The Managing Director of the Lagos Channel Management, Mr. Danny Fuchs is a well known personality in the Nigerian maritime industry, especially as a result of the activities of his organization, which has finally transform the Lagos channel, into a WAFMAX domain.
He was on hand recently, to speak on towage, dredging, trainings, his company’s relationship with the Nigerian Ports Authority (NPA) and other topical issues, including Why they must train Nigerians to international standards.
If you take a look at your first three years operation; we are specifically talking of year 2007, 2008 and 2009, you would find a consistent upward budgetary provisions of $13m, $14m and $!5m respectively. Why is this so?
Firstly, these figures were part of the agreement at inception, as presented by the NPA, to the Management Company. And they were agreed, on the basis of some parameters, at the planning stage.
The first provision of the 2007 was when everybody assumed it was going to be the annual budget. It was agreed to, before the company started to work. The other figures which you also mentioned were also based on certain escalation parameters as provided for in the contract based on the NPA who is the lessor, the owner and also the client; and the Landfall, as the Management company.
But why was there escalation Sir?
Firstly, because the tugboats were getting older and the cost of their maintenance would be impacted. The NPA also understood that there was going to be major repairs within the period.
But beyond this explanation, you must also realize that the basis for the calculation was largely based on the number of ships already coming into the country. This is because, as at that point, nobody knew how successful the contract would be. So, all the statistics available then was on the availability of 2072 ships, that was then coming in.
What that meant also was that since the calculation was based on a 12 month calendar, and the company did not start in January, but April, it also means that the company would not have collected all the budgetary provision; probably about half.
We collect money on budgetary basis; and the budget was calculated o the number of ships that we handled within the period of the year!
You must also understand that while the NPA was going into the agreement, they were not concerned so much as the number of operation that would be undertaken, as much as the need to play safe. So, the agreement ended up, actually favouring the Authority than the management company.
As a result they didn’t include the cost of shifting of ships, swinging or turning;; salvage or even towage of a ship without engine or in distress. A lot of things were excluded, because they wanted to play safe and simply said, on the number of ships that came calling.
My next question is now going to be on the issue of towage. The towage contract between the Land fall Towage management and the Nigerian Ports Authority is understandably, for 15 years. Is there any capital investment by Landfall, other than to operate and manage a fleet of vessels owned by the NPA?
Let me again thank you for your interest in the Landfall. But then let me first correct your poor understanding of the terrain. We do not have a contract for towage. We have a contract to manage the fleet of tugboats.
We are not managing any towage in the port. We are only called to take over and manage a fleet; consisting of six tugboats and one pilot cutter that belongs to the NPA.
The contract is therefore to manage six tugboats, a pilot cutters, and four more vessels. And our major capital investment is our knowledge, our expertise.
In other words, the capital is the human beings, the maintenance and the human resources to make the equipments work.
So, we have since, been investing in the human resources so as to raise both the standard of the equipment and those who would operate them, to an acceptable, international standards.
For your information, you may not always be able to find the people with the right competence, the right knowledge; but we took up the challenge.
We have employed a multitude of local people; we have trained them; and we are still training them. We have sent them to training schools in Ghana, and elsewhere, to raise their knowledge, their competence.
You don’t call it capital investment; you call it capacity development. Over 90 percent of these people from the inception also know that in the programme, we would need to train them, educate and retrain them and to raise their level of certification. These have gulped a lot of money.
Secondly, aside from developing their competence, we have also provided four additional pilot cutters in batches of two.
Although it is not our responsibility, but because we are partners to the NPA, and we noted from time to time, that there was stress and pressure, as a result of increasing demand in the port.
And because, what they gave us to manage were not able to fully meet the increasing demands.
This was why we bought, from our own money, four additional pilot cutters; so that we can supply and meet their demand.
But, we must understand that we don’t have a Service contract; we only have a Management contract; and this is to manage the fleet of NPA.
So, the capital investment is mainly and basically in the human resources not in physical assets, because this was not what was requested for by the contract.
If you build a house and you hand it to a Property Manager, do you ask him to build you another house? And if he manages your premises perfectly well, are you not going to pay him?
So, are you training these Nigerians as part of the letters of the contract?
It is not part of the letters of the contract. We are however training Nigerians because, it is part of our belief, that except we also train them, they may not perfectly perform their jobs, to the required international standard!
So, for instance, if you give me your taxi to manage for you, would you expect me to simply engage a roadside driver, because he has a license to drive only? No. you must expect me to engage him, send him to school to learn how to drive a taxi to international standards; to understand how to talk to a passenger he carries, to learn what exactly to do, if somebody is injured in his taxi; etc.
But in real sense, our contract did not specify that we are to train Nigerians. Our contract is to manage the fleet of the NPA tugboats up to international standards so that they can operate.
But we on our own believe we must send those engaged to the mandatory courses, including teaching them, not just how to swim; but also to know how to do life-saving; not necessarily because we like him; but because he must be competent, in order to do the job, perfectly in line with global standards. And this investment to us, is the real capital investment even though many would see it as Capacity development.
But, in addition to this, we also must procure spare parts, services and maintain the boats etc; so as to ensure they remain in (Lloyds) Class. Take Ohafia for instance, if you add up all the money we have invested on it, it would procure another tugboats—from the cost of our Annual survey, the Intermediate survey we do, with Lloyds; then the Special survey we do with the Lloyds; if you add up this money, you can actually buy a new tugboats. But it is our responsibility.
There is an allegation that your company sometimes connived with the NPA management to hike the value of contract executed so that all of you can then share the surplus amongst yourselves. What do you say to this?
Well…we cannot change the mind-set of some people. This is an allegation, which no one can substantiate. This is a rumour; and I don’t like attending to rumours.
That statement is simply a mere allegation. But let me assure you that before we are paid anything we always first furnish, the number of the ships we handled, their names, the date they came in or leave and other relevant data; including the names of the pilot; the names of the tugs that attended to it; what terminals it visited; what ships left, before it berthed.
So, let me assure you that in this arrangement, we talk of data, not of rumour.
Are you now saying you only charge, based on services you have rendered?
No. if we charge on the basis of services rendered, we would be collecting more money than we are presently paid. We only charge on the basis of the number of ships that we handled.
Luckily, for the NPA, even when the number of ships that are coming may be constant, their sizes have changed.
Larger vessels are now coming and that means, that we are now putting in more efforts services, more efforts and more tugs than before, even though the charges have remained same.
TO BE CONTINUED