The review of port concession is long overdue

About three weeks ago, the Managing Director of NPA, Ms Hadiza Bala Usman raised hope of a possible review of the more-than -10 years-old port concession agreement, which ceded running of the nation’s seaports to private hands.

She added that the NPA is 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.

Internally, she said that NPA has 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.

She acknowledged that the NPA has its obligations as an agency that must be provided, and that if it is not providing those services, it can not continuously bill for these services. 

“Our inability to comply with our own obligations within the concession agreement now makes it morally challenging to confront the concessionaire when he is not deploying his own obligation, so both of us would have a very frank conversation and review of the concession agreement and have a supplemental position that would address all the issues” she said.

Ahead of the coming review, two terminal operators in the Eastern Ports have been axed for non-performance.

She said that NPA is carrying out a study into the competitiveness of Nigerian ports to determine how expensive the ports are.

In 2016, 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, things have changed. 

No doubt, ship’s turn-around time has improved tremendously from an embarrassing almost four weeks, to as low as one day 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. 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 11 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 11-year old exercise.

Even though successive ministers of transport said they were interested in carrying out the review, they never allowed it to be. So, when the incumbent Minister of Transportation; Mr Rotimi Amaechi said in February last year that he would pursue a review of the concession agreements; it was received with high hope.

But, 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 last February and for more than one year, nothing was done, what is the guarantee that the Managing Director of NPA will be different? Time will tell!

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