Rethinking the Directive on Kirikiri Lighter Terminals Concession

Nosa Alekhuogie writes that the increase in cargo throughput from 2006 to 2012 when the Apapa port was concessioned, is indicative that the Minister of Transportation, Rotimi Amaechi should reconsider his decision on the concession of the Kirikiri lighter terminals

Last week, the Minister of Transport, Hon. Rotimi Amaechi ordered the Nigerian Ports Authority (NPA) to stay action on the concessioning of Kirikiri lighter terminals phases 1 and 2.
The minister gave the instruction at a maritime conference in Lagos where stakeholders urged government to implement a presidential directive on the establishment of an international fishing terminal at the said location.

The minister, reacting to the plea by the Chairperson of Shipowners Forum and former President, Nigerian Trawler Owners Association (NITOA), Mrs. Margret Orakwusi for the enforcement of the directive given by for President Chief Olusegun Obasanjo, said there was a counter directive signed by the immediate past administration of former President Goodluck Jonathan and the Federal Executive Council (FEC) relinquishing the terminals to concessionaires.

Amaech disclosed that the Ministry of Transport had also received a letter from the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, which stated that the withdrawal of the terminal from fish trawler operators had taken a negative toll on the fisheries sector and invariably, the nation’s economy.

He said it was necessary for the NPA to halt every arrangement on the handing over the terminals to private interests as the Presidency and Federal Executive Council (FEC) may revoke the directive to engage concessionaires after further deliberations.
He also stated that NPA had said that it revoked the permission granted trawler operators in Nigeria to use the terminals because it was only temporal.
Orakwusi had earlier stated that operators of fish trawlers had invested over three billion naira in the maintenance of both terminals.

She urged government to reconsider the decision as it is detrimental to the fisheries sector.
Former Managing Director, Nigerian Ports Authority (NPA), Chief Adebayo Sarumi, who was present when former President Obansanjo handed the terminals over to the fish trawlers said the decision should not be overruled as the terminals have never been fully utilised.
Speaking on behalf of the Minister of Agriculture and Rural Development , Mr. Audu Ogbeh at the event, the Deputy Director and Head, Fish Quality Assurance & Fish Disease Management, Mrs. B. Adepegba called on government to revisit the establishment of the fishing terminals as it has enormous benefits for the development of the industry.

She also called for the security of the investments of fish trawler operators who she said had many times suffered sea pirate attacks which resulted in both loss of businesses and deaths.
The fisheries sector, which was once the second largest non- oil export revenue earner for Nigeria had not showed up the radar in recent times for alleged lack of an enabling environment.
It is said that many operators in Nigeria have relocated to neighbouring West African countries.

Gains of concession
Meanwhile, Amaechi’s directive has elicited arguments in the industry with stakeholders calling on him to reconsider his stand.
They argued that the concession policy of the Obasanjo administration made the ports more efficient and commercially viable.

“Has the concession policy worked before? Certainly yes! There is no doubt that the trend of cargo throughput in Nigeria is determined by the inward cargo movement. The fluctuation in cargo movement from 1956 to 2005 and the unabated increase in cargo throughput from 2006 to 2012 when Apapa port was concession meant that the policy was effective,” said a competent source in the industry
Stakeholders have also argued that the concession of the port must have been responsible for this upward movement in cargo trend at the time.
Also, THISDAY learnt that there was a remarkable increase in inward and outward cargo movement during the post concession era in comparison to the pre concession era.

Advent of port concession
The source told THISDAY that before the advent of port concession (1956-2005), the Nigerian port system suffered from numerous ills.
”The turnaround time for ships was too long and usually calculated in weeks, sometimes months, depending on the cargo being loaded or discharged; Cargo-handling plants and equipment owned by the NPA were few and mostly unserviceable leading to shipping companies hiring these machines from private sector sources after having paid NPA; Dwell time for goods in ports was prolonged due to poor port management and as a such overtime cargo filled the most active seaports leading to port congestion; Labour for ship work was held in the vice-grip of wharf overlords who controlled dockworker unions and supplied less than the manpower paid for,” an operators said.

The operator noted that this fraud, which became accepted by the maritime community lasted for years and was usually perpetrated to extract maximum revenue from helpless ship owners and their agents without minding how this impacted on the Nigerian economy and the already dented image of the Nigerian seaports.

