Danger of delayed review of port concession programme

It is no gainsaying that the port concession programme of 2006 has revolutionised port operations in the country.

It would also be an overstatement to say that there was a marked improvement in port efficiency since the programme debuted 12 years ago.

The menace of dockworkers’ thuggery and unrest has been eliminated. The activities of the infamous ‘wharf rats’ who wilfully pilfered cargo have also been checkmated.

Turn- around time of vessels has significantly improved while government revenue has quadrupled through numerous remittances made by port concessionaires to the Nigerian Ports Authority (NPA).

Port infrastructures have received a boost through the investments of some of the port concessionaires.

To us at nigeriamaritime360.com, that is as far as the beauty of port concession stops.

The programme has led to an increased cost of port operations which clearly negates one of the cardinal objectives of the reform, to engender cost efficiency.

Rather than lower costs, Port concessionaires have foisted on the users of their facilities indiscriminate charges which make Nigerian Ports one of the costliest in the West African sub region.

Both the lessors, that is the NPA and the lessees which are the terminal operators, have all fallen foul of the agreement.

Hence our support for the clarion calls by all the stakeholders, especially the parties to the programme, that the concession agreement should be reviewed.

The 12 years agreement has variously been violated by both the lessors and lessees.

Also the present economic realities have made some of the provisions in the agreement more difficult to meet, especially by the terminal operators.

Interestingly, all the parties concerned in the agreement such as the NPA, the terminal operators, the Bureau of Public Enterprise (BPE) and the Infrastructure Concession Regulatory Commission (ICRC) were unanimous on the need to review the agreement.

Even the agreement provides for regular review to reflect the prevailing realities.

Sadly, the agreement is yet to be reviewed 12 years after it was in operation.

We are more saddened by the apparent delay in the review few years when it was being touted by all the parties.

This platform is worried about the backlash effect of the prolonged delay of this much anticipated review.

Due to the sudden slump of about 50 percent in value of naira against the dollar, the earnings of the operators have considerably dipped and threaten to wipe off their gains.

According to a report in 2016 by a renowned accounting and audit firm, Akintola William Deloitte, which covers a period of 10 years from 2006 to 2016, there has been 151.2 per cent increase in Terminal Handling Charges (THC) by the operators.

Despite this increase, the operators have reportedly recorded a 22.4 percent drop in real earnings.

THC is the main source of revenue for terminal operators which is the payment received from transferring cargo from ships or quayside to the container yards for release to clearing agents and regulated by NPA.

This inverse earning, according to the audit firm, was as a result of adjustment for naira depreciation and inflation.

Since their payment to the government is done in dollars, the operators, who have unsuccessfully appealed to government to pay in naira, claimed they need three times the amount in naira to pay their rentals and other charges in dollars, amidst what they claimed the shrinking cargo volume.

In a bid to stay afloat, the concessionaires, in flagrant disobedience to the provisions of the agreement, have stealthily imposed arbitrary charges on their customers, thus making nonsense of the objective of the proponents of port concession.

Also, except few of them, the majority of the 26 concessionaires have not committed commensurate amount of investments into the infrastructural development of their concessioned terminals due to the fear of the unknown.

NPA is also guilty of these infractions on the agreement.

The agency has not fulfilled some of its obligations under the agreement to which the present Managing Director, Hadiza Bala Usman has accepted culpability.

Nigeriamaritime360.com feels concerned about the multiple infractions to which this laudable programme has been subjected by the parties concerned and for which we agree its review is inevitable.

However, we are bothered by the delay in the review exercise.

The relevant authorities have been mouthing the imperativeness of the review for over a year now, especially the NPA whose management headed by Hadiza Bala-Usman has shown a seeming passion for the exercise.

Our worry over this avoidable delay is predicated on the possibility of further infringement and abuse to which the agreement could be subjected by both parties.

Further delay in the review could further lead to indiscriminate increase in port services by the operators who will continue to indulge in this illegality in a bid to stay in business in the face of mounting economic squeeze.

Most of them would continue to shy away from committing investments into infrastructural development under the guise of economic crunch while the few who make investments would want to recoup, thus subjecting their customers to more hardship.

As a result of this seemingly unregulated port environment, port costs will continue to soar, making Nigerian Port customers unfriendly which will drive potential port users and investors away.

We therefore urge the relevant authorities, especially the NPA, BPE and ICRC to stop their rhetoric but expedite action on comprehensive and holistic review of the concession programme that will accommodate the present economic realities.

We believe that the review will help to reassess the value of leased assets and identify the factors militating against the full realisation of the objective of port concession.

We are also convinced that the review will make government to address its own shortcomings in its obligations under the concession programme.

Some of the failures of government include poor channel dredging, dilapidated port access roads, lack of regulatory framework and inconsistent government policies which have all combined to render the cost template given to terminal operators no longer realistic.

We believe that quick review will make the adherence to the provisions of the agreement less cumbersome on both parties which will lead to the fulfilment of the dream of the proponents of the reforms.

Further delay in the review of the concession agreement, we dare say, will continue to leave the hapless users of the facilities of terminal operators in the mercy of these shrewd business people who will mindlessly exploit them to maximise their gains.