Amid unending reforms, maritime industry still gasping for breath
30 October 2022 |
3:19 am
Despite the huge capital expended on ports’ reforms by the Federal Government to make seaports efficient and attractive to investors, the country is still battling with challenges in ports’ administration such as delays...
Seaports
•Inadequate Parks, Holding Bays Complicating Ports’ Challenges
Despite the huge capital expended on ports’ reforms by the Federal Government to make seaports efficient and attractive to investors, the country is still battling with challenges in ports’ administration such as delays in import/export processes, port inefficiencies, red tape, human and vehicular congestion in and around the ports, and illegal charges leading to high costs of business operations.
This is why the seaports remain the most expensive ports in West and Central Africa, a development that has now led to the diversion of cargo to neighbouring ports in Ghana, Togo, Cotonou, Cameroon, and Ivory Coast, thereby costing Nigeria huge revenue, which runs in trillions of naira.
Nearly two decades ago, the President Olusegun Obasanjo-led Federal Government carried out wide-ranging reforms in the nation’s seaports to address the situation and ensure efficient port operations in a bid to regain the country’s status as Africa’s maritime hub.
Part of the ports’ reforms programmes implemented by that government included the 2006 Terminal Concession Policy, also known as the Landlord Port Management Model, which was to attract private capital to the port sector.
The objectives of that reform were to improve the overall efficiency of port operations, reduce the cost of doing business for users and operators, decrease government expenditure, boost economic activities with the introduction of the private sector, as well as make Nigerian ports the hub for international freight and trade in West Africa, but unfortunately, the aim is far from being reached.
Also, in 2006, the Destination Inspection Service regime replaced the Pre-shipment Inspection under a Build-Own-Operate-and-Transfer (BOOT) arrangement as a national project, under the Federal Ministry of Finance, for an initial period of seven years before additional extension.
This was to ensure that the destination inspection companies deploy Computerised Risk Management System (CRMS), provide a database for prices, carry out customs valuation and classification of goods, install scanners at designated ports of entry, carry out a physical examination of goods in conjunction with officers of the Nigeria Customs Service (NCS) when necessary, as well as the training and capacity building of these officers for the future management of the project.
After the scanners, which cost the country $120m were installed at major sea and airports as well as land borders, and later transferred to the NCS in 2014/2015, they have remained non-functional and abandoned, and customs officers have resorted to physical examination to prevent smuggling, uncover concealment and fight other importation-related illegalities such as false declaration and under-declaration.
Also, the government in 2012, in its efforts to improve the ease of doing business, and improve its position on the Corruption Perceptions Index, established the Port Service Support Portal (PSSP) reform policy.
The policy aims to standardise cargo handling and import-export operations across the nation’s ports, and also improve efficiency and enhance the transparency of the ports’ systems.
The reform was anchored by the Nigerian Shippers Council (NSC), the Technical Unit on Government and Anti-Corruption Reforms (TUGAR), and the Independent Corrupt Practices and Other Related Offences Commission (ICPC), in collaboration with the Maritime Anti-Corruption Network (MACN), and the United Nations Development Programme (UNDP).
Executed at the cost of $159, 000 by the NSC, the initiative resulted in the publication of the Standard Operating Procedures (SOPs) for port agencies, and also the publication of the Nigerian Port Process Manual (NPPM).
The PSSP is a complaints management and port service support solution aimed at addressing challenges of business-to-business transactions across the nation’s ports, thereby enabling stakeholders to submit and track the status of their complaints, enquiries, and port service requests in real time, the SOPs were to improve transparency and accountability, while the NPPM is focused on reducing bureaucratic roadblocks and improving operational efficiency in the sector.
Also, the Presidential Enabling Business Environment Council (PEBEC) launched the National Action Plan (NAP) to improve the Ease of Doing Business Reforms. The NAP focused on ports/trade facilitation reforms, automation reforms, and regulatory reforms for the maritime sector.
As part of broader efforts to improve the ease of doing business, and reducing the high costs of operations at the ports, Vice President, Prof. Yemi Osinbajo, in 2017, signed an Executive Order directing 24-hour operations and outlawing touting by official and unofficial persons at the ports.
The Executive Order, which also barred agencies such as the Standards Organisation of Nigeria (SON) and the National Food, Drugs Administration and Control (NAFDAC) from operating within the ports, mandated agencies to establish and implement a single-window platform, which led to the reduction/elimination of multiplicity of agencies, by the creation of a single clearance and payment desk as a vital reform measure with an immediate crosscutting positive impact at the port.
