Last year, the Nigeria Shippers’ Council (NSC) was temporarily appointed as seaports economic regulator, with a mandate to, among others, check arbitrary charges at the ports. However, almost a year after, the ports remain uncompetitive and unattractive for business due to the rising cost of doing business. This has pitched the council against importers, clearing agents and other stakeholders in the maritime industry, OLUWAKEMI DAUDA reports.
Despite its capacity to generate for the country an estimated N7 trillion in revenue, the Nigerian maritime sector remains inefficient and uncompetitive. High cost of doing business at the ports, cumbersome clearance procedures, bottlenecks in cargo evacuation, inadequate cargo handling equipment, and lack of transparency, among others, have conspired to make the ports inefficient and uncompetitive, forcing many importers to patronise ports in neighbouring countries, especially Benin Republic.
Government’s regulatory agencies and relevant ministries have confirmed the massive diversion of cargoes to ports of neighbouring countries, which are later substantially smuggled into the country through the numerous porous land borders, resulting in loss of huge revenue to the government.
This was why President Goodluck Jonathan, last year, appointed the Nigeria Shippers’ Council (NSC) as seaports economic regulator. The council was given the mandate to reduce cost of operations at the ports. However, one year after, the council appeared not to have lived up to its mandate, and this has become one of the sore points in the nation’s maritime business, as importers and clearing agents kick.
Cost of clearing containers
At the Apapa and Tin Can Island ports in Lagos, the cost of clearing containers remained the same, between N150, 000 and N300, 000. Investors and importers under the aegis of Shippers Association of Lagos State (SALS) said the high cost of clearing cargoes have remained high at the ports. They attributed this to multiple charges imposed on imported goods.
President of the association, Mr. Jonathan Nicol, said the five per cent Value Added Tax (VAT) and the one per cent PAAR charge were some of the many charges Nigerian shippers pay.
He gave others as the 35 per cent automobile levy and the Common External Tariffs (CET) levy.
According to him, the combined cost implication of the charges on one consignment takes away most of the shipper’s capital. “The Federal Ministry of Finance has to provide leadership in managing the problems of the Nigerian shipping community. Government should think about the huge investments in building deep sea ports as well as maritime prospects in the next 20 years to attract more cargoes,” he said.
Also, a frontline licensed clearing agent and a former chairman of Tin Can chapter of SALS, Dr Farinto Kayode, said at a meeting of clearing agents in Lagos that Customs charges originating from the PAAR system was becoming unbearable. He noted that as a final document and as far as value of cargo was concerned, the Customs could only query PAAR based on quantity.
Litigation against NSC
There have been squabbles between the NSC and terminal operators over the execution of a court judgment ordering the operators to stop ‘illegal’ revenue collection at sea ports.
Justice Ibrahim Buba of the Federal High Court, Lagos, last December 17, ordered the operators to stop the collections from importers and clearing agents, which the NSC contended was illegal.
The operators appealed the judgment and asked the High Court to suspend its execution pending the determination of their appeal.
But the NSC returned to Justice Buba, praying him to compel the operators to pay N150 billion for allegedly disobeying his order. In a statement, Seaport Terminal Operators Association of Nigeria (STOAN) Mr Femi Atoyebi (SAN), accused the NSC of making frantic efforts to ride rough shod over the judicial process.
Atoyebi accused NSC of adopting illegal and unacceptable method because the case is a subject of an appeal, adding that STOAN also has an application for stay of execution before Justice Buba.
The statement reads: “The law in Nigeria is that whereas, there is an appeal against a court decision and a motion for stay of execution/injunction is filed, none of the parties must do anything to frustrate the hearing of the appeal until the application has been determined.
“It is also trite that the court from which an appeal lies and the court to which an appeal lies have a duty to preserve the ‘res’ (subject-matter) so that the appeal, if successful, is not rendered nugatory. We consider that the NSC lawyers should have advised them appropriately of the correct position of the law and if they did, it would appear that the NSC is refusing to follow the advice. We hasten to add that the NSC publication and any further step that may be taken by them in a bid to frustrate the pending appeal and foist on the Court of Appeal a situation of complete helplessness would be highly contemptuous of the court and we would not hesitate to apply the full weight of the law on such persons as may have authorised the publication.”
