Eromosele Abiodun presents the events that shaped the maritime sector in 2019, saying the failure to secured the International Maritime Organisation category C seat, land border closure and the Apapa Gridlock muted the good news of N300 billion port cost reduction
The year 2019 has been an eventful one for stakeholders, regulators and residents of Apapa, the once thriving port city that has become a shadow of itself following debilitating gridlock. The year started with many not sure of what is at stake as port access roads became impassable and shippers became victims of shipping companies taking advantage of the port access road crisis to rip-off their customers.
As the year progressed with the hope of any positive development evaporating, the federal government set up a task force headed by Vice President Yemi Osinbajo to clear up the gridlock in Apapa and its environs within two weeks. The task force was set up as a result of a presidential directive, which ordered the removal of trucks on bridges and roads in Apapa as well as the restoration of law and order in that part of Lagos.
However, the situation became even worse a few days after the task teams came onboard with allegations and counter allegations of bribery and inducement by the task team and truckers’ association. It was in the midst of the drama that the news came that the federal government has closed land borders nationwide to stop smuggling, banditry and criminality. Nigerians were still digesting the news and the resultant hardship that trailed the border closure when it was announced that Nigeria has for the fourth time lost the election to category C of the International Maritime Organisation (IMO) seat to Kenya.
But has not been all negative news as shipping companies are ending the year smiling with the cancelation of Secured Anchorage(SAA) Fees by the Nigerian Ports Authority (NPA). It was not only the shipping companies that ended the year smiling, though it has not come into effect, shippers will soon have cost reduce to the barest minimum following the landmark agreement between the Nigerian Shippers Council (NSC) and the shipping companies to have port cost reduce by as much as N300 billion. That is not all, for the first time in the history of the nation’s maritime industry, the world gathered in Abuja for the Global Maritime Summit to chart a course for maritime security in the Gulf of Guinea…
Land Border Closed
On August 22, as Nigerians head to work to find their daily bread that they were told they can no longer cross the border to do business as the borders has been closed. The Nigerian Customs Services (NCS) had announced that it will be conducting joint border security exercise across 25 states along with the Nigeria Immigration Service (NIS) and other security agencies as part of measures to secure Nigeria’s land and maritime borders.
The Public Relations Officer, NCS, Joseph Attah said the joint border security exercise, codenamed “EX-SWIFT RESPONSE,” has support from the Armed Forces of Nigeria (AFN), the Nigeria Police Force (NPF), other security and intelligence agencies.
The NCS said the joint exercise is being coordinated by the Office of the National Security Adviser (ONSA) and will take place in four geopolitical zones which are: South-South, South-West, North-Central and North-West, having a total of 25 states.
“It is expected that the exercise will promote inter-agency cooperation and increase preparedness to address trans-border security challenges such as terrorism, armed banditry, smuggling, proliferation of small arms and light weapons, among others,”the NCS said.
Unknown to many, the customs actually planned to close the borders under the pretence of security exercise. Following reports of suffering being encountered by travelers and Nigerians living in the border communities, the customs rushed to the press to debunk reports in the media that the land borders were closed. But as the NCS was making effort to deny media reports of the closure, President Muhammadu Buhari in far away Japan announced to the world that Nigeria closed its land borders to check rice smuggling.
Following the confirmation by the president, Nigerians had reacted differently with many hailing the move as a necessary step to check criminality along the border. However, it was established that though the move by the government was good, it also lost huge revenue and its citizens facing untold hardship as a result.
NPA Cancels $133.28m SAA Fees
Another major development in the sector in 2019 was the cancelation of the so called Secured Anchorage Fees. Concerned by threat to national security and the cost of doing business at the country’s seaport, the NPA had notified the Nigerian Navy of its decision to dismantle the Secure Anchorage Area (SAA), operated on behalf of the Navy by a private company, OMSL Limited. NPA insisted that the security of the country’s waterways was the statutory responsibility of the Nigerian Maritime Administration and Safety Agency (NIMASA), Marine Police, and Nigerian Navy, which must all ensure safe and secure Nigeria territorial waters.
The move by NPA was been hailed by stakeholders in the maritime sector, who claimed the initiative was timely to stave off a financial burden that the consulting company had brought on them.
SAA is an area outside the Lagos port that the Nigerian Navy, with a private company, has defined as a secure place where vessels can anchor safely from the threat of pirate attack.
THISDAY investigation revealed that vessels are charged $2,500 for the first day at the anchorage and $1,500 for subsequent days.
It was gathered that it takes between 28 and 30 days for a vessel to exit the anchorage. According to vessel traffic numbers obtained from the NPA, 1,666 vessels called at the Lagos ports alone in a quarter and a minimum of 55 per cent of vessels that call at the Lagos port stays at the SAA.
This means that OMSL Limited collects averagely, $133.28 million (N47.98 billion) annually. It has been collecting this fee since 2014.
Worried by this, the Minister of Transportation, Rt. Hon. Chibuike Amaechi, had directed the NPA to write a letter to the Chief of Naval Staff to request that the Navy stopped the operation of the facility. The NPA, in the letter, stated that the revenue generated from the operation at a charge of $1,500 per vessel per day from 2014 to date was neither remitted to it nor the federal government.
NPA argued that the patrol boat, NNS Dorina P101, as mother vessel, and the interceptor vessels, NNS Agede P258 and NNS Torie P259, were all purchased by it for the Nigerian Navy to patrol the anchorage and not to be designated for use at a facility that has no relationship with it.