As a consequence of the perennial gridlock at the port access road, the cost of haulage skyrocketed dangerously, as transporting containers via trucks from Tin Can Port to parts of the state, including the Alaba International Market, and Computer Village, Ikeja, rose from around N1m or N1.2m to N1.6m to N1.8 respectively.
With vessels trapped at the Lagos anchorage area for between three to four months due to congestion at the ports, and poor access roads, shipping companies incurred all manner of surcharges, a development that forced investors to divert their cargoes to ports in neighbouring countries to escape accumulating demurrage that ran into billions of naira.
At some point, the situation got so bad that importers paid as much as N25, 000 per container, per day as demurrage, and another N15, 000 as storage fees to terminal operators, excluding the 7.5 per cent Value Added Tax (VAT), which amounted to N12.5b daily demurrage charges on 500, 000 containers, and N7.5b storage fees.
In light of the worrying scenario, the President of Dangote Group, Aliko Dangote, had estimated that the nation was losing about N140b weekly to traffic gridlocks on Apapa-Oshodi Expressway, just as the United Nations Conference on Trade and Development (UNCTAD), in its 2014 trade report, said that port inefficiencies were responsible for over N1t revenue losses.
Bent on curbing the perennial malaise, halting the losses, restoring law and order to Apapa traffic gridlock, President Muhammadu Buhari, in 2019, inaugurated a presidential task force headed by Vice President Yemi Osinbajo. But the presidential task team, rather than address the situation, compounded it, as the traffic situation became worse, with allegations of extortion and harassment flying around. It also allegedly erected several checkpoints where truckers and their drivers were heavily extorted.
After a groundswell of complaints, the vice president withdrew from the presidential task team, and the Lagos State Task team took over in 2021. However, nothing seemed to have changed as port users levelled the same allegations.
The Nigerian Ports Authority (NPA) as part of efforts to alleviate the traffic situation introduced the Electronic Call-up System and launched the ETO application to restore sanity on the Lagos ports access roads, as well as reduce extortions along the corridors.
Truckers used the ETO platform, which cost about N1.6B to book turns to enter the ports, in a process that did away with the human-to-human interface, all in a bid to achieve port efficiency and ease of doing business.
The initiative, which operational costs monthly, oscillates between N200m and N230m has succeeded in reducing the turn-around time for trucks operating in the port to about 24 hours to 48 hours due to the ongoing road reconstruction. Also, the cost of haulage has reduced to an average of about 65 per cent.
But stakeholders, while appraising the electronic call-up system, alleged that insiders have sabotaged the process, as some officials of the NPA and Truck Transit Park Limited (TTP), operators of the electronic call-up system have engaged in extortion practices.
In an attempt to share the blame, the NPA management identified the activities of security agencies, particularly the police, Lagos State Traffic Management Authority (LASTMA), and some NPA security operatives as the greatest challenge to the initiative.
According to it, the combined activities of these unscrupulous elements, including the indiscriminate stopping of trucks at multiple illegal checkpoints contribute to disrupting the flow of traffic.
The Guardian learnt that Cotonou Port, Benin Republic has since adopted the truck parks and truck call-up system model. The system is said to have improved efficiency and better use of manpower in the country, while Nigeria is yet to get its model right.
The NPA management on its part also introduced the liberalisation of barge movement on the waterways through licensing barge operators all in a bid to enhance efficiency at the ports. The liberalisation policy allows for cargo evacuation from port terminals to ensure a reduction in the number of trucks on the road corridor.
Other initiatives employed by the NPA to boost performance and enhance service delivery are the Empty Container Policy, which requires shipping lines in the container handling space to build holding bays for at least 50 to 65 per cent of their monthly landed containers and removal of at least 80 per cent equivalent in empties or laden export in return voyages.
The NPA management, due to increased cargo inflow also implemented the Maritime Logistics Ring, thereby directing all shipping lines in the container handling space to relocate their holding bays, which were along the port corridor, in addition to some measures that give priority to export containers that arrive at the ports using barges, or through landing jetties already approved.
One of the most recent reform policies is the establishment of the Port Standing Task Team (PSTT), funded by the NSC. Activities of the PSTT focus largely on three cardinal areas, which are joint vessel boarding, joint cargo examination, and operation-free port access roads.
