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How high ports charges engender bleak fortunes for Nigeria

By Sulaimon Salau
22 August 2018   |   3:00 am
Astronomical charges that make Nigerian seaports among the costliest in the world are currently throwing operators and importers off balance, and ultimately jeopardising the fortunes of the nation’s economy. Charges are a critical factor in the cost of doing business at the ports, and apart from the tariffs, levies and taxes, there are also computed…

Astronomical charges that make Nigerian seaports among the costliest in the world are currently throwing operators and importers off balance, and ultimately jeopardising the fortunes of the nation’s economy.

Charges are a critical factor in the cost of doing business at the ports, and apart from the tariffs, levies and taxes, there are also computed cost of delay, documentation process corruption, bureaucracy, and lack of political-will that compound the problems.

High charges coupled with the unfriendly ports environment threatening over $7 billion investments by operators in the maritime value chain, including the terminal operators.

Reports in recent years show massive diversion of cargoes to neighbouring countries given their competitive advantage over Nigerian ports.

These issues, among others, brought industry stakeholders together at the Taiwo Afolabi Yearly Maritime Conference 3, sponsored by Sifax Group in Lagos, where possible solutions were proffered.

Recurrent issues at the conference included: excessive or inappropriate charges and levies; damage, pilferage or short delivery cargoes; demurrage and terminal rents; fraudulent release of cargo to unauthorised parties; and delay in locating and delivery of cargoes.

Others were the auction of cargoes by the Nigeria Customs Service; multiple agencies examination and scanning procedures delays; and intervention of cargoes in transit between the ports and destination and a host of others.

Stakeholders, who expressed their displeasure over the prevailing situation believed it was high time the Federal Government reformed the maritime sector, and reviewed it’s policies to reflect the current realities in the global market.

A frontline shipping expert and Chairman, Ports Consultative Council, Otunba Kunle Folarin, said: “If the port industry truly deserves to be productive, competitive, and earn a hub status in the region, it must reform and stop deluding itself.”

He added that: “The colossal growth in traffic, environment and empowerment, which we deserve, will forever elude Nigeria unless the entire industry is reformed to meet the performance level of the ports in the sub-region now husbanding Nigeria destination cargo traffic.

“There is much more to do to achieve the objectives of unbundling and creating efficient and competitive ports environment.

The reforms must start now in an all-inclusive way; it must be total. That is the only way, and that is the way forward,” he said.

Folarin, who was apparently agitated, said a typical shipping company debit note in Nigeria contained at least nine different elements of charges.

These include: shipping line charges, container cleaning, container deposit, MOWCA charge, NIMASA sea protection levy, MOWCA fee, freight levy, document release, demurrage charges, NIPOST stamp tax, and Value Added Tax.

Currently, eight of these charges have generated dispute between the Nigerian Ports Authority (NPA), and the shipping companies, while four are a source of disaffection among importers, exporters and the terminal freight forwarders.

Also, another four charges are being contested among shipping companies, importers, exporters and freight forwarders.

Ports cost is a collective responsibility for both government and the private sector.

Total port cost per a given cargo unit include Customs duty/taxes – 70 per cent, and Ports Terminal Operators – 13 per cent. The Nigerian Ports Authority’s share is negligible (+/-1%) excluding Customs duties, and comprises costs of handling, storage and delivery.

Rolling out strategies to reduce ports cost, Folarin said there is a need for deliberate government policy to reduce Customs Duty and taxes; set up an effective and efficient Single Window platform; regulate infrastructure development especially in the port environment and common users’ areas.

He emphasised the need for a stakeholders’ dialogue, and encourage Public Private Partnership in ports business, invest in modern facilities, and provide good quality human resources.

Executive Vice Chairman, Sifax Group, Taiwo Afolabi, said: “We are convinced that these are matters of immediate and practical concerns to every Nigerian, and more so to the regulatory authorities who need to harmonise and balance the conflicting viewpoints to the satisfaction of the stakeholders.

“I recall as an industry player that the exchange rate (Naira to dollar) in Year 2016 for instance, when we became ports concessionaires was between N125 and N131 to a dollar.

How much is the exchange rate today?

In other words since many of the operations are expected to be discharged to the lessee in dollars, how much naira will be enough today to purchase the required dollars.

Twelve whole years after the historic concession, how do you generate that amount of naira in today’s national economy?

“By what percentage will the cost of service be adjusted upward to reflect the astronomical changes in the foreign exchange regime? So many questions seeking answers,” he said.

Chairman, Seaport Terminal Operators Associations of Nigeria (STOAN), Princess Vicky Haastrup, argued that terminal operators are not to be blamed for the astronomical increase, saying: “some people are putting all the blames on terminal operators and I feel very disappointed.

The truth is that leadership is the problem. Federal Government is the problem. I am not talking of this present leadership, the whole thing started from time immemorial. There was no sincerity on the part of government itself.

If you look at what is happening in Apapa today, there is no enabling environment.

The terminal operators are losing money. We have invested heavily and what do we get back in return?

“When we took over, dollar was N125, and today it is N362.

By implications our cost of thing as at 2006; are NIMASA charges the same thing as of today; who regulates them?

NPA is there, Shippers Council is also there. What NIMASA charges is one of the highest in the world. Policy summersaults everywhere.

Do we sit well and think deeply before changing policies?

“There are whole lot of government agencies in the ports with a lot of charges, even stamps.

You will see the government going around talking about Ease of Doing Business, are we supporting him? Is government supporting itself?

Ports should be a one-stop shop, but I am sorry we are far from it because there is no sincerity on the part of anyone,” she said.

Former President, Association of Nigerian Licensed Customs Agents (ANCLA), Olayiwola Shittu, noted that numerous charges are being imposed arbitrarily without due consultations among stakeholders, while soliciting for appropriate consideration for the importers/exporters whom are the basis for shipping because they generate cargoes.

“I was a member of the committee on ports reforms, and one of those things we recommended were the five smart steps to cargo clearance, if this had been implemented, I am sure that many of these problems we are talking about today will not be there,” he said.

He accused foreign shipping companies of exploiting the country without a commensurate investment profile.

The Nigerian Shippers’ Council (NSC), which is the ports economic regulator, said its efficiency is hindered by litigations challenging its authority.

The Deputy Director Compliance Monitoring, NSC, Cajethan Agu, said: “When the ports were concessioned in 2006, there was no regulator and Terminal operators have been operating for eight good years before the appointment of the Shippers Council as the ports economic regulator in 2014.

The management made an effort to dialogue with operators.

However the first attempt that was made due to its regulatory mandate to bring sanity to the sector was met with stiff opposition.

The Shippers Council was taken to court by both Terminal operators and shipping companies, and the case is now pending at the Supreme Court today.

I believe that in a sector where we want to make progress, litigation is not the best. There is room for dialogue and alternative dispute resolution,” he said.

He said the Shippers Council still believes that there is a need to establish an effective and sustainable platform for the review of import tariffs.

“We are working on that, and we will try as much as possible to get stakeholders to work on that project.”

He also raised concerns on the issue of automation, and advocated the establishment of a single window system.

“Almost all the ports in West Africa have embraced the Single Window system. I am surprised that here Nigeria, we are not operating it,” he said.