The Nigerian maritime industry has all it takes to be the leader on the African continent. But, decay has kept it on its knees, thereby becoming a nightmare for businesses. But things are beginning to look up. In this interview with OLUWAKEMI DAUDA, the Managing Director, Nigeria Ports Authority (NPA), Mohammed Bello-Koko, explains that for the country to assume the leadership role on the continent, there is the need for it to deepen port competitiveness through efficient operations. He also speaks on other issues affecting the industry and efforts by his administration to reposition it for better efficiency and growth.
Can you appraise the maritime sector in the first quarter of this year?
The year opened for the ports on a sound footing: Nigeria’s first Deep Seaport at Lekki, Lagos, commenced operations. We have seen a lot of improvement in cargo dwell-time. We are on the verge of the commencement of the reconstruction of the aged Tin Can Island Port Complex and rehabilitation of other ports to deepen the competitiveness of our exports, especially agro-allied products in international markets. We have licensed Export Processing Terminals (EPTs), among others.
We were also adjudged by the Bureau for Public Service Reforms (BPSR) as a Level 5 “Platinum Level” organisation due to our efforts at providing the enabling environment for exceptionally high quality of work in essential areas of responsibility, resulting in an overall quality of work that is superior, exceptional and unique.
What are the factors impeding trade facilitation in the port?
A major impediment is Customs processes and the insistence, sometimes on 100 per cent physical inspection of cargo. This constitutes delays with attendant negative impact on Cargo dwell-time. Another challenge is that of too many government agencies at the ports, which has resulted in duplications.These combine to increase the cost of doing business in our ports.
These are cumbersome documentation. However, we are doing a lot to address these issues. For instance, we are relentless in our drive to deploy the Port Community System (PCS) under the technical guidance of the International Maritime Organisation (IMO).
We have completed the first phase of the consultancy and the IMO consultants have actually visited the country for 10 working days to interface with the various agencies in the value chain. We are at the last stage of deployment of the PCS. Actually, we are persuaded that the PCS will lay the groundwork for the National Single Window (NSW), which will effectively solve these challenges.
What is delaying the review of the Concession Agreement you had with terminal operators since 2006?
The review of the Concession Agreement is actually not being delayed.This government is only trying to do a more thorough job to give Nigeria a better deal.
Recall that the Minister of Transportation approved the renewal to be driven by an Inter-Ministerial Committee comprising the Federal Ministry of Transportation, Federal Ministry of Finance, Budget and National Planning, Federal Ministry of Justice, NPA, Nigerian Shippers’ Council (NSC), Bureau of Public Enterprises (BPE) and Infrastructure Concession Regulatory Commission (ICRC) with very stringent terms.That process has been completed and it is awaiting the Federal Executive Council’s (FEC) approval.
Does that mean the earlier agreement was skewed in favour of terminal operators? If yes, what are your plans to revise this?
Actually, some of the lapses identified in the expiring leases have been addressed in the conclusive stage of their renewals. Under the new agreements, parties will be tasked to be more alive to their responsibilities in terms of deployment of state-of-the-art equipment, port illumination, quay maintenance, strict adherence to development plans, etc.
To what extent are terminal operators indebted to the NPA?
There are technicalities that govern the calculation of these values.The debt figures are composed of estate rents, lease fees and throughput charges, among others, as stipulated in the concession agreements. These debts date back to between 2006 and 2019. There have been recoveries within the period under review, and there are unrecoverable debts owing to issues such as Volume Change, Guaranteed Minimum Tonnage (GMT)/Penalties, Encumbered Areas etc. For avoidance of doubt, it would be necessary to explain the following terms: Volume Change – Means volume adjustment.
The Executed Contract Agreement with one of the major Terminal Operators stated that if the percentage variation between actual/ performance and projected volume is within minus 10 per cent to plus 10 per cent, the lease fee will be paid in full. However, if the percentage variation performance is more than minus 10 per cent to plus 10 per cent 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.
Encumbered Areas – refers to areas that are inaccessible due to factors not caused by the tenant such as host community hostility, marshy land, or equipment or buildings within the terminal that constitute obstacles for smooth operation etc.
Guaranteed Minimum Tonnage (GMT)- This is 90 per cent of the projected tonnage pledged to be achieved by the concessionaire. If this is achieved, the concessionaire will be incentivised, if otherwise the concessionaire will be penalised.
