Still on the review of port concession

Three things came out of the recent Taiwo Afolabi Annual Maritime (TAAM) Conference which held at the University of Lagos, which all gave credence to the fact that there were faults inherent in the 12 years old Port Concession.  The exercise created an unhealthy monopoly, it also did not make room for post-concession regulation, and lastly there was no enabling law to guide stakeholders.

While the man who midwifed the exercise as the then-Managing Director of the Nigerian Ports Authourity; Chief Adebayo Sarumi admitted that  one of the concessionaires; APM Terminal was undeservedly favoured to monoplise container handling at the Lagos Port Complex(LPC),  others like Major Henry Ajetunmobi (rtd) and  former National President of Association of Nigeria Licensed Customs Agents, Prince Olayiwola Shittu picked holes in the post-concession relationship between regulators and operators.

They argued that NPA has failed to live up to its responsibilities as bargained in the port concession agreement. He stressed that terminal operators now bore all unanticipated costs while NPA only collects its royalties.

Industry stakeholders also lamented the non-passage of the Ports and Harbours Authority Bill, 2015, which seeks to repeal the Nigerian Ports Authority Act 1955.

The fact is that it is 12 years since the ports were concessioned and we recall vividly that in 2006, when the government of former President Olusegun Obasanjo introduced the policy of bringing in the private sector into port operations, it was met with resistance by stakeholders, especially the workers of Nigerian Ports Authourity (NPA) who (understandably) felt threatened and vowed to oppose it with all that they had. On the part of others, it was borne out of the fear of the unknown as well as the fear of cost of doing business in the ports, thereafter.

 To put the issues in proper perspectives, it is important to bring out certain facts. Government’s first argument in support of port concession was that the ports (just like other businesses could be better operated by the private sector. Secondly and rightly too, government also observed that the nation’s seaports were becoming too expensive in the face of decaying facilities.

The options were between commercialisation and outright concession of the facilities. Government, in defiance of better and by far more superior arguments, decided to settle for port concession. It eventually had its way, having won to its side (or is it blackmailed) the two house unions; namely the Maritime Workers Union of Nigeria and the Senior Staff Association of NPA.

Since that decision was taken and the eventual handing over of the ports to private terminal operators, and we dare say, things have changed for better.

No doubt, ship’s turn-around time has improved tremendously from an embarrassing almost four weeks, to as low as one day (and even hours in some terminals), while ships no longer have to wait for days at any of the terminals. There is also a significant reduction in human traffic into the precincts and peripheries of the ports. Cases of vandalism, cargo theft and container broaching have dropped drastically or even non-existing. Certainly the ports are doing better than they were; pre-2006.

But, will it be correct to assume that once the above are evident, then port concession is a total success? 

Certainly, after 12 years, there are still proven cases of under-utilization of some terminals and non-availability of some common-user facilities that Nigerian Ports Authourity ought to have provided.  While many of the concessioned terminals in Lagos can be said to be doing well at the beginning, the same cannot be said of those in Calabar, Warri and Port Harcourt.  One of the most important missing links in the implementation of the port concession policy is the absence of a commercial regulator to handle commercial disputes arising from the interactions of operators. 

This has largely affected the relationship between the landlord (NPA) and its tenants (the terminal operators) on one hand, and the relationship between the users and suppliers of port services.  We are totally in agreement with the position of majority of stakeholders that, a level-playing field should be created as it is the only way to encourage growth and stimulate development among all players in the port concession game.

There have been lamentations from all the parties that are currently either supplying or using port services. They include: NPA itself, terminal operators, freight forwarders/clearing agents, truck owners, shipping companies, and even the workers; especially dockworkers.

Other users of services also have axe to grind with the terminal operators, the workers are not left out. 

The fact that there are few things such as higher throughput , low turn-around time for vessels , non-vandalism  or cargo, cleaner environment, perimeter fencing are not enough indices of a healthy, successful and fair-price port system.  And this is why we are in support of the deafening calls for a review of the 12-year old exercise.

Even though successive ministers of transport said they were interested in carrying out the review, they never had the guts to do it. Similarly, the incumbent Minister of Transportation; Mr Rotimi Amaechi said as far back as February  2016 that he would pursue a review of the concession agreements; we are still waiting.

Our worry is in the nature of government and its functionaries to raise and dash hopes. If the Minister talked excitedly about the need to review port concession as far back as February 2106 and for more than two years, nothing was done, what is the guarantee that it will be done before May 2019.

It appears that the hope of those who are pushing for the review is now with the Managing Director of NPA, Hadiza Bala Usman who also promised  more than one year ago to review the port concession agreement  which ceded running of the nation’s seaports to private hands.

She had said that NPA had concluded the assessment of the activities of terminal operators in the Western Ports, and that it is at the moment also concluding on the Eastern ports. That was more than one year ago! Can the industry have an update?

She had also said that the NPA was about to engage the service of Transaction Advisers to appraise the various obligations and responsibilities and how far these have been kept in line with the agreements that the two parties signed. Can we also have an update on this?

As stated earlier, one of the most important missing links in the implementation of the port concession policy is the absence of a commercial regulator to handle commercial disputes arising from the interactions of operators. This has largely affected the relationship between the landlord (NPA) and its tenants (the terminal operators) on one hand, and the relationship between the users and suppliers of port services.  

We are totally in agreement with the position of majority of stakeholders that, the expected review should create a level-playing field and eliminate monopoly as it is the only way to encourage growth and stimulate development among all players in the port concession game.

Importantly, the expected review should empower whoever is regulating to enforce its intervention. It is saddening that even though the Nigerian Shippers’ Council has been gazzetted as the ports economic regulator, yet it has been bogged down with serial litigations by terminal operators and shipping line agencies.

If the review can take care of appropriate port pricing, fair competition among players and ensure responsibility among the tenants and the landlord and empower the regulator, then it would have achieved success.    

Most importantly, what the port industry needs is the passage of the Ports and Harbour Bill.

 

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