Another maritime lawyer, Mr. Chidi Ilogu (SAN), said the NSC cannot execute the judgment delivered in its favour against members of the Association of Shipping Line Agencies (ASLA) on Shipping Line Agency Charges (SLAC) yet because of a pending appeal.
Ilogu, who is the Counsel to ASLA, said members of the association, being dissatisfied with the Federal High Court judgment delivered on December 17, last year by Justice Ibrahim Buba, immediately filed a ‘Notice of Appeal’ challenging the entire judgment of the lower court.
The lawyer said the judgment is being appealed on the grounds that the NSC cannot perform economic regulatory role at the ports in Nigeria pursuant to a presidential directive, which is inconsistent with the extant laws of the country including the NSC Act and regulations made pursuant thereto; that the purported economic regulatory functions are ultra vires the powers of the NSC as presently stipulated under the enabling Act, which has not been amended; and that the purported presidential directive, being inconsistent with the NSC Act, is null and void and of no effect.
“In addition to the said notice of appeal, the plaintiffs filed an application for a stay of execution and/or injunction pending appeal.
“It is a trite principle of law as established in a plethora of cases that where an appeal is pending and the applicant has applied for a stay of execution of the judgment appealed against, the parties to the appeal are enjoined to maintain the status quo – being the subsisting position before the judgment of the lower court,” Ilogu said.
He said the purpose of an application for stay of execution is to preserve the ‘res’ and “the parties are legally obliged to avoid taking any steps that may foist a fait accompli on the Appeal Court and render its decision nugatory given that the rights and obligations of the parties are yet to be determined to finality by the appellate court”.
He averred that the shipping companies and the shipping line agents were not collecting any illegal charges from port users as they are within the right to maintain the status quo.
“The NSC is well aware of the pending appeal and application for stay of execution and has indeed, filed a response to the application for stay of execution before the trial Court and same is yet to be heard.
“Nigerian Appellant Courts have held that a party, who has appealed and asked the Court for a stay, will not be held in contempt merely because he has not obeyed the order which he is appealing against or which he wants stayed or suspended pending the appeal.
NSC’s lawyer’s position
But NSC’s lawyer Mr Olisa Agbakoba (SAN) disagreed, saying: “The mere fact that there is a pending application for stay of execution and an appeal do not remove the effect of the judgment we got. Our position is supported by a Supreme Court decision that it will be unfair to allow a losing defendant ‘to continue cutting down and selling economic trees on the land’ adjudged by the trial court not to belong to them simply because of a pending application for stay of execution and an appeal.
“What the appellants, who have been found not to be the owners of the land in dispute want of this court, in effect, is for the court to lend its authority to the appellants, for them to continue devastating the land in dispute by being allowed to continue cutting down and selling the economic trees on the land while the owner of the land – the respondent – sits back and watches, helplessly, the fruits of his judgment being denied him. That will be justice inverted. I will not be a party to such an inversion.
“This Supreme Court decision is apt to our case. Applying the decision, it is clear that the terminal operators cannot continue to impose and collect illegal charges on the pretext that they have filed a pending application for stay or appeal.”
Why the council is worried
The Executive Secretary, NSC, Mr. Hassan Bello, is worried. His worry arose from the country’s quest to achieve the status of hub of shipping activities in the West African sub-region amidst an uncompetitive and unfriendly port sector.
The council is also dealing with stakeholders, who have been playing without the rules as the port terminals were concessioned to private operators without consideration for appointing a regulator to assess options for competition, to decide on entry rules, regulate on pricing freedom and monitor outcomes.
Expectedly, the operators resisted attempts by the NSC to introduce reforms at the ports that will engender attractiveness and competitiveness by dragging the regulator to Court.
Bello said the global competitiveness of Nigerian ports has a major role to play in attracting Foreign Direct Investment (FDI). Port reforms, he said, has brought tremendous benefits to the economy.
“However, there is still the need to harness other potential areas of the port sector with a view to bringing down the cost of doing business and enthrone efficiency,” he said, noting that a vacuum was created by the absence of an economic regulator that will act as a referee, and the vacuum has made it difficult for the nation to enjoy the gains of the reform.
“Niger and Chad Republics would rather go to Cotonou in Benin Republic than Apapa in Lagos because of so many reasons. There is the deployment of technology there and things are done at fairly transparent level,” Bello said, adding: “we have to counter that and make our ports efficient so as to attract cargoes from our competitors.”
