Saturday, 9th December 2023

FG ignores 17-year-old concession fee debts, renews terminal leases 

By Adaku Onyenucheya
23 August 2023   |   4:31 am
The Federal Government has disregarded debts owed by operators of leased port terminals and proceeded to renew the agreements, The Guardian has learnt. 

• Lease owners exploit official grafts, unclear regulations
• Port infrastructure continues to deteriorate
• Some operators yet to pay up 2006 concession fees
• Politicians, business executives lobbying for renewal of last batch

The Federal Government has disregarded debts owed by operators of leased port terminals and proceeded to renew the agreements, The Guardian has learnt.

Also waived are various terms of contracts, which the operators have flagrantly violated during the lease.

While the concessionnaires have failed to keep up with parts of their obligations in the schemes, the contraventions have been enabled by what some stakeholders have described as unclear regulations.

The port concession/lease agreement entered into in 2006 was not supported by legislation or a structured regulatory framework to monitor the 26 concessionnaires, The Guardian was informed.

Findings also showed that political forces have been shielding the concessionnaires who have failed to meet their obligations in the concession agreements, especially their financial and port infrastructure development requirements.

While some of the concessionnaires are still owing their concession fees since 2006 up till date, as well as failing to develop the port infrastructure as required of them in the contracts, they have had their various lease agreements renewed after much pressure from certain forces in government mandating the inter-agency committee involved in the renewal processes.

The inter-agency committee is made of representatives of the Bureau of Public Enterprises (BPE), Nigerian Ports Authority (NPA), Infrastructure Concession Regulatory Commission (ICRC), Federal Ministry of Transportation (FMOT), Ministry of Finance, Budget and National Planning and the Federal Ministry of Justice (FMOJ).

Recall that in an audit query by the Office of the Auditor General for the Federation presented to the House of Representatives in August 2022, 18 of the terminal operators were reported to have failed to remit $753 million and N1.61billion to the Federal Government from 2006 to 2019.

Although, the terminal operators’ total indebtedness was $852.094 million and N1.9 billion, the debts, which exclude that of 2020 to 2022, were composed of estate rents, lease fees and throughput charges among others as stipulated in the concession agreement.

Further analysis of the debt includes $504,663,452.37 of uncollectible portion due to volume change and contentions, $66,627,342.76 of uncollectible portion due to gross minimum tonnage (GMT) and $19,619,459 of uncollectible portion due to encumbered areas.

Despite the indebtedness, NPA, in 2020, went ahead to renew the contracts of 21 terminal concessionaires, which include, Intels Nigeria Limited’s five subsidiaries at Federal Lighter Terminal, Onne; Federal Ocean Terminal, Onne; Warri Terminal ‘A’; Warri Terminal ‘B’ and Intels Nigeria Limited, Calabar.

Others are Julius Berger Services Nigeria Limited, Green view Development Ltd (GDNL), Ports and Cargo Handling Services Limited (PCHS), Apapa Bulk Terminal Limited ‘A’, Apapa Bulk Terminal Limited ‘B’, Associated Maritime Services Ltd, Josepdam Services Ltd, Five Star Logistics Ltd and Shoreline Logistics Limited.

The rest are Ecomarine Terminals Limited (ENL) Consortium ‘C’, ENL Consortium Ltd ‘D’, AP Moller Terminals Ltd, Brawal Oil Services Ltd, Ports and Terminal Operators Limited as well as West African Container Terminals.

The remaining five concessionaires with expired contracts have continued to push for renewal with the support of politically-exposed persons from the government.

They are Ports and Cargo Terminal Ltd, operator of Terminal ‘C’ at the Tin-Can Island Port: Tin-Can Island Container Terminal (TCIP); ENL Consortium, Terminal C, Lagos Port Complex, LPC; ENL Consortium, Terminal ‘D’: LPC Josephdam Terminal and AMS Terminal, Delta Port.

