Port Congestion: NPA Moves to Take over APM Operations

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•Writes company’s HQ in The Hague
•30-day ultimatum expires this week

Eromosele Abiodun

Barring any last-minute development, the Nigerian Ports Authority (NPA) will this week take over the operations of AP Moller Terminals (APMT) after the expiration of the 30-day ultimatum given to the firm by NPA to address inefficiency at its terminal, which has resulted in port congestion and Apapa gridlock, THISDAY has learnt.

NPA has also written AP Moller’s parent company in The Hague, Netherlands, expressing its frustration about the inadequacy of cargo handling equipment at APM Terminals.
It has also threatened that it would not hesitate to bring to fore the non-compliance clause in the 2006 port concession agreement to protect the interest of the port users.

The clause empowers NPA to take over the operations of APM in the event of its failure to meet the terms of the concession agreement.
The ultimatum, which was given to the company last month, would expire this week following which the NPA will take over the operations at the terminal
APMT is the biggest container terminal in West Africa with an annual capacity of 1.2 million TEU (Twenty-foot Equivalent Unit).
APM Terminals took over the concession at Lagos’ Apapa Container Terminal in 2006.

THISDAY’s investigation revealed that the NPA decided to take action following complaints by customs agents, importers and major stakeholders in the maritime industry who warned that the congestion at the port, if not addressed urgently will lead to emergencies that the federal government may not be able to handle.

Also, there has been a huge outcry over post-cost and demurrages as a result of the Apapa gridlock, which the clearing agents claimed is deliberately been fuelled by APMT for their selfish interest.
Consequently, the NPA in a letter dated, January 24, 2020, warned APMT that it would no longer tolerate delays in berthing vessels at the firm’s terminal, which the NPA said has resulted in vessels waiting at anchorage for 25 days or more to discharge cargo.

This delay, the NPA stated, is mainly attributed to the poor state of APMT’s cargo handling equipment and other infrastructure deployments in its terminal.
This development NPA added negates some of the fundamental problems the port concession policy was intended to address, namely: Congestion and delay in turnaround time as emphasised by the International Maritime Organisation (IMO) and several conventions to which Nigeria is a party.

When THISDAY contacted the Stakeholder Manager of APM Terminals, Mr. Odibe Daniel, on the issue, he declined to comment by ignoring text messages and phone calls.

NPA had reminded the company that: “In article 6.11 of the NPA-APMT lease agreement, parties agreed that APMT, ‘may use additional equipment on the premises other than the moveable assets and fixed assets and not included in the development plan, to satisfy its obligations, including without limitation of its performance of the operations and to meet the performance requirements…

“Consequently, the authority will not condone any act which is capable of undermining the federal government’s aspiration and policies. You are hereby advised to take immediate steps to arrest and ameliorate the situation within 14 days or it shall be treated as an event of default under article 13.1© and sterner penalty as applicable will be invoked.”

THISDAY gathered that following the expiration of the 14 days warning, the NPA in another letter addressed to the Managing Director of the firm, dated February 12, 2020 accused the company of inefficiency and disregard for the interest of the federal government and the Nigerian economy.
The NPA also accused APMT of favouring neighbouring African states by deploying better equipment in those countries.

The NPA in the letter stated: “I refer to our recent letter to you ref: MD/17/MF/VOL.XX/049 dated 24th January 2020, in respect of the delay in the berthing of vessels at your terminal. In the said memo, we drew your attention to our discontent in observing that vessels have to wait at anchorage for 25 days or more to berth and discharge cargo. It has become necessary to reiterate the essence of the government’s decision to concession the ports in 2005, this being to engage the private sector in the development of port infrastructure to promote operational efficiency, invest in automation of port process and enhance the economy. We expect that as a serious investor, AP Moller terminal would have made a considerable investment in relevant port infrastructure to improve the condition of the port as inherited, and would have invested in upgrading relevant cargo handling equipment in order to boost port efficiency.

“Our observations have not justified the reason for awarding you the concession, as we have not witnessed substantial investment by you in promoting port operations. This shortfall in efficiency is very glaring as there seems to be a very wide gap in your investment in Nigeria compared to your investments in our neighbouring African states, as they are better equipped and more efficient in their services.”
While stating that it is not oblivious of the import of APMT in the Nigerian maritime clime, the NPA called on APMT to note the provisions of the lease agreement in Article 6.1, “where it stipulates under the general requirement that the lessee shall use its best efforts to ensure that there is no decline in the standard of the operations.

“We, therefore, wish to inform you that in the event that APMT continues to fail to comply with its obligations and we do not see any change or improvement in your overall operations, resulting in the improvement of the turnaround and cargo clearing times, we would have no option but to invoke the terms of non-compliance, as set out in Article 8.1, which states, ‘if the lessee fails to rectify its failure, the lessor may fulfill such obligation for and on behalf of the lessee at its own cost. The lessor shall then be entitled to recover such costs provided that computation of costs to be recovered shall be based on the acceptable bid from one out of three bids submitted by reputable companies in such a field of operation…
“In accordance with the lease agreement, the authority is, therefore, issuing you a 30 days’ notice to rectify this failure from the date of receipt of this letter.”

THISDAY gathered that the 30-day ultimatum issued on February 12 will expire this week, precisely on March 13.
Also, in a letter addressed to the APMT’s parent company in The Hague, Netherlands, the NPA expressed its frustration about the inadequacy of cargo handling equipment at APM Terminals and warned that it would not hesitate to bring to fore the non-compliance clause to protect the interest of port users.