Nigeria losing revenue to faulty port concession agreement, says Official

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Engr. David Omonibeke, Executive Director, Marine and Operations, NPA

Assessing the port concession programme 10 years after
its inception in Nigeria, the Executive Director, Marine and Operations,
Nigeria Ports Authority (NPA) Engr. David Omonibeke in an interview with some
Maritime Correspondents, calls for a review of the concession agreement,
revealing that Nigeria has lost over 200 million USD to the ‘move’ clause in
the concession agreement with one of the terminals.

Omonibeke also
spoke on other industry issues….

What is your assessment of the Port Concession Programme in Nigeria in
the last 10 years?

In any business or scenario, you have advantages and
disadvantages so, what you do is to compare the level both and then, take a
decision. If we are to look at the port prior to 2006 and where we are now, in
terms of the advantages, we have removed some inefficiency especially when it
comes to cargo handling which government was doing. And, that is the
concession. We concessioned cargo handling which also has to do with
stevedoring.

Government, prior to the concession was having challenges. It was
responsible for the machinery…equipment…the cargo handling equipment. There
were so many people within the ports. There were wharf rats. You could import a
car and when you come you will not see anything.

Also, the
government officials then too, you will see a crane that they say had been
fixed but for it to handle a container, it will get stuck and that is, after
releasing so much money. You also had scenarios where the tug boats took so
much diesel and at the end, it will move only one vessel in and they will say
there is no more diesel. So, you had longer waiting time for vessels. Also, to
mobilise pilots, you had challenges of the pilot quarters and your tug boats.

So, when government in its wisdom looked at the
concession and did it in 2006, they brought in terminal operators to help in
terms of cargo handling and stevedoring services, expecting the concessionaires
to pay lease fees and throughput which is a percentage of what we were
collecting when we handled the goods ourselves. This was enshrined in the
agreement. Where you are collecting 6.5USD for example, you give the Authority
1.1USD.

Some concessionares decided to specialise in goods
going to the oil field etc. They did that in the bidding room with BPE (Bureau
of Public Enterprises). Every concessionare was allowed to bring out their
projections, the kind of cargo they wanted to handle, the kind of business they
wanted to do. They were also allowed to tell government how much they could pay
for the lease area. It was based on this that some other people were denied the
concession. We also have what is called Guaranteed Minimum Tonnage. It is
reviewed every two years and for all the concessionaires except one, it is tied
on the throughput fees-the cargo movement.

It is only in one agreement that you have what they
call ‘moves’ which is strange to the port operations because you are talking of
the container ‘moves’. It means when they move the container from ship down and
move it again and again. And they have a clause that once they do not meet certain
targets, they penalize government. If they do not achieve their ‘moves’, what
they do is that they make deductions directly from the lease fee. And the lease
fee is fixed and is not supposed to be tampered with.

The provision of the clause says that if you want to
touch the lease fees, it should be on technical grounds or the place is
encumbered and you do not have access to it. We have related with the
concessionaires to ensure they do not pay for areas they do not have access to.
But by that agreement, that terminal has power to deduct money from the lease
fee and government has suffered loss based on that agreement.

So, you mean government is losing huge money especially now that import
volume has dropped?

That is exactly what I am saying. Because of the
‘moves’ agreement, they just do their deductions. Since the concession in 2006
till date, government has suffered deduction from the lease fee over 200
million USD. That is why NPA representing the government has been making
attempts to call that terminal operator to a round-table for us to discuss and
adjust that ‘moves’ to ‘throughput’ as it is in other concession agreements.
But you see, the beauty of the concession is that it is the two parties that
must come together and agree but they have been very evasive.

And we have taken a stand too because in previous
times we had given considerations for one or two challenges they met like empty
container export. They were supposed to pay the same with containers that were
coming in, but we had meetings then, and government had consideration and
brought it down. But when it comes to their own and they know that it is queued
against government and to their favour and they do not want to come to the
table. That is why presently, they are having challenges with dollar payment
and we said no, if must discuss that, we must all come back to the table and
this ‘move’ issue must be addressed.

Has the concession programme yielded any benefit so far?

At the ports now, there are no wharf rats anymore. The
vessel turn-around time has also improved tremendously although it is not where
we want to be. What government has in mind is 48 hours clearance of cargo. So,
we are working towards that. Government will keep improving on its policies.
And the concessionaires, we also expect that they get the cargo handling
equipment. Yes, some of them have got some, but some have not.

