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Shittu: Idea behind ports concession was politically motivated

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Olayiwola Shittu


Govt’s Insincerity Responsible For Failed Expectations

Chairman, Skelas Group of Companies, and former President, Association of Nigerian Licensed Clearing Agents (ANLCA), Olayiwola Shittu, in this interview with SULAIMON SALAU, said that government’s insensitivity and inability to fulfill its obligations to concessionaires has hindered the desired progress in Nigerian seaports.

It’s been about 14 years after concessioning of ports in the country began with the aim of enthroning efficiency. What is your assessment of the programme?
I will give the terminal operators a pass mark because of the circumstances of trade in Nigeria. But let me quickly add that concession was politically motivated from the word go, and that is what is infringing on the ability of the terminal operators to meet with the expectations.  I will also like to allude to the fact that in modern ports, this type of cannibalisation of trade, where more than one concessionaire will acquire a very small area, with no room for expansion is a rarity. All the ports in Lagos, by my understanding, cannot be given to more than one concessionaire in other parts of the world because you will need to plan where to create container bays, where to stack cargoes, area for storage, that is the ones for export, empty ones, among others, but what we did in Nigeria is to give so many people to manage very little area based on political interest.

Lagos and Port Harcourt are peculiar cases because there is no room for expansion. They cannot be expanded into the water, and they cannot be expanded on land because the whole area has been turned in to a residential area. So, that is why people are looking forward to not even Lekki, but Badagry in planning for the future. The only alternative to make things work for concessionaires is for government to be ready to acquire land and housing so that they can expand.

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Lack of expansion has also created a lot of congestion because the places are small. Each terminal is managing its part, and as more containers are coming in, cargoes going to terminals are determined by the liners. So, if you know that APM Terminal is fully stacked for example, you will look at PTML. PTML wasn’t an NPA’s terminal before; it was an area acquired, and the port was built from scratch. When they needed expansion, they had to go to Mile 2 to acquire land, as all those ports sites were busy. What the terminal operators are able to do now is according to their capability and not for lack of operations. That is the major issue on ground now.

If you go to the other seaports across the country, you will find out that Onne seaport, for example, is currently expanding; Warri Port can expand further, but Port Harcourt seaport cannot expand because it is stuck in the middle of the town. The same thing applies to Lagos ports. If they have the means to expand, efficiency will definitely improve.
 
Are you saying that lack of parking space and holding bay are part of shortcoming that hampered effective ports operations?
That is what I am saying because the place was cannibalised and small portions given to different operators. At the end of the day, what one terminal operator got from the Nigeria Ports Authority (NPA) was so small that it could not be redesigned or properly compartmentalised to accommodate a trailer park, empty containers bay, storage for general cargoes etc. Even sadder is the fact that they don’t even have warehouses. So, whatever challenges they are now witnessing could be described as the fault of the initiators of the idea from the beginning, and not the fault of the terminal operators.

Now that the concession agreement is being reviewed, what areas would you pick out for consideration?
You cannot correct an area that is already choked when there is no room for expansion. The NPA is only interested in reviewing the concession so that it can increase the money that it is collecting from the concessionaires. I don’t see what they can do other than that. Or are you saying that they are not working according to the agreement? 

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A port is a transit place and not a permanent storage place, but as we speak, there is no way to come in or go out of the ports because the access roads are bad. Of course you know that it is not the fault of the terminal operators when movement into the ports to evacuate cargo becomes a problem. What this means in the final analysis is that the cargoes will continue to remain in the terminal. So, if you are doing a review of the concession, where do you want them to improve upon? Many of them are even looking into their handling equipment, but we are talking of the bay. That is a major issue. Government has been trying to carry out a review, but what are the yardsticks for the proposed review? You need to have a yardstick so that the direction of your review would be clear. Are you reviewing the charges? If their concessionaires’ charges are not commensurate with other foreign ports, that could be an issue, but you cannot rob Peter to pay Paul because most of the things that people are looking for is, take it from Terminal X and give it to Terminal Y. That will not solve the problem because the concessionaire will still be confronted with the main issue.

