Dredging: Joint Ventures Are Special Vehicles, With Presidential Approvals – Fuchs


Managing Director, Lagos Channel Management (LCM), Mr Danny Fuchs whose ongoing dredging and maintenance activities has no doubt, attracted glowing investments to the Lagos Ports, today takes a hard look at growing shipping trades in Nigeria; and commends the Government, while describing the Joint Venture organizations as functional Special Vehicles, approved by the President.

Excerpt please:

What is a Joint Venture and why should the NPA go into Joined Venture to accomplished its statutory functions?

The Nigerian Port Authority is a constituted entity with a right to invest and become a share holder. In this case, the NPA has enter into an agreement with Foreign Experts to create another company, a management company in which the NPA Managing Director is also the Chairman of the Board of Directors

So in this case, the NPA actually comes in with three Directors: while the technical partner comes in with only two Directors. Thus, the NPA owns a 60 percent majority share and control of the company

In other words, the NPA is also the sole authority monitoring the operation of the company. If the NPA does not create a Joint Venture, if the NPA is to invite a Foreign Technical Partner and assign the Tasks onto it, it could also lose the control of the operation to the invited party

LCM Dredger
LCM Dredger

It means, if there were unforeseen development and you want to change or alter your priority, then you cannot do it. It means the technical partner could be asking for more money or could be asking for more reaction-time

But in the present arrangement, we are doing a board meeting every quarter of the year and all the sub-committees of the board are involved: at this board meetings. So, that way if they want to change or modify any aspect of a decision, they could easily and freely do it. And in any case, any decision or resolution of the board, is like a new command or instruction to me.

So as to your question, what is a Joint Venture, I will say a Joint Venture is a Special Vehicle which technically put the NPA in total control of the operations of the company, as Chairman of the Board.

Danny Fuchs
Danny Fuchs

You must also remember that those Directors are responsible for the business operations of the company: and these directors include the Executive Director Marine and Operations, as well as the ED Finance. So, when you bring the three Directors from NPA to the two from the Technical Partners you have the five Directors currently administering the Lagos Channel Management (LCM) as a Joint Venture.

How do you prepare your budget?

The board tells me what they need or require. I evaluate and put in a cost estimation in respect of all that is required or going to be required: all this will be captured by the budget based on agreed instruction from the board.

For instance, if the board instructs me to expand the port’s channel, it will be my task to prepare a budget for it, based on the directive, and which would be captured in the budget request.

I will also have to defend the budget. For in stance, in July when I defended a budget, I did it before a panel of several NPA officials, from different departments, with documents. It can be strenuous and sometimes it can take two months or more. They would scrutinize everything; and until they are satisfactorily convinced, sequel to their ability to fund it, accept it or modify it. It then becomes part of what they present in their own budget request before the appropriate authorities.

So the LCM as no hidden budget of its own, except what as been approved by the law makers for the NPA and this is likely the situation with the other Joint Ventures. The JVs are part of the NPA budget, just as I think, the NPA is a part of the Ministry’s budget too, alongside other parastatals.

Are you saying that the joint ventures don’t do anything without approvals?

Yes. We cannot do anything without legitimate approvals.

Even with your detailed explanation, has the board of directors not cleverly dodged awarding contracts without going through the public procurement act?

From my explanation, you ought to know by now that the JVs are special vehicles approved by the President to assist in the performance of technical functions. They are not procurement platforms. So, by definition, we have approvals for our job. Our task undergoes close scrutiny and monitoring. Our budget goes through scrutiny and various stages of approvals.

You found a company. You are a shareholder of the company. You in control of the company. You cannot wish to assign the company a job, and first advertise it.

In addition, the company so established also have certain basic functions it must perform: from capital dredging to maintenance dredging, bathymetric survey etc; and every task is closely monitored and supervised. That is why you also have NPA officials on hand doing due diligence.

How do we know that in this budget system the JVs technical partner do not over price the cost of doing basic tasks at the expense of Nigeria?

You must know that there are rates publicly known. We have our rates. We submitted rates that are verified and justified by auditors, especially the NPA auditors. The auditors submit the rates to the board and the board approves those rates.

As for the LCM, we have operated on these agreed rates from inception of the company and we have never changed them.

To be continued.