HeadlinesPorts Management We are not owing NPA N490bn – Terminal operators By maritimemag August 18, 2022 ShareTweet 0 Abiola Seun Terminal operators operating at the nation’s seaports have refuted reports that their total indebtedness to the Nigerian Ports Authority (NPA), stood at N490billion.Recall that it was reported that 18 terminal operators were indebted to the federal government to the tune of $753 million and N1.61 billion (cumulatively 490billion).One of the terminal operators who craved anonymity had informed that the indebtedness were accrued between 2006 and 2019, adding that the period covering 2020 to 2022 was not part of the reported indebtedness.The source who happened to be one of the management staff of a leading terminal operator said, “The debts dated back to the period spanning 2006 to 2019 and the debt figures are composed of estate rents, lease fees and throughput charges among others as stipulated in the concession agreements.” He, however, said that there had been recoveries within the period under review, and that there had also been unrecoverable debts. He specifically disclosed, “There have been recoveries within the period under review, and there are unrecoverable debts owing to issues such as volume change, gross minimum tonnage (GMT)/Penalties, and encumbered areas, among others.” Asked to explain the issues militating against debt recovery, he stated that volume change, for instance means volume adjustment. “The Executed Contract Agreement stated that if the percentage variation between actual performance and projected volume is within minus 10% to plus 10%, the lease fee will be paid in full. “However, if the percentage variation performance is more than minus 10% to plus 10%, the lease fee payable will be adjusted by an equivalent percentage. “Therefore, the adjustment is against the lease fee payable by the percentage change in volume,” he explained. He stated that the encumbered areas referred to “areas that are inaccessible due to factors not caused by the tenant such as host community hostility and marshy land, etc.,” while Guaranteed Minimum Tonnage (GMT) referred to “the projected tonnage pledged by the concessionaire to achieve and this arises from the inability of the concessionaire to meet up the pledge.” According to the official: “unpaid VAT (value Added Tax) relates to the VAT element of the unpaid Lease Fees arising from adjustment brought about by the volume change defined above,” while “penalty refers to financial burden suffered for failure to meet terms of payment in a contractual agreement. “It is as a result of the concessionaire not paying within the specified time /days allowed in the contractual agreement. Simply put, it refers to a charge for late payment.” An official of the Authority speaking under the condition of anonymity also disclosed that the figure quoted in the press related to the 2019 Auditor General’s report did not reflect the current position of indebtedness to NPA. According to him: “It is pertinent to clarify that out of the $852,093,731.10 cited in the Auditor General of the Federation’s report and being circulated in the media, $504,663,452.37 constitutes uncollectible portion due to volume change and contentions; $66,627,342.76 constitutes uncollectible portion due to gross minimum tonnage (GMT); $19,619,459.00 constitutes uncollectible portion due to encumbered areas; while the sum of $98,114,442.46 has been recovered, leaving the sum of $163,069034.51 as the actual amount owed by only three (3) of the terminal operators. “It is very important to note that the uncollectible debts are summation of GMT stated above (a performance metrics), which the terminal operators could not meet mostly because of change in government policies (issues such as force majeure, infrastructure decay, poor road network outside the port and others.” He also pointed out that some of the debts were legacy debts “being owed by a government agency which metamorphosed into a limited liability company and for which the Authority is working out modalities with the relevant parties to recover accordingly.” He expressed optimism that with the Authority already at an advanced stage of talks to resolve the disputes surrounding these amounts, there would be “a resolution and recovery of what is due to NPA by the end of the year 2022.” He also hinted about the setting up of an inter-agency committee comprising NPA, Federal Ministry of Transportation (FMOT), Federal Ministry of Justice (FMOJ), Bureau of Pubic Enterprises (BPE) and Infrastructure Concession Regulatory Commission (ICRC), with the task to undertake a review of the Concession Agreement which has led to some of the anomalies. According to him, the committee had already developed a template to address the inherent anomalies in the agreements that allowed for the accumulation of such debts to forestall a recurrence. The official further said that the relationship between the NPA and the terminal operators was an ongoing business that entailed reconciliation of accounts at every point of the way. He restated the fact that the NPA was on top of the debt situation, saying that the authority had mechanisms in place to recover all debts owed by terminal operators. He therefore dismissed as needless and uncalled for “the entire hue and cry in the media space about indebtedness by terminal operators.” © 2022, maritimemag. All rights reserved.