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Monopoly in the maritime industry

By Zik Zulu Okafor
16 June 2015   |   5:38 am
ON April 27, 2015. The Nigerian Ports Authority (NPA) sent a simple but corrosive letter to seaports operators. This letter supposedly carried a directive from the immediate past President of the Federal Republic of Nigeria, Dr. Goodluck Ebele Jonathan containing two confounding instructions.

Nigeria Ports AuthorityON April 27, 2015. The Nigerian Ports Authority (NPA) sent a simple but corrosive letter to seaports operators. This letter supposedly carried a directive from the immediate past President of the Federal Republic of Nigeria, Dr. Goodluck Ebele Jonathan containing two confounding instructions.

The first is that the Management of LADOL Integrated Free Logistics Zone Enterprise should relocate its present U.S.$500 million fabrication and integrated yards currently going on in Apapa, Lagos State, to Agge, in Bayelsa State.

Perhaps, well aware that Bayelsa State does not have the facilities to accommodate the massive Egina FPSO Project, the directive added that, “it can be conveniently located at any dedicated Oil and Gas terminal”. And the only designated oil and gas terminal is Onne Ports, controlled by INTELS.

The second point in the curious directive, signed by Executive Director, Marine and Operations, but allegedly written by the former Minister of Transport, Senator Idris Umar, decreed that all oil and gas related cargo must be handled only at the designated terminals at Onne, Warri and Calabar ports. These three designated ports are controlled exclusively by INTELS.

This directive convulsed the maritime world, staggered the Sea Ports Operators and indeed shocked all stakeholders. Reason: The government has a subsisting contract it signed with the terminal operators through NPA and the Bureau of Public Enterprises (BPE) which serves as the confirming party.

This contract states in crystal terms in Article 18.2 that “No change, amendment, or modification of this agreement shall be valid or binding upon parties hereto unless such change, amendment or modification shall be in writing and duly executed by the parties hereto”.

The former President and his men at the Federal Ministry of Transport and NPA did not hold any form of consultation with the sea port operators before making this policy statement that represents a crass violation of the agreement and subjects Nigeria to outrageous infamy before the global business community.   But Jonathan’s directive is only an incongruous climax to a thriving illegality that has endured for years.

An example is the case of Ports and Terminal Operators Nigeria Limited, (PTOL) an indigenous registered company and the concessionaire of the multi-purpose Terminal A, Port Harcourt Port.

In a letter to the Attorney General of the Federation, the Managing Director, Mrs Lizzie Ovbude  had decried “the wrongful, illegal and discriminatory implementation of the Lease Agreement by the Federal Ministry of Transport and NPA by the diversion of vessels meant for Terminal A in Port Harcourt in the last three years to Onne Ports under the illegal classification of vessels as oil and gas related cargoes, to … a concessionaire at Onne Port …”

Some of PTOL diverted vessels, leading to loss of clientele and debilitating financial losses to the tune of millions of dollars and naira include MV Kota Berlain  MV Kota Bakti and Cosco Jing Gang Shan .

Groaning in pains at the crucible her organisation was faced with, Ovbude employed administrative and legislative means to bring the authorities to see her plight; but to no avail. She is seeking redress in court for the crude violation of their lease contract.

Already, a Federal High Court in Lagos has granted PTOL an interlocutory injunction restraining the government, NPA and their agencies from “diverting MV Industrial Faith and MV Kota Budaya BYA Q03 and or any other vessel as may be scheduled to berth at their terminal”.

Jonathan’s directive of April 27, 2015, was therefore something of an ugly stamp of approval to a ritual of illegality. By that singular action, the former President practically endorsed the enthronement of monopoly in the nation’s maritime industry.

Unable to remain silent in the face of unmitigated injustice, LADOL headed to a Federal High Court in Lagos and obtained an injunction restraining the government and its relevant agencies from implementing the controversial and economically destructive directive.

A flurry of litigations challenging the defective directive soon followed, with Niger Dock and Simco Free Zone Company, the management firm of Snake Island Integrated Free Zone, among others also obtaining injunctions that appear to drum a death knell for the dream foreign monopoly.

How did we get to this abysmal ebb where our government could make pronouncements that are incongruous with all known international trade, maritime law and international law? How did we introduce so much ambiguities into a port reform exercise that received global acclaim for its transparency and success only nine years ago.

Why is INTELS a recurrent decimal in our ports crisis moments? Why is INTELS, a supposedly cardinal name in the maritime sector, always the pariah whenever our seaports jangle?   President Muhammadu Buhari needs to be firm in purpose and decisive in action in dealing with this critical matter. For it is a well known fact that Nigerian seaports, before 2006, were a huge scandal.

Firmly under the grip of the monopolistic Nigerian Ports Authority, inefficiency, abject lack of facilities, revenue leakages and stark corruption reigned at the ports.   The Olusegun Obasanjo government considered this unacceptable.

It came to terms with the hard fact that the monopoly of the NPA was a primal reason for the woes at the ports. It then decided to privatise and concession the ports to private investors.

This attempt at monopoly of oil and gas cargoes often with active connivance of NPA and the Ministry of Transport, had lured its head way back in 2006. Former President Olusegun Obasanjo, miffed by this bizarre agenda not only reversed it, he set up a committee to investigate INTELS’ activities in the maritime industry.

The committee, headed by Dr A.S.P Sekibo in its report dated May 16 2006, made useful recommendations to the government; particularly that “NPA should ensure that cargo owners are free to patronise any truck of their choice for the freight of cargo discharged in the Oil and Gas Free Zone.”

In addition, “importers of oil and gas cargo should be free to choose their ports of preference”.   However, in 2008, the then Minister of State for Transportation, during Umaru Musa Yar’Adua’s tenure reversed Obasanjo’s directive. But the late President Yar’Adua treated the matter dispassionately when he was petitioned by aggrieved ports owners.

In compliance, the Honourable Minister of State 2 for Water, Prince Emeka published in The Guardian of Monday, August 18, 2008, thus: “Notice is hereby given that importers of oil and gas related cargoes are free to choose their port of discharge for their cargoes”.

And finally, that, “This notice supersedes an earlier directive stipulating particular ports of discharge for such cargoes”. Yar’Adua took a decisive and patriotic stand against a monopoly that was crippling the maritime industry and driving away potential investors.

President Buhari’s government has a solemn responsibility, now, to stop this ignominious attempt to introduce a foreign monopoly into Nigeria’s seaports and terminals and also to thoroughly investigate perennial infraction of contracts and order in the maritime industry. •  Okafor, a Nigeria Media Merit Award Winning journalist, wrote from Lagos.