Royalty charges: the impunity of terminal operators

Sifax Group, the operator of terminal “C” at the Tin Can island port, ruffled not a few feathers last month when it slammed what it called a royalty charge on its customers.

In a circular issued on 14th, May, 2018, the terminal announced a 20- footer container wishing to leave its terminal to other off-dock facilities other than its own would pay the sum of N62,361 while 40-footer container attracts N121,565.

The reasons the indigenous terminal operator gave for this action were not only self-serving but preposterous.

It said it had observed that in recent times ,a lot of containers were being transferred from its terminal to other bonded terminals without concrete agreement with the owners of these terminals.

It also said, rather ridiculously, that this had affected its revenue target and reconciliation process.

Nigeriamaritime360.com considers the action of SIFAX Ports and Cargo Terminal an unabashed display of impunity.

We view it as not only against the general norm of best trade practices but an attempt to coerce its customers into using its facilities, thus eliminating the freedom of choice given them in international shipping trade.

This is more pronounced in the face of the multiplicity of charges and fees which users of ports are being subjected to daily by terminal operators and other government agencies which have made Nigerian Ports the costliest in the sub region.

Even though the terminal has eventually capitulated and reverted to status quo due to the intense pressure and threats of users of its facilities, this however should not distract from the total condemnation this action deserves.

This singular action of SIFAX, as innocuous as it may seem, is a general reflection of impunity and exploitative tendencies of all the terminal operators and shipping companies in the sector.

It further showcases the multiplicity of charges and levies which shippers and importers are perennially burdened with.

The operators of the 23 terminals carved out of the eight full fledged ports hitherto run by the Nigerian Port Authority among themselves, have almost 20 charges and fees which they impose on their hapless customers.

Some of these charges are as repetitive as they are exploitative.

Royalty charge, which stakeholders have described as illegal, is one of such repetitive ones, replicating another called transfer charge, at least by intent and purpose.

We however commend the timely intervention of the Nigerian Shippers Council, which as a regulatory agency, called Sifax Group to order before the controversy its action generated festers.

This platform is pleased by the laudable efforts of the council to protect the interests of shippers as well as whip the service providers, that are money mongers, back to line and ensure they obey the extant laws and other rules of engagement.

We readily recall the odious exploitative tendency of a Chinese Shipping Company, Cosco Shipping Line, which was made to refund an excess of N3.5million it overcharged its customer as demurrage.

Royalty charge, to our mind, is not part of the charges contained in the concession agreement which the operators are empowered to charge.

By reason of its meaning, it is not only illegal but alien to the extant laws.

According to Wikipedia, royalty is a payment made by one party, the licensee or franchisee to another that owns a particular assets , the licensor or franchisor for the right to ongoing use of the asset.

Royalty is usually agreed upon as a percentage of gross or net revenue derived from the use of an asset or a fixed price unit sold of an item of such.

By this definition, no charge is qualified as royalty charge by the terminal operators.

Only the NPA, by virtue of being a lessor, is statutorily empowered to collect such from the terminal operators as lessees.

Curiously however, we noticed that this illegal charge is contained in the tariff book of Ports and Cargo terminal.

On page 26 of its tariff schedule , it listed as royalty charges for transfer to other terminals which includes royalty charge for car at N7,996.97, for bus at N9.00.7, for truck at N12,294.22 and for caterpillar /trailer /excavator at N12,820.41.

On containers, it charges N5,820.41 on 20-footer and N8,565.60 on 40-footer.

These tariff took effect from 20th, May,2016.

It was however stated on page four of the tariff book that these charges could be changed or amended without prior notice by the terminal operator.

We believe that for Port and Cargo terminal to have this charge, as illegal as it is in its tariff book , goes to show that other terminal operators may equally have it.

After all, they share common interests under their association which is Seaport Terminal Operators Association of Nigeria (STOAN).

While others may not yet have the need to invoke and unleash the charge on their hapless customers, Ports and Cargo terminal saw the need not only to invoke this latent charge but also jerked it up to stop its fleeing customers as well as shore up its dwindling revenue.

Going by the meaning, intent and purpose of the charges, we therefore consider it as not only anomalous for any terminal operator to have it in its tariff schedule but also outrageous and unwarranted for such service provider to impose it on its customers.

While we commend the Shippers Council for its timely intervention to nip in the bud what could have been a dangerous precedence, we believe the regulatory agency should compel the Ports and Cargo terminal to refund the amount so far collected under this spurious circumstance to serve as a deterrent to other terminal operators who might be tempted to fly similar kite.

This case, we believe, is similar to Cosco Shipping Line’s which, under spurious circumstance, overcharged its customer but was later made to refund the excess.

This platform also enjoins the Shippers Council to scrutinise the tariff schedules of all the terminal operators and shipping companies in a bid to discover and compel them to weed out those ones that are not in tandem with the provisions of extant laws but which were illegally inserted for exploitative purposes.

This, we believe, will restore sanity to the shipping sector and stop “crazy charges” being imposed by service providers on their oppressed customers.