NPA clarifies $1b unremitted levies flagged in audit report

The Nigerian Ports Authority (NPA) has offered clarifications to the Senate Committee on Public Accounts on the debt sum of N1 billion, which the committee said was not clarified in the report of the Auditor General of the Federation.

Its clarifications also extended to the $852,093,731.10 cited in the Auditor General of the Federation’s report being circulated in the media, even as it claimed that a total of $232,354,156.43 out of the sum had been recovered.

Managing Director of the NPA, Mr. Mohammed Bello-Koko, who appeared before the Committee last Friday, said that the House Committee on Public Accounts in the 9th Assembly had thoroughly verified the money and had given the Authority a clean bill of health.

Bello-Koko explained that the misunderstanding between the position of the Senate and House of Representatives Public Accounts Committees arose from the continuous repetition of sums dating back to the period before the year 2006 concession of the Authority, which the current NPA Management had already accounted for but the sums had yet to be expunged from its books.

Bello-Koko, who exhaustively explained the facts of the matter to the senators, said: “Most of the debts date back decades. I mean legacy debts from companies like Nigerian National Shipping Line Ltd and from pre- concession period.

“But we have been carrying these debts in our books and we have been impairing the amounts, thereby making provisions for all such debts. We have written to the Auditor-General of the Federation on the procedure to take them out of our books and solicited for the support of the Senate Committee in this regard.”

He assured the committee that “in the spirit of public accountability, we will always be open to give account.”
Asked to further clarify the debt issue by the lawmakers, he explained that the debt figures were composed of estate rents, lease fees and throughput charges among others as stipulated in the Concession Agreements.

He explained: “The debts date back to the period 2006 to 2019. There have been recoveries within the period under review, and they are unrecoverable debts owing to issues such as Volume Change, Gross 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 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, etc.
“Guaranteed Minimum Tonnage (GMT): This is the projected tonnage pledge by the Concessionaire to achieve; this arises from the inability of the Concessionaire to meet up the pledge.”

“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: Refers to financial burden suffered for failure to meet 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. Simply put, it refers to a charge for late payment.”

Bello-Koko further said: “The figure quoted in the press relates to the 2019 Auditor General’s report and it doesn’t reflect the current position of indebtedness to NPA.

“It would be pertinent to clarify that out of the amount of $852,093,731.10 cited in the Auditor General of the Federation’s report and being circulated in the media, a total of $ 232,354,156.43 has been recovered.
“The balance $504,663,452.37 constitutes uncollectible portion due to volume change and Contentions; $54,663,452.37 constitutes uncollectible portion due to Gross Minimum Tonnage (GMT); $19,619,459.00 constitutes  Portion due to Encumbered Areas; $11,908,355.82 constitutes various penalties  imposed on the terminal operators for not meeting set standards and $ 28,693,607.07 represents VAT  of said amount.
“In relation to the concessionaire debt of N1.8 billion, a total of N269 million has been recovered leaving a balance of N1.6 billion, which represents encumbered areas of the terminals.
“As regards the outstanding estate rent, Ship Dues and service boats of $67 million, a total of $10.6 million has been recovered.”

He stated that, “it is very important to note that the uncollectible debts are summation of GMT stated above (which is a performance metrics) which the Terminal Operators could not meet mostly because of change in government policies (e.g issues like force majeure) and infrastructure decay.”

According to him, “some of the other debts are also legacy debts being owed by a government agency, which metamorphosed into a limited liability company and for which the Authority is working out modalities with the relevant parties to recover accordingly.”

He confirmed that the Authority was in advanced talks to resolve the disputes surrounding these amounts, pointing out that all outstanding amounts due to NPA had been accounted for by the end of the year 2022.

Bello-Koko disclosed that the management of the Authority, in a concerted effort to correct the anomalies as seen in the concession agreements, engaged the World Bank to provide consultancy services for its review while an inter-agency committee comprising NPA, FMOT, FMOJ, BPE and ICRC developed a template to address the inherent anomalies in the agreements that allowed for the accumulation of such debts and to forestall a recurrence.

“This has resulted in the signing of a supplemental concession/legal agreements which will come into effect shortly,” he disclosed.