FG must fulfill obligation to reap benefits of port concession

 

When the Federal Government embarked on port reform in 2006, culminating in the concession of cargo handling operations to private terminal operators, there were expectations of massive transformation in ports operations, and aptly so.

 

With the concession, 25 terminals were handed over to private companies in Lagos, Rivers, Calabar, Delta and Onne, with the port authority retaining ownership of the ports.

 

The private companies were required to provide and maintain their own superstructure, including buildings and cargo-handling equipment at the terminals.

 

The objective of the port concession was to increase efficiency in port operation, decrease cost of port services to stakeholders as well as decrease cost of running the ports by the government.

 

However, 16 years after the port concession, stakeholders insist the country is yet to reap its full benefits.

 

The general belief is that the port authority has not lived up to expectation with regards to provision of the enabling environment, and has not fulfilled some of its obligations in the concession agreement.

 

Maritime stakeholders postulate that the private operators have done their own part and it’s left for the government to fulfill its obligations for the country to reap the full benefits of the port concession.

 

Dr Kayode Farinto, acting president, Association of Nigerian Licensed Customs Agents (ANLCA), urged government to live up to its responsibility by providing 24-hour electricity.

 

He said even though the government had awarded the contract for the rehabilitation of the road leading to the seaport, the work had been very slow.

 

He said the government should prevail on the contractor to fast tract the implementation of its intermodal transport system as many of the cargoes that transited the port in terms of import and export solely relied on the road.

 

“On the rail system, we have been hearing stories about the rail being bought, the rail system has gone beyond what we are having here,” he said.

 

He noted that the payment in dollars by concessionaires should be reviewed by government so that it could add value and strengthen the naira.

 

He also called for the review of the port concession agreement, adding that a concessionaire unable to add value should be suspended.

 

“Port concession has brought another era of port operations into cargo clearance. It has added value and I can score port concession 60 per cent, at least now, the custodian of the goods can deliver.

 

“Also, we have one or two indigenous companies that have a lot of success stories, likewise some foreign companies, in terms of handling equipment.

 

“Port concession is not a total failure, there has been success story in one part and in some parts there is need for the federal government to review it,” he said.

 

The ANLCA boss said there were new handling equipment that could handle thousands of containers in an hour, noting that any concessionaire with obsolete equipment was taking the country back to the medieval period.

 

“Fifteen years ago I visited the Antwerp Port, they are talking about Port Development Plan viz-a-viz 2035, we don’t even have port development plan, we don’t have a consistent policy.

 

“We need to have a Ministry of Maritime Affairs so that we can use that opportunity to develop our port industry and more revenue can be generated by the federal government, and all these things have not been harnessed,” he said.

 

Before the concession, the entire operations of the ports were manually conducted, and bureaucracy worsened the situation making the entire port environment chaotic, Mrs Joy Monije, a freight forwarder, said.

 

Monije noted that the concession brought improvement and innovations, with operations being done digitally.

 

“But before the COVID-19 pandemic, there had not been much improvement. It was as a result of the COVID that so many things changed.

 

“COVID-19 helped to reduce human interface, and introduced technology in port operations.

 

“People now know that it’s not compulsory to come together at the ports to achieve their aim. If it’s implemented more, by 2023, I believe things will be much better.

 

“In the area of costing, we are paying through our nose. Before now, we don’t pay demurrage and even weekend when they don’t work, we don’t pay anything.

 

“But now things are done in stages, if one does not complete a stage, you cannot move to the next line and this distorts things, making us to pay demurrage,” she said.

 

The spokesman for Seaport Terminal Operators Association of Nigeria (STOAN), Dr Bolaji Akinola, said wthout a doubt, the economy had benefitted from port concession.

 

He listed benefits of port concession to include injection of private capital into port development, elimination of port congestion, modernisation of ports and better cargo handling equipment.

 

Others, he said, were competition among terminal operators, improved welfare and training of port workers and the institution of condition of service for dockworkers.

 

“Recall that prior to port concession, dockworkers were casualised; they did not have employers and did not have condition of service.

 

“The narrative has since changed with the introduction of the Collective Bargaining Agreement, which created a condition of service for them and also created room for review of their remuneration every two years,” he said.

 

Akinola said the drawbacks at the ports were as a result of the cumbersome cargo clearing process and physical examination of cargo by the Nigeria Customs Service.

 

He added that the over-dependence on roads for cargo delivery, as well as bad roads leading into and out of the ports were some of the reasons the country was not reaping the full benefits of port concession.

 

“I believe that once these challenges are addressed by government, Nigerians will reap more gains from port concession,” he said.

 

Similarly, Mr Hassan Bello, former Executive Secretary, Nigerian Shippers’ Council (NSC), said there had been gains in port reform; palpable yet limited.

 

He said the reform was short of being revolutionary, changing radically the dynamics of the port operation such as efficiency in port operation – largely because of the private sector participation, increased port revenue and others.

 

Bello said unfortunately, the vestiges of the pre-reform era still remained, as efficiency was not optimal – port operation characterised by delays, inertia, lack of transparency, primitive and tedious cargo clearance procedures.

 

“The port is still being run as mostly a manual port even though some terminals are operating digitally. Thus, the port is still plagued by human contacts and having 21 days cargo dwell time – very long,” he said.

 

He said the reforms were not comprehensive and had gaps like multi model access to rail, road, inland waterways; absence of clarity and inclusiveness in the regulatory and legal framework.

 

“There seems, therefore, a lack of effort by the government to carry out structural reforms in related sectors, such as enhancing inland connectivity.

 

“There is no deliberate linkage or integration of transport infrastructure, ports were haphazardly cited without regard to logistic dynamism,” he said.

 

In addressing the present state of the ports, the Managing Director, Nigerian Ports Authority (NPA), Mr Mohammed Bello-Koko, noted that there were options for the rehabilitation of the country’s ports.

 

He said what led to defects in infrastructure at the ports was the reduction in the ability of the ports to generate revenue to invest in the rehabilitation of the ports and other offdock locations and provide equipment for maritime service.

 

Bello-Koko noted that one of the options was for NPA to totally fund the port rehabilitation, but to do that, government needed to give concession and not ask NPA to transfer revenue to the Consolidated Revenue Fund (CRF).

 

“This year alone, we have transfered over N100 billion to the CRF and imagine if the amount is allowed back for the reconstruction of the port.

 

“To say NPA should fund it holistically, we know it’s impossible, reason being that normal construction period for such infrastructure is three years and there is no revenue to pay any contractor,” he said.

 

Bello-Koko noted that the second option was to go for a hybrid finance model where the NPA and the federal government would provide part of the money, while a multilateral lending agency would provide the balance.

He said another option was for terminal operators to reconstruct the ports, but at a high cost.

 

“The decision taken by the ministry of transportation, NPA and probably with the federal government is to allow NPA to use 50 per cent of the amount transferred to CRF in the next four to five years.

 

“If on average NPA transfers N80 million to CRF and is allowed to use 50 per cent to reconstruct the port, it will go a long way and we hope we get the approval,” he said.

 

From the prevailing views, long after the Federal Government carried out its port reform, particularly the port concession, the country is far from benefiting maximally from the reforms.

 

And for that to happen, it is believed that the government must fulfill its part of the port concession agreements by proving key infrastructure and overall enabling environment. (NAN)