Recall that NPA had, in May last year, threatened to revoke the concession agreements of the five terminal operators over decaying infrastructure, noting that all players at the nation’s seaports had been placed under surveillance for actions to their obligations captured in the port concession agreement.

The authority said while a holistic review of decaying infrastructure at the ports had been taken, it was decided that the rehabilitation of Tin Can and Apapa ports that were practically collapsing was vital. The terminal operators were asked how much money they were going to invest in them.

The Managing Director of NPA, Mohammed Bello-Koko, said to renew the concession agreements, there would be commitments from the affected concessionaires to the development of the terminals.

He said if the concessionaires could not give such commitment, the terminals would either be given to other operators or NPA would take over their development.

Bello-Koko disclosed that the concession agreements in 2006 were no more tenable, as the demands are now different and require the terminal operators to be more responsible for the maintenance of quays, fenders and allied matters such as port illumination as well as for deployment of modern equipment in sufficient quantity.

But the terminal concessionaires kicked in and got the backing of the government, with the House of Representatives Committee on Privatisation and Commercialisation, giving 45 days to NPA and the inter-agency committee on concession agreement review to renew the contracts.

Recall that the House of Representatives Committee on Privatisation and Commercialisation, last year April, warned that the concession renewal investment for the five terminal operators which totalled N211.9 billion could be lost if their contracts were not renewed.

The concession fee for ENL Consortium was $143 million; Port &Cargo Handling Services, $120 million; Josepdam Port Services, $100 million and the Associated Marine Services was $2.4 million, which made the total $365.4 million, equivalent to N211.9 billion.

The committee summoned the inter-agency committee to proceed and conclude the renewal of the lease agreements in line with the article (2) of their respective concession agreements, noting that the concessionaire agreed to pay a renewal fee ranging from $1 million to $5 million as soon as the supplemental agreements are executed.

After the renewed lease agreement certificates were awarded by ICRC to the terminal operators last year, the former minister of transportation, Muazu Sambo overturned the renewal because it did not follow due process.

Sambo said the requests for the concession agreement renewals were submitted without verifiable data on the performance of the terminals and that the Nigerian Shippers’ Council (NSC), as the port economic regulator, was best placed to perform this role.

He directed the NSC to carry out performance audits on the terminal operators as part of prerequisites for any lease renewal, which was, however, greeted with knocks from the operators.

The minister charged NSC to ensure the terminal operators meet key performance indicators (KPIs), which include, development plans, cargo traffic, improved revenues and other obligations that were incumbent on the contract as key considerations.

Sambo also directed NSC to meticulously screen the terminal operators that show satisfactory evidence of performance and meet the KPI as well as drop any company that could not satisfy the conditions for renewal.

When The Guardian asked the Director of Consumer Affairs, NSC, Cajetan Agu, who was at the initial stage of the concession renewal agreement, about the update, he said: “I wouldn’t know about the renewal of those whose concession agreement had expired, it is only those who are members of the committee on concession that can give you the answer.

“But I know the review of the concession renewal is ongoing. I am aware that before the minister left, there was a committee handling that and I am sure some of them might have been reviewed and approval granted, but I can’t say which one it is. It is only the Ministry of Transportation that can talk on that.”

When The Guardian contacted BPE on the current state of the concession renewal after several calls and promises by its communications department to send information, it declined comments while other calls were not answered.

The Guardian also contacted NPA management on the update of the issue but was told by the communications department that work was concluded on the renewal process by NPA, with ICRC’s approval given before it was presented to the Federal Executive Council (FEC) by the former minister of transportation.

NPA said after the first deliberation by FEC, the Ministry of Transportation was requested to furnish it with further details, which had been provided and awaiting presentation by the ministry to FEC.

On the concessionaires’ contract renewal, NPA said: “So far, we have five concessions that have expired, out of 26. These five concessionaires’ requests for renewal are awaiting FEC approval, having undergone all necessary renewal processes.”

On meeting the performance requirements for renewal, NPA said: “The five forwarded concessionaires met the various performance audits as required. There was the inter-agency review, independent audit review by an independent consultant, NPA in-house review as well as ICRC review.

