabar ports were commissioned. Port construction and expansion continued between 1981 and 1985; the new Sapele port was constructed in 1982. In 1996, Federal Ocean Terminal Onne Phase 1 was constructed. Financing was done through agreement with the International Bank of Reconstruction and Development and the World Bank.

Reliable statistics in the mid-1980s showed that the public ports operated at 47 per cent of their capacity at the best and cargo throughput dropped down to 28.7 per cent of previous years. To increase efficiency, enhance capacity and introduce healthy competition in government enterprise. Government in 1988 promulgated the Privatization and Commercialization Decree. In 1993, the implementation of the commercialization programme of the NPA was partially carried out and it became Nigerian Ports Plc. This was reversed in 1996 as a result of inherent weakness of the policy and government, through the National Council on Privatisation (NCP), upgraded the state of NPA from full commercialisation to partial privatisation called concession, to make room for private sector involvement in port operations.

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 any 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 made 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 were allowed to rot.

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

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 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 Harcourt; 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 a myriad of problems.

One of such major problem was the 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.

Decaying infrastructure
In recent years however, essential infrastructure has been left to rot leading to the loss of life and properties. For instance, in the last few months, two tragic incidents have occurred that indicate the situation in Apapa is reaching implosion point, and these are the stoning to death of a LASTMA officer and the burning of banks.
Both incidents are directly related to the traffic gridlock in Apapa and are the products of the frustrations and stresses being borne by truck and tanker drivers.

The first was the murder of the LASTMA officer, allegedly by some tanker drivers protesting the death of one of their motor boys they blamed on LASTMA officers trying to seize a tanker for wrong parking.

The second and most disturbing was the burning of two banks and destruction of other business premises by some truck drivers protesting the killing of a truck driver by a policeman for wrong parking.

With numerous petroleum tank farms in Apapa, no one knows what will trigger the next altercation over the traffic gridlock that can cause massive destruction in Apapa.

Regarding how to resolve the ongoing traffic gridlock in Apapa, Lagos State, we may have started on a wrong premise and will end up with a wrong conclusion or solution going forward.

Apapa is home to Nigeria’s key ports (Apapa and Tin Can), numerous petroleum tank farms, national dailies (THISDAY Newspaper and BusinessDay), numerous manufacturing concerns, businesses and residents.

For the last few years (critically last two months), Apapa has been a no-go for visitors, hellish for those who reside and work there, and traumatic for business owners and those exporting or importing cargo.

The primary reason for the traffic gridlock, experts said, has been the complete collapse of the 2km Wharf Road which leads from the base of Ijora Bridge entering into Apapa to the entrance of Apapa Port.

This, the experts believe, has resulted in a backlog of trucks and tankers on the Ijora Bridge, sometimes all the way to Western Avenue, making it difficult for other road users going in and out of Apapa.

“Likewise, the only other access road out of Apapa through the Liverpool Overhead Bridge and Apapa-Mile 2 Expressway is similarly in a state of complete disrepair and blocked by trucks and tankers,” said a leading operator who do not want his name in print.

Wrong Premise
He added: “The wrong premise that we have started with is that fixing these roads, Wharf Road and the Apapa – Mile 2 Expressway, will resolve the traffic gridlock in Apapa. But that approach fails to answer the question of why these roads are deteriorating at alarming rates because many readily blame the prevalence of petroleum tank farms in Apapa for this.

“Yes, there are many petroleum tank farms in Apapa resulting in the deluge of tankers coming from many parts of Nigeria to lift petroleum products in Apapa. When you add these tankers to the trucks coming to the ports in Apapa, the trucks coming to the manufacturing concerns and other vehicles that have cause to be in Apapa, you will say Eureka. But again, this does not fully tell the story why the roads in Apapa are deteriorating at an alarming rate especially the access roads in and out of Apapa.

“The right premise for tackling the traffic gridlock in Apapa is in realising that the trucks and tankers that flood Apapa on a daily basis are forced to pack and queue on the roads.”

Holding Bay Palaver
He stated that with no holding bay in Apapa for trucks and tankers, their drivers are forced to park and queue on not only the access roads into Apapa but the main roads inside Apapa.

“So, roads and bridges that were not meant to be parking spaces for heavy duty vehicles but to serve only as thoroughfares, now carry the additional burden leading to their regular and speedy deterioration. This makes life hellish for both occupants of trucks and vehicles and has turned Apapa into a nightmare for all but the government which continues to collect trillions of Naira from taxes, duties and charges.