In the letter dated October 9, 2019 NPA stated: “Sequel to your letter ref: NHQ/CNS/015/54/00/Vol.X111/695 of January 2018 to the Honourable Minister of Transportation giving the background to your involvement with the creation and operation of the Secure Anchorage for vessels by OMSL, the Honourable Minister had directed that a letter be written to your service to request that you stop the operation of this facility for the following reasons listed below:
“One, by virtue of Port Act (1954), an Anchorage Area is an integral part of NPA statutory responsibility while NIMASA, Marine Police and Nigerian Navy ensure a safe and secure Nigeria territorial waters. Two, the Secure Anchorage Area (SAA) (Centre Point 06 17’30N/003 12’00E) established by OMSL is located within the port limit, which should be strictly under the management and control of the NPA.
“Three, it is established that vessels are directed and regulated to this facility by OMSL, who NPA does not have contractual agreement or other with. However, the Navy has a Memorandum of Understanding with OMSL and is providing security to the anchorage. Four, the continued operation of this facility by a private entity could pose security threat to the nation.”
NSC, Shipping Firms Reach Agreement
Perhaps the most cherry news in the maritime sector in 2019 is the agreement between the federal government and shipping companies to reduce port cost, which is among the highest anywhere in the world. After almost two years of negotiations, the NSC on behalf of the federal government signed a landmark agreement with shipping companies to reduce cost by 35 per cent or N258.38 billion annually.
The cost of doing business in Nigeria ports ranks amongst the highest in the world with the ports notorious for high demurrage charges as a result of delay in cargo clearing process; high insurance premium of vessels coming to Nigeria and trucks conveying containers to and from the ports and higher shipping and terminal charges. This is aside the total annual freight cost estimated at between $5 billion and $6 billion annually, according to the Ministry of Transportation.
The Executive Secretary/Chief Executive Officer of the NSC, Hassan Bello said he was hopeful the agreement will be signed.
“You know in negotiation you can only be hopeful. We have been negotiating for one and half years. We have a small knotty problem which we hope to resolve by next week. Some I am hopeful we will conclude with the shipping companies.
“However, we will run the agreed MOU by the Ministry of Transportation, major stakeholders such as; shippers freight forwarders, Manufacturers Association of Nigeria (MAN) and Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA). This will take four days, then we will sign the MOU. Further, the total reduction would be 35 per cent reduction but the most important thing is we have come up with sustainable mechanism of settling dispute, which means no arbitrary or unilateral fixing of cost at the ports,” he said.
Besides the reduction of port charges, he said the council has also abolished the container cleaning fee hitherto being collected by shipping companies, just as fifteen other port charges were removed from the list of charges.
Nigeria loses IMO Seat Again
Many thought Nigeria will be fourth time lucky in its bid to clinch the International Maritime Organisation (IMO) seat, it was not to be as Nigeria for the fourth time, failed to clinch the coveted Category ‘C’ seat on the IMO Council.
The development, which apparently dampened the morale of stakeholders in the industry, would again deny Nigeria the pivotal role of contributing in taking key decisions in the global maritime space.
Category C comprises countries, which have special interest in maritime transportation or navigation, and whose election to the IMO council will ensure the representation of all major geographic areas of the world.
At an election held during the 31st Session of the IMO, Nigeria lost to Kenya by one vote in the Category C elections. Kenya got 111 votes to come 20th, while Nigeria got 110 votes to make 21st. Saudi Arabia got 106, Poland 101, and Liberia 100.
This made the West Africa lost its only seat in the council, as Egypt, Morocco, South Africa, and Kenya retained their seats in the 20-member Category C of the IMO.
The last time the country got elected into the council was in 2009, during the administration of Dr. Ade Dosunmu after its initial election in 2000.
Commenting on this development, Former President, Ship Owners Association of Nigeria (SOAN), Greg Ogbeifun, said the nation should look inward and develop its capacity and expand its platforms in other to earn a better reputation in the comity of maritime nations.
Ogbeifun, who is also the chairman of Starzs Investments Company Limited, said: “The country as a whole, particularly the maritime agencies responsible for this have stepped up their efforts to develop the sector in the last couple the years, although there are still some challenges. From the international perspective, I think we have done well, but what is remaining is for us to now look inward and see how we can develop our own resources.
“For example, we have been talking about training cadets. As long as we continue going around the world and beg people to put our cadets on their ships, we are telling the world that we don’t have any serious platform. First, we should be able to develop our own maritime platform that will make us less dependent on the foreign countries, because anytime anybody comes to your house to start begging for something, you will feel that the person is weak and deficient.
So, if you are in a position to vote that person into any serious position, the first thing that strike your mind is that, is it not this person that came asking me for internship space? Is it not this person that does have any single ship to carry his import or export?, “he said.
Speaking in the same vein, the President, Association of Nigerian Licensed Customs Agents (ANLCA), Tony Iju, said the nation should review its international relationship and then look inward to examine the reasons behind the loss, and make necessary amendments.
The Minister of State for Transportation, Gbemisola Saraki, who led the country’s delegation, said the campaign for the 2021 bid had begun.
Saraki said it was of paramount national interest that “Nigeria gets a seat on the maritime table.”
She said the country would, as a first task, appraise the factors behind its narrow loss.
“We are going to go back to the countries that voted to ask them what they did not think we have done well or why they did not vote for us,”Saraki stated.