When former President Olusegun Obasanjo came into office in May, 1999, he made it unambiguously clear that his government was interested in opening up the nation’s economy to the private sector. The position of the government was that there was need for reforms in many sectors of the economy, including the nation’s seaports.
Perhaps, the most popular singsong is port concession, apparently because it translated to stripping Nigerian Ports Authority of its core functions and transferring same to the private terminal operators.
When former President Olusegun Obasanjo came into office in May, 1999, he made it unambiguously clear that his government was interested in opening up the nation’s economy to the private sector. The position of the government was that there was need for reforms in many sectors of the economy, including the nation’s seaports.
Perhaps, the most popular singsong is port concession, apparently because it translated to stripping Nigerian Ports Authority of its core functions and transferring same to the private terminal operators.
Needless to stress that the concession policy led to massive down sizing on the part of NPA and of course, thousands of dockworkers also went with it. The exact number of dockworkers and NPA employees who lost their jobs is still top secret.
To the government and justifiably too, the nation’s seaport were already decaying; both in terms of service delivery and security as well as infrastructures, not to mention integrity and best practices.
That was enough justification and we share government’s position on that. We also share government’s disposition that managing the ports by its employees had been most unprofitable.
It is no longer news that the terminals are now safely in the custody of about 28 private sector companies; both local and foreign.
In fact, they have been for about seven years, until last penultimate week when the concessionaires in charge of the Lillypond Terminal in Ijora threw in the towel.
Apparently, not able to cope any longer, the manager of the off-dock terminal; Mr. Tristram Denyer, confirmed that the company has been running at a loss since 2006 when it won a 10-year concession. He blamed the fate that befell the terminal on absence of containers, even as he lamented that the company had invested more than US$15Million since it moved into the terminal.
He admitted being “frustrated by a number of factors including the lack of overflow container volume available for depots generally, the high cost of operating the depot and increased capacity in Nigerian marine container terminals.”
The fate that befell Lillypond off-dock facilities had been foretold by the Bureau of Public Enterprises (BPE) when it said shortly after the ports were concessioned that the off-dock facilities (otherwise called bonded terminals) which a couple of years ago became very useful in the wake of debilitating pile-up of containers leading to congestion at the various ports, especially in Lagos, would no longer be needed under the present dispensation of port concession.
Coming from the BPE, it was obvious that the days of the once- important bonded terminals were numbered; a clear shock to those who invested fortunes on the project thinking it would be a lasting venture, probably worthy of being bequeathed to their children.
The fact is: Lillypond is a glorified bonded terminal, albeit fed regularly by its sister company; APM Terminal.
How did the off dock facilities come about in the first place? They were licensed by the Nigeria Customs Service and that probably explains why the companies are owned by some of the foremost licensed customs agents.
Without mincing words, the bonded terminals served the purpose for which they were established. At the time of their emergence, there was something close to total chaos in the ports as ships waited for days running into weeks for berthing space that had become scarce as corrupt officials of Nigerian Ports Authourity (NPA) fleece hapless shipping agents who were desperate to secure berths for their principals.
At a point, one could count about 25 bonded terminals in Lagos alone, even though their presence did not really curb sharp practices. We recall that importers and clearing agents were always complaining that the off-dock facilities did not have sufficient cargo handling equipment.
We recall that sometime in 2007, the chairman of Seaport and Terminal Operators Association of Nigeria; Princess Vicky Hastrup had said without mincing words that there was no need for bonded terminal in port operations any longer and that the era of transfer of containers from the ports to storage facilities outside the port was gone. That was exactly what happened in the case of APMT and Lillypond terminal.
She had attributed the association’s position to the efficiency of the terminal operators, who according to her, have equipped the terminals with state- of- the- art facilities that have combined to make the terminals very efficient, as to make off- dock terminals to become absolutely unnecessarily.
Some questions are germane here: Didn’t the promoters of the concessionaire at the Lillypond Terminal carry out feasibility studies and due diligence before rushing to buy? Is it that they were just too desperate to buy it, thinking it would help the Apapa terminal? Have they explored all possibilities before accepting that the terminal can not be profitable as it is?
We recall that shortly after the ports were concessioned and his bid for the terminal that is currently being operated by ENL was turned down, foremost industry operator and politician, Mr Peter Eloka Okocha was offered the Lillypond facilities. Of course, knowing that a terminal that wants to make profit must have berths, he turned down the offer. With the benefit of hindsight he probably saw what others didn’t see or refused to see and that is that: called by any name, the Lillypond terminal is an off-dock facility that will need the benevolence of a mother terminal to survive.
But one of the sad things about the bonded terminals generally is that their promoters had also invested huge resources and we shudder at the kind of policy that renders previously attractive investments to become liabilities, within a few years.
The truth is that, nearly all the off-dock facilities are becoming totally redundant, and without sounding alarming, the fate that befell the Lillypond facilities may soon befall them. The only difference is that, while the magement of Lillypond were compelled to admit their inability to make a success of it, the ‘indigenous’ off-dock facilities will only quietly fizzle out.
Really there would have been no need for such facilities if the terminals work well and ships don’t need to spend days waiting to discharge cargoes. Of what use is an off-dock terminal when the mother terminal is not congested.
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