Understanding FMoT, NPA, INTELS’ Brouhaha

Eromosele Abiodun writes on what transpired between NPA, INTELS, LADOL, the Minister of Transportation, Rotimi Amaechi and the need for president Muhammadu Buhari to urgently intervene before the maritime sector is further imperiled

Twenty-two days ago, Nigerians woke up to the news that the Managing Director of the Nigerian Ports Authority (NPA), Hadiza Bala-Usman has been suspended from office for an allegation that the NPA under her watch failed to remit operating surplus to the Consolidated Revenue Fund (CRF).

The NPA’s Executive Director, Finance and Administration, Mohamed Koko, a key member of the NPA management alleged to have withheld operating surpluses was appointed to replace his boss, an appointment regarded by pundits as a curious elevation for a major figure in the administration to be investigated.
A few days after Bala-Usman’s suspension, a panel of enquiry was set up to investigate the failure to remit operating surplus to the CRF.

A week after the panel was set up, a major twist in the matter was reported as it turned out the panel will now probe Bala-Usman for insubordination as against the earlier claim of not remitting operating surplus of N165 billion to the consolidated revenue fund account.
A member of the administrative panel had told TheCable that the focus would now be “insubordination.”

He said: “We are looking at two things. One, the suspended managing director was in the habit of communicating directly with the president and bypassing the honourable minister. This is gross indiscipline and a breach of public service communication line. That is enough to get her sacked.

“Two, the minister directed her to restore all Intels’ contracts that were suspended or terminated. What she didn’t know was that the president was in the know of it. She failed to comply. This is insubordination and she is not above discipline.”

However, according to THISDAY report, a source at the transport ministry had volunteered that Buhari actually withdrew his approval for the reinstatement of Intels’ contract after Bala-Usman wrote to President’s Chief of Staff, Prof. Ibrahim Gambari, to explain NPA’s position.

Gambari, the source said, forwarded her response to the Attorney General of the Federation (AGF), Mr. Abubakar Malami (SAN), for a legal opinion.
The source said Malami wrote to the president to state that the NPA was right and that no contracts were terminated or violated.

Buhari then withdrew his approval for the reinstatement of Intels’ contract and that was believed to have infuriated Amaechi, who accused Usman of insubordination.

According to the source, “If you look at the terms of reference properly, we are to examine and investigate compliance with the communication channel as obtained in the public service. Insubordination is not a small offence.”
The panel member accused her of bypassing the minister and dealing directly with the president despite a “clear reporting hierarchy.”

Asked about the N165 billion non-remittance claim, the member said: “Available evidence shows that the allegation may not be true… it is a matter of reconciliation of what the Budget Office thought should be the remittances with what the actual remittances should be.
“Since audits have been done over the years, there is obviously nothing more to that. It is not as if NPA’s monies are in private banks. Everything is with the CBN, so if there were no remittances, it is just about looking at NPA’s accounts with the CBN.”

Although the minister asked the eleven-member panel to “examine and investigate the procurement of contracts from 2016 to date” as part of the terms of reference, another source at the NPA said it was going to be a “tricky job.”

“At NPA, any contract beyond N50 million for goods and services and N200 million for works are referred to the ministerial tenders board (MTB), which is headed by the permanent secretary of the ministry.

“If we go into probing contracts since 2016, we may end up probing the minister himself. About 70 per cent of the contracts for capital projects go to the MTB, after which the minister presents them to the federal executive council (FEC), presided over by the president himself, for approval. We will check if all the procedures were followed, but I am personally not optimistic about that. The suspended MD, from indications, is a process person, ”he said.

The Case of INTELS
From the foregoing, it has been made clear that the needless controversy was about the reinstatement of INTELS contract. At this juncture, a proper understanding of the INTELS contract with NPA is important.

On August 9, 2010, the NPA on behalf of the federal government entered into an agreement with a sister company of INTELS Nigeria, Deep Offshore Limited to build 200 metres of berth at Onne port, Rivers State.

To recoup its investment totaling $2.7 billion (Lekki Deep Seaport is been built for $1.5 billion), INTELS singed another contract with the NPA for service boasts revenue collection and agents management with 72 per cent of the revenue going to NPA/INTELS to service the debt and the balance 28 per cent as commission to INTELS.

The Service Boats contract expired August last year but INTELS insisted it must act as agent to the federal government to collect pilotage revenue while the NPA argued that the agreement does not reference INTELS or any agent but revenue to offset the amortisation deal.

After collecting the pilotage revenue for 10 years, the $2.7 billion has not been paid off, making the NPA to conclude that Nigeria was shortchanged in both contracts. Part of its many grievances with the contract is the standing rule by the Bureau of Public Procurement (BPP) that commission on such contracts should not go above 15 per cent. The NPA insists INTELS collecting 28 per cent violated this law and is also using judicial manipulation to undermine Nigeria. Also, the NPA was required to pay for the cost of funds and the NPA saw this as cheating.

“Nigerian government invested $2.7 billion in building, not a full Port actually, but 200 metres of berth, the same time Singapore built a deep seaport with modern hi-tech facilities for far less.