“As a result of the compounded problems, the Nigerian seaports were rated as one of the costliest seaports in the world. Consequently, it adversely affected the patronage of our seaports, “said the source who do not want his name in print,” he said.
He added that the ills that bedevilled Nigerian ports before port concession in 2006 includes long turnaround time for ships, insecurity of cargo, unproductive labour force in NPA, multiple government agencies in the port, corrupt practices and excessive charges.

According to him, Africa accounts for less than one per cent of world container traffic.
He said: “Anextra 2,200 TEU vessel service from Europe to a small country in the West and Central Africa sub-region would have a 27 per cent market share whereas a 5,500 TEU vessel from the Far East to Europe would potentially generate a 3.6 per cent market share taking into account market size. For shipping lines, port turnaround time has become an increasingly important factor to decide which port to call in the world. One extra day at a port costs more than US$35,000 to a shipping line for a 2,200 TEU vessel.”

Another player in the industry told THISDAY that before the policy, many port premises and quay aprons had fallen to disuse, “and failed road sections inside the ports made movement of goods within port grounds cumbersome and very slow. Following the seaport congestion, complaints of untraceable or missing cargoes were being regularly lodged against the NPA, all to no avail. Security inside Nigerian seaports was compromised by the relentless ingress of multitudes of all shades of persons into the seaports. As a result, miscreants called wharf rats easily gained access into the ports and pilfered goods in storage or vehicle parts. In fact, security within port grounds was at the mercy of an elusive racket.”

Private participation
He was of the view that the Sub-Saharan (SSA) Africa has been slower than some other regions to embrace private participation.
He explained that “by the late 1990s, only 10 per cent of SSA’s 90 main ports involved private participation beyond stevedoring services. By 2006, that situation had begun to change with concessions concluded for container and general cargo terminals in Tanzania, Cameroon, Madagascar, Mozambique, and other SSA countries. It is worthy of note that average cargo throughput from 1956 to 2005 is 14,467,024 metric tons while the average cargo throughput from 2006 to 2012 is 67,240,231.86 metric tons.

“The yearly average cargo throughput of 67,240,231.86 metric tons of cargo from 2006 to 2012 over the yearly average of 14,467,024 metric tons from 1956 to 2005 shows a percentage increase of 456.69 per cent. This shows the remarkable progress made in our port developmental efforts since the port concession era. In a nutshell, the pattern in Nigerian port traffic during the pre-concession era is sinusoidal while the post concession experienced a sharp progressive rise,” he said.

“The statistics has shown that the cargo throughput increased from 46,150,518metric tons in 2006 to 77,104,738metric tons in 2012. This means that between 2006 and 2012, cargo throughput at the nation’s ports increased by over 67 per cent. This was as a result of the landlord model of port management which was adopted in 2006 that led to the concession of sections of the ports to private terminal operators, otherwise called concessionaires, and has led to the consistent improvement in cargo throughput,” he added.

About the ports
A port is a location on a coast or shore containing one or more harbours where ships can dock and transfer people or cargo to or from land. Port locations are selected to optimise access to land and navigable water, for commercial demand, and for shelter from wind and waves. The use of the sea as a means of transport in Nigeria dates back to the 15th century (1485) when the Portuguese sailed into Lagos with their vessels basically to trade on artefacts in Benin City.

From the pre-independence era till date, the nation’s maritime industry is characterised by the domination of foreign vessels and/or carriers from the developed market economies of Western Europe and America. In order to control this scenario, subsequent developments led to the opening of ports at Apapa and Port Harcourt, rolling in the creation of the NPA by the provision of Ports Act 1954 to load and discharge as well as maintain and develop the ports.

From the commencement of operation of the NPA in 1956, Nigeria had operated a service port model. This was fraught with a lot of challenges, which informed the idea of switching over to a landlord port model or port concession. The port concession program was completed in 2006 after an international competitive bidding process.

This led to the emergence of 26 terminals, which were concessioned to private terminal operators on the Build, Operate and Transfer (BOT) model. The reform brought about ceding of cargo handling operations at the port to private terminal operators, leaving NPA as the landlord.
The Nigerian ports witnessed a rapid transformation as a result of this reform in which Nigerian ports were concession to the port operators called concessionaires.