As the landlord, there are certain things we have to
do as well, as a government in terms of the draft channel. When we were handing
over, agreement was reached as to what draft we are supposed to have. For some
of the areas in the ports, government was unable to achieve the draft that was
agreed because we do not have channel management companies in those areas.

Like you are aware, we have six ports and in Lagos, we
have the Lagos Pilotage District where we have the Lagos Port Complex and Tin
Can Island port. The Lagos Channel Management Company is responsible for the
draft in Lagos District. And prior to the concession, the maximum we could have
in some of those berths is maybe nine meters but now we are achieving 13.5
meters and we are having bigger vessels coming.

With the terminal operators, we are also discussing
and carrying out simulations to see how they can bring vessels of length
overall 300 meters which will also bring in more cargoes.

In the East, we have the Bonny Channel Management that
dredge and maintain the draft for the Rivers and Onne ports and then Bonny, the
Liquefied Natural Gas channel. There, we also have tremendous improvement in
terms draft.

Government has also established the Calabar Channel
Management but, we presently have some challenge that is being investigated. I
believe when the issue is resolved, that area will be taken care of.

Government is also working on Delta port. We have already
given consultancy services but some of the challenges there is that you have a
lot of pipes. The West African Gas pipeline passed through there and they are
in a certain depth that consideration has to be given to know which one can be
removed or reduced for us to have a very deep channel. I think the consultants
will come up with all those alternatives before government will finally set up
the channel management company.

Presently, there is a lot of challenge there because
at the Escravos bar, vessels face a lot of restrictions. They have to work with
the tide to see how they can bring in ships.

On port development, we are investing in deep sea
ports as well. We have the Lekki one which will soon start. That is where you
have the Dangote refinery and the Free Trade Zone. It will have about 15 meters
draft with big vessels coming in. The essence of that is that when you have a
deep sea port you do not need channel management.

So, it will reduce the cost of maintaining the draft
and then bigger ships come in and this will impact in ship dues and improve on
the trade. These other ones are river ports and the only best way to have it is
to have the channel management companies.

What is the situation on Ibom Port? The Honourable Minister had asked the former and current Transaction
Advisers to settle their differences out of court but no one is meditating. As the body representing the
Federal Government in the project, will NPA take this up?

I can’t discuss this since it is a matter in the
court. The Minister has said they should settle outside the court. We have a
committee where NPA is a member. Akwa Ibom State Government is really
interested in the matter and that is why they have given us (NPA) the
Certificate of Occupancy. The Governor is really interested and he is working
towards resolving the matter. So, I cannot give you an affirmative as it is not
directly what I am handling.

The Nigerian port is missing on the list of the top 50 world container
ports published by the World Shippers Council. How can we say port concession
is effective given this indices?

When we came on board (that’s this management) in
2012, we were fifth on the list of ports in Africa. Our goal is to be the
leading port in Africa. Now, we are number three. Before, we were not including
crude export in the throughput. Now, we have included them in the data and it
has shown the volume the ports are handling. In terms of effectiveness, like I
said in 2006, we concessioned the ports. Now, we have less people in the port.
The port is not an area where you should have too many people. Once you have
the system automated, a truck can just go when it is expected.

The ports should be like a graveyard. But in Nigeria here,
the clearing agency, everybody wants to be in the port but government maintains
just seven agencies.

Just recently, I read in the papers that the Minister
of State for Agriculture said Quarantine should immediately move into the port
because of the outbreak. I do not know how that will be done. Some agencies
come into the ports at the invitation of Customs not that they have offices in
the ports. We will look at all that and see how people can work outside and
come into the ports only when the need arises.

That is why when our sister agency Shippers’ Council
was asking to come into the ports too, we had to make them understand that they
could have suggestion boxes in the ports but not offices so, if there are any
complaints, people can reach them. If they need to meet them, they go to their
offices not the ports. We should not take two steps forward and four steps
backwards.

We are working towards efficient service delivery to
see how the world will look at our ports and rank us as one of the world’s effective
ports. This will happen when we start to reduce human traffic in our ports and
have a single window in terms of payment. We are working with Customs, NPA,
NIMASA and other major agencies can work together. If someone applies and
payment is simple, easy and seamless, it will improve the status of our ports.
So, it is not just Nigeria Ports Authority, it has to be a synergy of relevant
agencies in the ports to ensure that we provide these services.

Also, security in the waterways, pirates attack …those
are indices. If the Gulf of Guinea is safer and we do not get reports of
hijacks once in a while then, it will also improve our marine insurance.