“A company was given this contract. When you award contracts, it is not government business how you go and source your money. Government does not pay for the cost of funds. If you have a project as a contractor, you go to a bank, they give you a loan, you give your bond or guarantee, how does government take up the liability of the cost of funds?, “said an official of the NPA.

The LADOL Controversy
Another major case been sighted by commentators to support the insubordination question is the misunderstanding between the NPA and LADOL.

In early February 2020, the NPA sanctioned LADOL for violating the terms of the land lease at Tarkwa Bay, near Light House Beach in Lagos.

The NPA had in a statement said the action is part of the efforts to boost accountability and ensure transparency, which is the fulcrum of President Muhammadu Buhari’s administration, as well as boost the confidence of local and foreign investors in Nigeria’s operating environment.

THISDAY had exclusively reported that LADOL profited at the expense of the federal government by subleasing 11.2426 hectares of land out of the total 121 hectares leased to it at outrageous amount of money without recourse to NPA.

The firm was alleged to have collected $45 million (N16.2billion) from Samsung Heavy Industries Nigeria Limited (SHIN) for the 11.2426 hectares of land for which it paid only $524,105 (N37.73 million) to NPA.

Documents exclusively obtained by THISDAY revealed that whereas the NPA charged GRML a rent of $104,821.95 per year for five years on 11.2426 hectare for the head lease, GRML charged the sublease (SHI) $9 million per year for five years for the same portion of land, collecting a total of $45million.

The documents showed that GRML was on January 1, 2003, initially granted a 21-year lease over 80 hectares of land at Takwa Bay by the NPA. Another lease of an adjoining 34 hectares was subsequently granted, bringing the lease area to 114 hectares.

From the recent survey, THISDAY had reported that the total lease area is now 121 hectares.
In a letter dated November 22, 2013, GRML applied to NPA to sublease 11.246 hectares out of the 121 hectares (nine per cent) to MCI-SHI FZE for the purpose of expanding facilities at LADOL Offshore Support Facility in readiness to handle the integration of the Egina FPSO onshore in Nigeria for the Nigerian National Petroleum Corporation (NNPC) and Total Upstream Nigeria.

The letter also stated that expanding the facility would generate 55,000 jobs within and outside LADOL, save billions of dollars from being spent outside Nigeria and make the country the West Africa hub for oil and gas engineering.

In consideration of the huge investment that was to be made by SHIN, GRML, in the letter pleaded with the NPA to consider and approve the sublease expeditiously so that SHIN would not cancel the project and use its existing facility in Goje, South Korea for the entire Egina project.

The NPA obliged in a letter dated March 12, 2014 and a conditional approval for the sublease was conveyed.
Competent sources at the NPA however told THISDAY that the NPA suspected fowl play when GRML failed to furnish it with the sublease agreement between it and SHIN throughout the tenor of the sublease, so as to conceal the actual amount it collected from SHIN.

The sources told THISDAY that LADOL eventually furnished NPA with the sublease agreement only in August 2019 following a highly toned letter from the NPA, dated June 18, 2019.
THISDAY also gathered that another sublease agreement between the parties, which was dated September 13, 2013, was terminated, because NPA’s approval was not sought as provided in the head lease agreement.

Apart from allegedly profiting at the expense of the federal government by collecting outrageous amount from SHIN and paying far less to the NPA, documents also showed that LADOL, through GRML had also entered into another sublease agreement with an American company called Africoat Nigeria Limited, without any recourse to the NPA contrary to the provision of the head lease agreement with NPA.

A letter to the Managing Director of the NPA by the General Manager, Land and Assets Administration, dated November 14, 2019, notified the NPA boss that there was evidence to show that GRML granted at least a sublease to SHI-MCI in September 13, 2013 without any recourse whatsoever to the NPA.

Unanswered Question
The above scenarios lay credence to the argument by maritime stakeholders that there are many questions begging for answers.
As reported by THISDAY last week, the Minister of Transportation was aware of what transpired between NPA, INTELS and LADOL but was driven by his personal grievance with the embattled NPA boss.

THISDAY had exclusively reported that the suspension of Bala-Usman, at the request of Amaechi, was the culmination of a two-year war of attrition between the duo, triggered by disagreement in 2019 over whether or not to renew the channel management contracts.
It was learnt that the NPA had in 2020 placed advertisement in newspapers calling for expression of interest and bids.

Sources said two bid rounds were cancelled on the orders of the minister over disagreements on the selective bids and open bids.
The channels in contention are: Lagos, Port Harcourt (Bonny) and Warri while Calabar is under litigation.

Each channel management contract is valued at $100 million a year for five years making it $1.5 billion (N600 billion) for the three channels for the five years.
THISDAY learnt that Amaechi had requested that two Chinese companies are selected to manage Bonny and Warri Channels, a request the NPA rejected because it violated due process. Meanwhile, it has also emerged that politics has a major role to play it the ongoing saga. While this is been debated, stakeholders have called on president Buhari to step in before it is too late.