According to the Executive Secretary of the Nigerian Shippers’ Council, Emmanuel Jime, the supervision of the activities of the PSTT in the implementation of the NPPM saved the country over $6 billion between 2020 and 2021.
The implementation of the manual has also facilitated the ease of doing business in the ports and drastically reduced corrupt tendencies, especially with the “Operation Free the Port” initiative that has reduced the number of checkpoints along the ports corridors and drastically curtailed the indiscriminate parking of trucks.
However, stakeholders are divided on the impact of the reforms on ports’ operations. While some say the reforms have brought manifest changes, others insist that changes occasioned by the reforms are still minimal and responsible for the unpleasant state of ports’ operations across the country, including port users still paying various illegal charges, as well as facing extortions by government agencies/law enforcement officers at the ports.
For maritime expert and member, of Task Force Customs Reform Customs in 2010, Lucky Amiwero, the unavailability of scanners at the ports and border posts have had serious negative effects on the economy and trade facilitation such as physical/manual inspection of containers, which has led to prolonged cargo delays and the payment of rent and demurrage by importers and their licensed customs agents.
Amiwero, who accused Customs officials of deliberately abstaining from the use of scanners, as they make millions of naira from the 100 per cent manual/physical examination, further alleged that the scanners were non-functional, idle, and abandoned because it pays NCS operatives to operate manually.”
While specifically blaming the high cost of port operations on the 2006 reforms, which saw the NPA ceding its powers to the concessionaires, he also noted that seaports were not working. optimally as they ought to as the two reform components have hiccups.
Amiwero said the Landlord Ports Model Law is driven by a public-private partnership, in which the port authority is a landlord, as well as a regulatory body for the port operators, while all the port operations and services are carried out by private companies, including bearing the costs of maintenance, infrastructure, and development.
He said this is not the case with the lease agreement, which is confused as a concession agreement, which does not make provision for a regulator.
“In 2006, there was a lease agreement, which is called concession now. The Nigerian Ports Authority (NPA) Act does not contain concessions. That agreement was to cede off power from the government, which is moving the government out from the ports and cargo operations. When you look at concession, it is the Landlord Ports Model of operation, the problem with that regime is what is affecting us now because there is no law to that regime, only contracts.
“We don’t have people who control what is happening at the ports; there are no regulators of ports operations; everything is handed over to the concessionaires. These concessionaires fix high prices for their services, which makes Nigerian ports some of the most expensive in the world because. Today, we now have terminal operators who are more powerful than the government because they now have made a lot of money from Nigeria, and it is very difficult to control them,” he said.
On ports’ infrastructure, Amiwero said they were in a state of collapse with the terminal operators not being pressured to rehabilitate them since there are no laws, or regulations to enforce them.
He said the government convinced stakeholders that the concession was going to bring revenue to the country, noting that the country is having a very serious issue, as it is not getting what is needed from the concession due to lack of regulation.
Insisting that the country is not consistent, transparent, and predictable in its ports’ operations considering the huge amount invested in these reforms, which he said is a very serious set back on the country, the maritime chief added that the country is losing trillions of naira because it doesn’t have an economic regulator to regulate the commercial interest of the ports.
“We are operating a port system that needs complete overhauling, if we don’t do that, with the coming of the Africa Continental Free Trade Agreement (AfCFTA), it will be very difficult for us. We are playing politics in the ports and it is affecting us terribly,” he said.
Amiwero who said that Ghana runs an effective ports’ system, which is one of the best in West and Central Africa, explained that the shipper’s council in the West African country regulates the terminal operators, and shipping companies with proper contract/law, contrary to what the case is in Nigeria.
“In Ghana, their shippers’ council changed to the Ghana Shippers’ Authority and incorporated their business and brought in cargo elements into their law,” he said.
The National Secretary of Maritime Researchers and Authors Association of Nigeria (MARASSON), Ajanonwu Vincent, minced no words in concluding that most Federal Government’s policies are killing the maritime industry, and indigenous operators, while favouring foreigners who operate 80 per cent of the trade in the country.
He alleged that the maritime sector has been the worst victim of the Federal Government’s policies from 2015 to date, including the auto policy of 2013.
Also baring his mind to the increasing menace posed by empty containers, Vincent said that the under-utilisation of the facilities has contributed majorly to the littering of the country’s maritime domain with empty containers.
