Facilitating Trade with Dry Ports, Rails

About 11 years after the seaports in the country were concessioned to private operators under a landlord port model, stakeholders believe that the reform process of the federal government cannot be complete without effective take-off  of dry ports and interconnectivity of rail services with all the seaports, writes Francis Ugwoke

At the beginning of the port reform exercise in 2006, two important infrastructures necessary to drive the reform were absent.  Stakeholders had identified rail links to the seaports as well as Inland Container Depots (ICDs), as very significant for the success of the reform.  This was even moreso with the congestion   in the ports and on the roads leading to either of the two major seaports  in Lagos and Rivers.  But despite the absence of these key infrastructures, the reform programme had to take off.  The strong argument was that a journey of about 1,000 kilometres must start with a step, and that waiting for everything to be complete would be a mirage in the efforts to promote trade facilitation.  However, this year would make it the 11th year that the reform at the seaports  was introduced.  While a lot of successes have been recorded under the landlord port system,   the need  to have ICDs  that will bring shipping services  closer  to the people  has become very crucial.  Similarly, what has also become very important as an integral part of trade facilitation is the rail system as is the case in other climes.  In modern trade facilitation, the absence of rail links to the seaports is considered abnormal.   In our own peculiar trade environment, ICDs, otherwise known as dry ports, are very necessary for a number of reasons. The growing population of the country of about 170 million people from different parts of the country cannot be flocking to just two or three seaports for their international business transactions.  Apart from lack of proximity of the seaports to many of the shippers, the bad state of the roads and crime rate on these roads are indeed trade obstacles.  This explains why the Transport Ministry and  the Nigerian Shippers’ Council (NSC) have been pushing  both rail and dry projects as key to the success of port reform exercise. For the Council as   ports economic regulator, both rail and ICDs are integral ingredients to the reform in the ports. This, according to the council was because of the efficiency that will bring to bear in shipping services in the country.

ICDs Concessionaires

There are six dry ports covering different  geographical sections  in the country. They were approved by the federal government about the same time that the  Nigerian Ports Authority (NPA) handed over the  seaports to the concessionaires.  The   ICDs  are  located at  Ibadan, Oyo State, Isiala Ngwa, Aba, Abia State, Jos Heipang  Plateau State, Bichi ,  Bauchi State, Gombe ,  Gombe State, Bulunkutu,  Borno State, Zawachiki ,  Kano State and Zanfarawa-Funtua in Katsina State. The concessionaires, who will operate the  dry ports under  ‘build-own-operate-transfer’ model for 25 years include Catamaran Logistics, Dala Inland Dry Port, Duncan  Maritime, Eastgate Terminal, Inland Containers Nigeria, Equatorial Maritime and Migfo Nigeria. For over 10 years, the concessionaires appeared not to have taken the project serious.  A lot of issues accounted for this. The issues of  sourcing capital  for the projects and the long wait for the right infrastructures to be put in place by the federal  government  were considered by   the concessionaires. With the absence of rail links and the bad state of the high ways,  some of the concessionaires, it was gathered had  developed cold feet on the projects.

Rail and ICDs

With the current efforts of the Ministry of Transport in interconnecting major cities of  the  country with rail, Executive Secretary, NSC, Hassan Bello, said this will  be a big boost for the ICDs. He said the rail links  in the major cities will facilitate movement of all types of goods from the seaports to the  dry ports in good time.

The Transportation Minister, Rotimi Amaechi, had at different fora assured concessionaires of the federal government’s enabling environment for the dry port projects to succeed in the country.  So far, almost all the cities of the country  are covered by the  $11.117billion  total  rail project.  Among the  areas to be covered include  Port Harcourt, Aba, Umuahia, Enugu, Makurdi, Jos, Gombe, Bauchi and Borno.  The  Lagos to Kano line will   Abeokuta, Ibadan, Ilorin, Kano, Funtua, Zaria,    Kaura and  Namuda.

Wake-up Call 

Worried by the failure of the concessionaires to mobilise to sites  over 10 years after concession, the  NSC had last year threatened  a showdown with the  operators.  At a meeting,  Bello had told the concessionaires that  except they show serious commitment in the development ,  the  concession agreement would be terminated.  Bello said, “If for any reason, we see some unwillingness to execute this project the government will not hesitate to terminate this concession”.

The Council boss did not end there, as he said officers of the council would monitor the various sites.  With the threat, the concessionaires have been making frantic efforts to develop the sites.  Bello disclosed  recently that  all the concessionaires have been making  efforts to mobilise to sites. He  said  that while some have gone far with their projects,  others  were currently  talking with their  technical partners and  investors in a bid to move to site soon. He  expressed optimism that by June, one of the concessionaires, Duncan Maritime Services Limited, which is  handling the  Jos Heipang Inland Dry Port may be through. Bello who  visited  Abia State Governor,  Mr Okezie  Ikpeazu, for his formal endorsement of the Isi Ala Ngwa ICD, said other state governments   have shown strong support for  the dry ports. He said, “We are going round, we are not resting on our oars. We are supervising, so we will encourage the developments of these ports wherever they are sited.”

Facilitation

For stakeholders, ICDs remain an essential part of the port reform process which cannot be complete except the dry ports effectively become operational. Freight forwarders told this writer that ICDs will make trade easier for shippers who are  doing businesses in far distances away from the  traditional seaports. Former Chairman, Council for the Regulation of Freight Forwarding in Nigeria, Iju Tony Nwabunike, said ICDs when fully operational will make the reform exercise at the ports more meaningful. “The reason is that shippers can be in a position to consign their goods to these dry ports as ‘Port of Destination’. This will reduce the stress and risks they are having using only Lagos, Rivers, Calabar or  Delta  seaports to import goods into the country”, he said.

Nwabunike commended the management of the NSC for the efforts in encouraging the ICD concessionaires to demonstrate serious commitment on the development of the projects.  At a meeting with the Abia State Governor, Bello had  explained that the concept of the ICD project was to ease transportation of goods from far distances by bringing port services closer to the people. He disclosed that when fully operational, the Isiala Ngwa ICD will  bring about  a lot of economic benefits, including creating  about 3,000 jobs in the state. 

\Describing Abia state as an industrial city, Bello said the ICD was necessary for the purpose of export and import business. Stating that the Council wants the project to succeed, the NSC boss urged the state governor to use his good offices to give necessary support so that by December this year, the project would have become ready. Bello assured that once the federal government was satisfied with the level of work at the site, it will accord the ICD the Port of Origin status so that importers and exporters can use the port in all their international transactions. Such status, Bello explained, will enable importers outside the country to use the dry port as the ‘Port of Destination’ instead of using other seaports that are far away from the state.

Bello also urged the concessionaire, the East Gate Ltd, to make serious efforts to move to site without further delay. He warned that if after 18 months, the company did not show serious commitment on the development of the project, the council would  be forced  to impose some sanction on the concessionaire. The council boss had issued the same warning to all other concessionaires, in what he explained was part of federal government’s determination to ease international business for all importers and exporters.

Bello said the ICDs apart from making shipping services easier for cargo owners, will equally boost export activities through production of cash crops. This, he added, will   revitalise the agricultural sector and reduce over dependence on oil.  Other benefits, according to him, include reduction in transport and transaction cost of shippers, attraction of infrastructural and regional development projects.