“The requirements include operational performance, financial obligation performance, past infrastructural development, commitment to port infrastructural development and investment, commitment to the provision of new and adequate plant and equipment, provision of an adequate performance bond, technology, necessary adequate insurance plan, security and improvement of the port environment.

“On the financial obligation, aside from the statutory obligation of payment of lease fees, throughput fees and commencement fees, the commitment to make a substantial investment in the infrastructural development of the port within a timeframe was required.”

But this contradicts the lingering issues that stalled the initial process for port renewal as there has been no feedback on clearance of the backlog of indebtedness or development of the deteriorating port infrastructure in which the NPA is seeking $800 million to rehabilitate the infrastructure.

On the issue of carrying the Nigerian Shippers’ Council along throughout the entire process as part of an inter-agency committee, which was one of the issues that stalled the concession renewal process, the NPA told The Guardian that the council was deeply involved.

To date, the concession agreement document has been shrouded in secrecy, which has made it difficult for the public to scrutinize the flaws in it as well as the obligations of the contracting parties.

A former member of the Presidential Committee on Destination Inspection and Ministerial Committee on Fiscal Policy and Import Clearance Procedure, Lucky Amiwero, said the document for the lease agreement was not backed by any law or regulation, which is why the terminal operators get away with their violations easily.

He said the elements embodied in the concession, which includes facilities development, traffic management among others are not implemented or achieved.

“Before you go into concession, what you are supposed to do is to pass a law whereby you don’t give powers to the terminal operators to do what they are doing today as well as the shipping companies. We don’t have a law to regulate those bodies. Who took charge of the terminal operators and shipping companies? They also come and increase tariffs. We have a problem, the shippers council still has a case about the illegal charge increase of the shipping companies,” he said.

Speaking on the concession review, Amiwero said after the expiration of the concession, it is supposed to be reviewed by stakeholders, not only by government because the port users are stakeholders.

“Other countries’ stakeholders are part of those that review the concession to see if the concession is in line with international best practice and by government. NPA is supposed to have staff that will take over from these concessionaires. In many countries that have concessioned their ports, it has been returned to the government.

“What we have now is a system where we need the government to intervene seriously because it is not in favour of the country, prices are being hiked by terminal operators on their own time, they do what they want to do, nobody regulates them, so it is the same thing with the shipping companies.

“There is a need for the government to look and review it in line with international best practices. They need to access and evaluate the concession and see if it is beneficial to the economy or not. This new government has to review the whole thing. They have to set up, not political, like what was done by former President Olusegun Obasanjo, it was a political concession,” he added.

A maritime expert, Eguono Odjegba, said the port concession is a bit of politics and business, adding that hardly can politics be ruled out.

“Late last year/early this year, the position of the immediate past minister of transportation and that of the executive management of the Nigerian ports authority varied. The minister ordered the immediate review of the concessions, and a few days later, NPA gave reasons why they couldn’t do so and announced thereafter that there has been an extension of six months before the proper review would be done.

“In the heat of the debate of collapse quay sections of some of the ports, particularly Tin Can port, the executive management of NPA said that they are considering getting concessionaires to be involved in the repairs and that if concessionaires cannot undertake repairs within their various terminals, then the rules, what the NPA will charge will be different. Up till now, NPA didn’t give us an update on that issue. That is why I said politics is involved in all of this.

“Look at the concessionaires, most of them are friends of the government and when critical issues of governance are at stake, you discover that politics filters in. Politics will keep playing its role in the affairs of our port concession regime,” he stated.

A maritime expert close to the government, who doesn’t want his name on paper, said the government has only worked on verbal presentations about the port concession agreement, adding that the agreement is not made public for scrutiny.

“They kept it secret and it was also generally understood that it was not a uniform agreement, that is, the agreement they had with the concessionaires varies and is different.

“Government is dealing with the concessionaires on an individual company basis. You may not get a general answer from them because someone may be very connected in this government and secure an extension of the contract,” he said.