He pointed out that shipping companies have found good business opportunities in the empty container-holding crisis with the collection of high demurrage for late return of empty containers, from the refundable deposits earlier paid by importers or their agents, while they go ahead to send additional debit notes to the importers or their agents, or both.
While the MARASSON chief noted that the conversion of bonded terminals to holding bays would resolve, or drastically reduce the empty container holding crisis, the General Secretary of the Association of Bonded Terminal Operators of Nigeria, Haruna Omolajomo, maintained that the government failed in the concession reform, which is the major problem of port inefficiencies.
“It is very painful that the Federal Government did not properly dot the Is and cross the Ts before signing the initial agreement with the concessionaires. This has turned the concessionaires into overlords in their dealing with Nigerians and the government. Any attempt to change the ball game will attract heavy penalties to our country by the international maritime community
“Even the ports and quay aprons that were to be included for the concessionaires to maintain have been ignored. This is bad; they are supposed to be committed to making available a certain amount of money for repairs and maintenance of these ports and quay aprons. Now the ports are collapsing,” he said.
Also weighing in on the controversy surrounding the ETO call-up system, the National President, of the Council of Maritime Transport Unions and Associations (COMTUA), Adeyinka Aroyewun, said that the process is fraudulent as the operators collect illegal payments before call-ups.
He alleged that over N40b was collected from the truckers between February 2021 and July 2022, due to NPA and TTP’s failure, and mismanagement of the electronic call-up system.
He highlighted the high cost of an electronic call-up, illegal deduction from truckers’ wallets in the name of demurrage by Trust Transit Park (TTP), expansion of garages for favouritism by the management of NPA and TTP, and harassment of truckers by law enforcement agencies, as challenges hindering the smooth operation of the ETO system.
Also admitting that the ETO call-up system has fallen short of expectations, is the Chairman, of the Association of Maritime Truck Owners (AMATO), Chief Remi Ogungbemi, even as he noted that the managers were trying their possible best, even though their best is not good enough.
“Anything you are doing, there is always room for improvement. I am expecting ETO to improve; I want a situation where before a truck leaves where it was parked, it would have been informed that it is its turn to commence the journey to the port. But some individuals are sabotaging the system. They are circumventing the system for their interest; people are still maneuvering and circumventing the ETO system. This shows that the system needs to be improved since it is not working as expected. It should be improved to the extent that no one can bribe, or circumvent it. So, I am expecting ETO to work to that stage,” he said.
Only recently, the Lagos State government re-constituted and inaugurated the Apapa Special Traffic Management Team to effectively tackle gridlock in the Mile 2/Tin Can axis. The government said that the development was aimed at consolidating the gains of improved traffic flow being witnessed in Apapa axis.
Ogungbemi regretted the existence of inadequate parks for trucks, noting that if the facilities were to be sufficient, trucks would not be parking on roadsides, bridges, and in unauthorised places.
“I was part of those who did the visibility study of Asiwaju Bola Ahmed Tinubu (ABAT) Park at Orile, but when the terminal was completed, it was dedicated to only petroleum tankers. Recently, a part of it has been assigned to serve as a pre-bay for trucks going into the ports, especially those with empty containers. The unoccupied space within the park was to be developed to accommodate articulated trucks. During the tenure of Governor Ambode, he flagged off the construction of the remaining portion of the park with the contractor sand-filling the section, but before Ambode completed his tenure, the contractor had stopped work.
“The present administration is working towards getting a place that would serve as a truck terminal because trucks must come from somewhere. It is not in the interest of the drivers that they park haphazardly across the state, but this is happening because of the unavailability of befitting and modern truck terminals.
The Special Adviser to the Governor on Transportation, who is also the Chairman of the team, Sola Giwa, explained that the focus of the team is solely to eliminate gridlock on the Mile 2/Tin Can axis to sustain the 80 per cent success rate recorded in the Apapa traffic reduction, in line with the governor’s promise to resolve traffic challenges in Apapa and its environs.
Giwa further stressed that the task must be carried out with utmost integrity, as Governor Babajide Sanwo-Olu aims to replicate the success recorded on the Apapa axis, by focusing more on the Mile 2/Tin Can corridor to ensure improved traffic flow in the affected areas.
He emphasised that the team is poised to achieve the onerous assignment with the full cooperation of the Lagos State Traffic Management Authority (LASTMA).
The General Manager of LASTMA, Mr. Bolaji Oreagba, on behalf of other committee members assured the state that the team would consolidate on its previous achievements in Apapa by executing the task diligently.
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