Some operators are complaining about shallow channel, maintenance of the ports area, among others. With these and many other challenges, would you say that government is fulfilling its part of the concessioning agreement?
Let me say that many of the terminals have gone beyond their expectations based on the agreement. For instance, the Federal Government is supposed to provide electricity to power these ports, but all of the concessionaires are still running generators for 24 hours. The government is also supposed to arrange for where water can be given to vessels, and the bunker for vessel store and other things, but it has failed to meet its responsibilities. And what are government’s expectation from terminal operators, the major one is that there should be quick turnaround of vessels. This is not the fault of the terminal operators because the vessels that are discharging are delayed while the ones that are coming have to wait for their turns since already offloaded cargoes are not being removed on time due to bad access roads.

Right now, it takes so many weeks for you to even access where your container is located. Then, it takes you another two weeks to come out of the port environment. So, when will you return the empty container? These are part of the problems that concessionaires are grappling with.

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There was a move by the Federal Government to improve the ease of doing business at the ports. What is responsible for the situation still remaining unchanged?
 Ease of doing business expects that everyone should do what is expected of him/her and on time, but when you are handicapped by the inefficiency of government agencies, what do you do?

If you want to position a container for examination now, it takes two days to do so because of the processes involved, ranging from proximity of container, to bringing it down for 100 per cent physical examination by the Nigeria Customs Service (NCS), without which the NCS will never give permission for it to leave the port. All these coupled with the gross lack of space slow down the entire process. Worse of all, no matter what happens, terminal operators cannot release containers without customs approval.

There are also situations where cargoes released after Customs examination inside the ports have been completed are intercepted outside the port based on new discoveries that what the scanners showed is different from what is inside the container. These are major issues that we must revisit over time.

Another factor that also makes jest of the so-called ease of doing business and adds to the cumbersome process is the inability of government offices to open for business at the right time. If you have a business transaction that involves your presence at some government agencies at say 7 or 8 a.m., you can be rest assured that the individual government agencies, who are supposed to be there on time to perform examination and give approval for releases would never be there on time. And no matter how slow the process is, Customs’ officials will tell you that they are doing their job. All these things take time and slow down the system badly, so how do you expect the ease of doing business to work? It cannot.
 

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Also, look at the APM Terminal for example. It is highly congested, and ease of doing business has not been able to decongest it. Unless you ask everybody to go and clear their cargoes from there, the shipping companies will still be smiling to the bank because when the cargoes are not removed, terminal operators are being paid rent, while the shipping companies are also being paid rent for the containers. So, the more the containers stay there, the more money they make. Meanwhile, the law does not even allow government to say don’t collect rent.
 
Elsewhere on the continent, including the port in Cape Town, South Africa, you won’t see human beings within these terminals, yet operations are moving on smoothly with heavy machineries going up and down, either moving, or stacking containers where they ought to be. And these places are very large areas contrary to what is the case here, where less than 100 metres from a terminal you are already in another terminal. The terminals here are too small.
 
Why, in your own opinion, is it taking a lifetime to acquire new cargo scanners?
The Nigeria Customs Service is not responsible for acquiring scanners, so if the Federal Government that should do that is dragging its feet, then you should know that the issue has been politicised.

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What recommendations do you have for the Federal Government on how to improve port operations?
Every year we say the same thing. We will continue to repeat ourselves. What I expect the government to do is to put together some stakeholders to chart the best way forward instead of relying too much on its agencies for information on how to get the system right. Its personnel will never tell them the truth. As you are talking to me now as a stakeholder, I have nothing to benefit other than helping the system to run efficiently.

There have been so many committees set up in the past, but which the government has failed to implement the outcomes. For instance, I was a member of presidential committee on ports reforms where we presented to the government, a sample of what obtains elsewhere regarding five plans for cargo clearance. But the government jettisoned it. Since 2012, nothing has been done about the document. How do you get a new system in place when the government does not have the will power?

If the government continually fails to play its part and the terminal operators are doing what the government should be doing, then it should not complain about high charges until it honours its part of the deal.

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