Archives Maritime

Terminal Operators Expend More As NPA Declines Reinvesting – Report

Avatar
Written by Maritime First

• Firm Audits Ports Concessioning 10 Years After
• Darkness Prevails At Nigerian Ports
• 24 Hours Operations Not Working

Ten years after port reforms, which transferred ownership of no fewer than 27 terminals to private concerns, the Nigerian Port Authority (NPA) is yet to provide the necessary infrastructure that will reduce cost of doing business. The ports are yet to be connected to the national grid. There has also been no provision for full port access to enable effective operations.

This was the observation of an independent report by an audit firm, made available to The Guardian recently.According to the report, the NPA had signed concession agreement with the terminal operators in 2006, to provide reasonable assistance for the supply of independent power plant at the ports premises, but till today, nothing has been done, making the operators to spend part of their profit on private electricity generation.

The NPA is said to have partially complied with the agreement relating to the provision of general security of the port, comprising land and sea entrances to the ports, beside the provision and maintenance of perimetre fencing at the port boundaries.

The NPA had also agreed with terminal handlers to maintain suitable number of navigational aids, such as floating lights, lighthouse and radio-navigational system such as GPS, DGPS and beacons among others. The NPA, according to the report, is yet to comply fully with the agreement.

The report also said the NPA has partially complied with the aspect of port concession agreement relating to provision of port services and vessel management, provision of pilotage, towage berthing, unberthing and shifting of vessel services required by vessels intending to call at the port premises.

In the area of the provision of access to Port premises, road and rail access to the ports, the authority was accused of only partially honouring the agreement, making cost of doing business to skyrocket.

The only aspect of the agreement, which NPA has nearly complied with, is channel dredging, which has increased the draft on the channel to 13.5 metres, from about seven metres before the reforms.

This is on the heels of compliance by the operators, to secure the terminal, provide infrastructure and equipment, as well as agreed on the throughput volumes and remittance of fees.

The reports also identified factors working together to increase cost of doing business at the port despite concession.One of such factors, it said, is the lack of compliance with necessary documentation procedure by shippers.

It said incorrect documentation and lack of proper compliance by consignees to Customs policies is still prevalent at the Nigerian ports, leading to incorrect declaration of goods and massive revenue loss to government.

It also said incorrect documentation could be as a result of negligence or deliberate attempt to evade payment of Customs duty and tariff.
Aside the observed discrepancies, time of operation pegged at 24 hours is not realistic, as Customs, working hours are between 8a.m. and 5p.m.

“The restriction on the working hours negatively impact the shipping line, terminal operators and consignees, as in the event of a ship needing to leave at night, shipping lines have to wait extra hours for the arrival of tug boat drivers and, therefore, incur extra overhead cost,” it said.

The report bemoaned the increasing number of overtime cargoes, saying it has reduced efficiency of operations at the gateways through congestion, while terminal operators continue to be the losers.

“Majority of cargo in the Nigeria Container Terminals spend more than three days free storage allowances in the port and there is an increasing number of overtime cargo to the detriment of the terminal operators,” which it said are not able to recover full revenue from overtime cargo, while the yard ends up congested with overtime cargo.

The spiralling inflation and declining value of the naira have reduced seaport terminal operators’ earnings by over 230 per cent, according to the report, which is about to be made public by the consultancy firm.

It said although terminal operators invested over N200b between 2006 and 2015, they have also incurred revenue loss of about N58.9bn within the same period.

The report also identified insufficient power supply, dilapidated port access roads, traffic gridlock and uncertainty of policy direction among others as some challenges hindering port operations in the country.

According to the report, the 2006 port concession had resulted in significant improvement in port operations in the country.“For example, there has been the emergence of larger vessels with improved cost effectiveness, improved cargo-handling technology and delivery speed, as well as reduced unit freight cost.

“In addition, the concession has increased Nigeria’s port competitiveness, while reducing waiting time for ships and enhanced movement of goods across international borders and offshore manufacturing,” it stated.

The report further explained that the sector witnessed increased participation of foreign and private investors in terminal operations, investment in new port facilities and equipment, as well as investment in automated computer tracking system and establishment of new ports.

Explaining further, the report said private sector developments and Nigerian Ports Authority (NPA) were responsible for the improvement in the overall key performance indicators (KPIs) at the ports, including ship waiting time, ship turn around time, dwell time, container moves per hour, Customs examination time and overall cargo clearance time.

 

About the author

Avatar

Maritime First