Competition, he said, is central to regulation. “How do we make the ports competitive?” he asked, stating, “You have to have an economic regulator, who is like an auditor, he is focusing on the efficiency of the ports, which is based on some key performance indicators. These include questions like, what is the turnaround time for vessels? What is the dwell time of cargoes? What is the clearance process? How do you evacuate cargoes from the ports to their final destinations? What are the incentives? What are the infrastructure available? What is the level of corruption or transparency? The importers then have to weigh it whether to bring their cargoes to Apapa or go to Cotonou.”
Bello explained that what the NSC did in the last few months was to have consultations with various stakeholders. “We held many breakfast meetings and dinners trying to sell an idea. The idea is simple. If the game is played by the rule, it will be for the benefit of all. When you have chaos or brigandage it will not benefit anybody in the long term. I am happy we have generally got an acceptance by stakeholders both in the private or public sector,” he said.
Bello said in Shippers’ Council capacity as port economic regulator, is to consult, coordinate, moderate and harmonise the various processes and procedures with a view to achieving operational efficiency at the ports. However, where there is unreasonable resistance, he said the council will not hesitate to apply appropriate sanctions to ensure compliance. He, however, said they shall remain open, independent, neutral and consultative and all decisions would be based on the buy in of stakeholders.
Highlighting the effect of economic regulation on the regulated entities in the transport and logistics chain, Bello said terminal operators will experience protection of their investments from undue interference, leading to guaranteed return on investments and increased profitability.
There will also be predictability in processes and procedures, assurance of level playing ground, and availability of common user information service provided by the regulator.
On the part of the government, Bello said there will be improved revenue generation; improved infrastructural development; improvement of the nation’s global competitive index and consequent attraction of FDI.
He noted that the shipping companies will experience improved delivery of marine and terminal handling services leading to reduced turn-around time of vessels and reduced cost of vessel operations.
Also, an effective regulation will engender professionalisation of freight forwarding practice, leading to elimination of touting, sanitisation of the port environment and the promotion of global linkages.
“We wish to note that the NSC is not competing with any other government regulatory agency, but striving to actualise the mandate of making our ports the sub-regional hub and international logistics centre. On this note, we call for the support and cooperation of the Nigerian Ports Authority (NPA); Nigeria Maritime Administration and Safety Agency (NIMASA); Nigeria Customs Service (NCS); Nigeria Immigration Service (NIS); Standards Organisation of Nigeria (SON); National Agency for Food, Drug Administration and Control (NAFDAC); the Nigeria Police, and all other stakeholders. We shall also rely on the political will and the support of the government to enable us succeed in this our assignment,” Bello said.
Outdated shipping policy
Agbakoba, a maritime lawyer and former president of Nigerian Chamber of Shipping (NCS), said he is organising a policy dialogue that will bring together all stakeholders to highlight the constraints in the shipping sector, which at present are preventing Nigeria from becoming the maritime hub of Africa and an international maritime centre.
He said the Nigeria’s shipping policy framework is outdated and incoherent. The last major review was 28 years ago i.e the Nigerian Shipping Policy (NSP) Act No 10 of 1987. As a result, Nigeria’s ports have become uncompetitive.
“Nigeria requires an economic regulator for shipping sector. Until recently, there is no clearly recognised economic regulator for the shipping sector. The Federal High Court has held that the NSC is an economic regulator. It is only when the NSC is empowered to regulate that stakeholders in the sector can turn around the fortunes of their businesses and generate huge revenue for the nation as their counterparts in other jurisdictions such as Malaysia, Indonesia, Hong Kong, and USA do,” he said.
Having been appointed as the economic regulator of the ports eight years after the port concession exercise when private companies took over cargo handling operations, NSC has been taking steps to ensure that Nigerian ports become competitive again and attract more cargoes.
This is because Nigeria has the destination of cargoes. More than 65 per cent of the imports into the West and Central Africa sub region end up in the country of an estimated 170 million population, the largest in the continent.
“I remember what we say then that Nigeria is the hub. Nigeria cannot be a hub, you cannot decree a hub. The shipper has a choice, he enters into contract of affreightment and chooses port of discharge,” Bello said, during a recent media interaction
“We have to look at the Nigerian ports and find out why neighbouring ports are having more cargoes than Nigeria and that is the function of an economic regulator. That is what the NSC has been addressing. It is not an easy thing,” Agbakoba added.