Unpaid VAT- this relates to the VAT element of the unpaid lease fees arising from adjustment brought about by the volume change defined above.
Penalty- means financial burden suffered for failure to meet the 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 or a charge for late payment. Let me reiterate that under the new agreements, measures have been taken to forestall the accumulation of debts.
Terminal operations represent the most common performance indicator to assess port efficiency. What is your take on that?
I agree that the terminal operations constitute an objective measure of operational efficiency. If we do a comparative analysis of the pre-concession and post-concession era there have been significant improvements, but what we are doing now is to ensure that more is achieved, because success when not improved upon easily becomes failure. For instance, the turn- around time of vessels reduced from an average of 9.2 days pre-concession to an average of 5.2 days post-concession. This signifies a marked improvement in efficiency in the handling of vessel and cargo operations which has great propensity to reduce shipping costs. Cargo Throughput has also increased from 44.9 Million Metric Tonnes in 2005 to 75.3 Million Metric Tonnes in 2022. Container Throughput increased from about 599,000 TEUs in 2006 to over one Million TEUs in 2022. Vessel sizes have also increased significantly.
How can Nigeria become Africa’s leader in maritime?
To assume port leadership on the continent, we must deepen our port competitiveness through efficient operations, which are seamless and lower cost. The smartest strategy for achieving this is full automation of ports and leveraging the advantages of economies of scale by constructing deep seaports. We are moving in that direction with the operationalisation of Lekki Deep Seaport whose template will govern the coming on stream of the Badagry Deep Seaport and others. We are working on improving the processes in the maritime industry and reconstructing decayed port infrastructure. We are in discussion with AFREXIM Bank and other local banks to fund the reconstruction.
Can there be improvement in the sources of revenue and collection at the port?
Most of the unprecedented upswing in the Authority’s revenue being witnessed, especially since 2020, are attributable to our tightening of collection mechanisms and we are relentless in our diversification of revenue sources through the many initiatives on new business avenues we have been churning out.
On a general note, what is your assessment of the performance of the Authority’s JV partners?
Again, a juxtaposition of the period before the JV partnerships and the status quo clearly shows significant performance: Channel surveys, wreck removal and dredging increased channel depth from 9.5 meters to 15.5 meters.
What is the revenue profile of the NPA and how has this contributed to the national economy?
We have supported the national economy through unprecedented revenue generation and remittances to the Consolidated Revenue Fund (CRF) of the Federation with revenue steadily growing from N317 billion in 2020 to N361 billion in 2022 and remittances progressively soaring from N80 billion in 2020 to N91 billion by financial year end 2022.
The ports are in dire need of critical infrastructure. For instance, the quay wall at the Tin-Can Port has collapsed. What are your plans towards solving these challenges facing our ports?
Our comprehensive ports need assessment and appraisals reveal that we will be requiring about $800 million to reconstruct TinCan Island Port Complex and rehabilitate aged infrastructure in the other port locations. This is aside other challenges facing the prots which include but not limited to: aged/collapsed infrastructure, multiplicity of government agencies, inadequate funding, municipality encroachments etc.
The return of louts otherwise known as ‘wharf rats’ into the ports are on the increase despite the presence of security agencies. How can this be tackled?
One of the steps we have taken to stem the influx of unauthorised persons at the ports recently is the perimeter fencing of TinCan Port and I can tell you that if you visit that location, you will confirm that sanity has been restored significantly.
Also, recall that we had, in partnership with the Police High Command and Lagos State Government, removed shanties and other illegal erections along the ports’ environs. We intend to sustain these clearance. We have also installed Access Control Gates and ISPS-compliant fences Authority-wide.
The MWUN has kicked against poor salary increase by your management. How do you intend to address this to avoid industrial action?
I am surprised to hear this, because I am in receipt of a letter dated March 6, 2023 signed by the Secretary-General of the Maritime Workers Union of Nigeria (MWUN), expressing appreciation to the management of the authority for the increment in the salary of its members.
Breaking the jinx of salary stagnation suffered for over a decade by the authority’s employees was made possible with the support of the MWUN, and we remain appreciative.
This critical support from MWUN has buoyed us to intensify our relentless drive towards continuous improvement in the welfare of our esteemed workers in ways not limited to monthly salary alone.
Let me reiterate that we are delighted that our own Comrade Adewale Adeyanju is now the Deputy President of the NLC. This gives us the solidarity and backing to push for more benefits for our highly valued human resources.