“Before the port concession exercise undertaken by the Obasanjo administration, trucks coming to Apapa and Tin Can Ports had holding bays inside of these ports for parking and queuing. During the port concession exercise, the Bureau of Public Enterprise (BPE) and the Nigeria Ports Authority (NPA) went on to concession every available space inside these ports to private concessionaires.

“With the concession of their holding bays inside Apapa Port and Tin Can Port, the NPA designated the Lilypond Terminal in Ijora which is outside the ports, as the new holding bay for trucks,” he said.

Dominance of Foreign Companies
It is important to point out that after years of going back and forth, the dominance of Nigerian maritime sector by foreigners does not look like abating soon.

Although some stakeholders are happy with the various reforms in the sector, they, however, want the implementing agencies to enforce the provisions of the law.

Recently, the Indigenous Ship owners Association of Nigeria (ISAN) decried the dominance of their foreign counterpart, stating that while their foreign counterparts are in business, their members are going through difficult times.

The Chairman of ISAN, Chief Isaac Jolapamo, said that while indigenous ship owners could only move cargoes within the nation’s waters once in a month, the foreign ship owners could move cargoes up to three times in a week.
According to Jolapamo, indigenous vessels are idle and huge costs are being incurred as the engines keep running.
Besides, he said that foreign ships were entering the nation’s waters at will despite the Cabotage law, while the relevant agencies watch the ships helplessly.

However, recently, ISAN had obtained court orders and arrested six foreign ships alleged to be trading in Nigerian waters in defiance of the Coastal and Inland Shipping Act, otherwise known as the Cabotage Act, which was enacted in 2003.

Jolapamo blamed the development on the inability of the implementing agency to enforce the provisions of the law.
According to the ship owner, six years after the Cabotage law came into effect, the law has not achieved its intended objectives.

The former President of the Nigerian Association of Master Mariners (NAMM), Capt Adewale Ishola, said that the nation’s indigenous ship owners should be able to transport more of Nigeria’s crude oil than the foreign ship owners, but the reverse had been the case.

A member of ISAN, Capt. Olaniyi Labinjo, urged the federal government to reverse this trend because in some oil producing countries, the indigenous ship owners dominate the trade.

Labinjo said that this was the only way to build a good future for all Nigerians and generations yet unborn.
On his part, the Deputy National President of the National Association of Government Approved Freight Forwarders (NAGAFF), Mr Eugene Nweke, said that it was unfortunate that 57 years after independence, Nigeria was yet to be ranked among the big maritime nations.

Nweke faulted the concession exercise, adding that the Nigerian Ports Authority Act 1990 ought to have been amended before the concession and not after.

He said that it was a shame that the Customs and Excise Management Act (CEMA); the NPA Act; Nigerian Shippers’ Council Act; were undergoing review now 57 years after the country gained independence.

Bad Govt Policies
Another major setback for the maritime sector, according to top players in the sector, has been policy inconsistencies of the federal government.

Chairman of Seaports Terminal Operators Association of Nigeria (STOAN), Vicky Haastrup believes inconsistent government policies have held the maritime industry down.

‘‘Government needs to ensure that consistency in policy is applied to the economy because there are lot of inconsistencies in policies that they keep changing from time to time and these does not augur well for business owners. The maritime industry has a huge potential if right policies are made.

“The port industry doesn’t need inconsistent policies. We don’t need policy summersault. The manufacturers are bleeding right now because they cannot plan, it may be N400 to a dollar today and in another one week, it is N450. That makes it very difficult for business owners to plan. That is quite scary and that is why investors are moving out of the country, investors do not have confidence in injecting finances into business in Nigeria and the reason was due to inconsistent government policies,” she said.

Haastrup, who is also the Executive Vice Chairman of ENL Consortium, operator of terminal C&D, Apapa Port, Lagos further stated that private investors need government’s confidence which can only be achieved through consistent policies. According to her, the maritime industry is second to oil with huge potentials only if the right policies are made.

She said: “Businesses owners need consistent government policies before they can open letter of credit or source for foreign exchange from the black market to bring goods into the country. For instance, Customs tariff keeps changing from time to time and before it changes for instance an importer of goods will have shipped his cargo from wherever it is and before the cargo lands, Customs has increased the tariff on such cargo then that business owner is already messed up and got into trouble financially so this are all the fortunes we need to sync. The port industry has a huge potential but like i said only if the right policies are applied.”