Port charges were subsidised before concession’
The rise of public administration and the discovery of petroleum and natural gas are two major events seen to have led to a litany of ignoble corrupt practices in Nigeria over the past half a century. The country has seen its wealth withered with little to show in living conditions of the average human being. Some analysts have posited about the different potential causes of flagrant and pecunious graft that exists in the country: many blame greed and ostentatious lifestyle as a potential root cause of corruption. The same level of corruption was preponderant at Nigerian ports until 2003 when Chief Adebayo Babatunde Sarumi was appointed Managing Director of Nigerian Ports Authority (NPA).
A veteran of an often corrupt port system, Sarumi, 69, took up his position at the height of the port congestion in 2003 and immediately turned on his former peers. He blocked all avenues of revenue leakages, sacked several top management staff, and ordered a series of probes and change in processes.
By 2006, he had completed the processes of handing over the usually inefficient terminal handling operation to private companies and cut the workforce of NPA by more than half. The rest, as they say, is history.
In this interview, Sarumi speaks on issues around the port reforms.
Sir, what exactly have you been doing since your retirement as MD of Nigerian Ports Authority?
I consult and give advisory services to people about maritime services in particular. And I’m in the process of setting up (along with some colleagues) a maritime training centre at Tinapa in Calabar. This facility is particularly for training of seafarers and later on, dock workers.
As the man who executed Nigeria’s port programme, do you think the success so far recorded has met the expectation and dreams of the prime movers?
It won’t be right to say that I’m the prime mover. I will consider myself as the midwife that assisted in giving birth to a child that was conceived by the government of Nigeria and of course with a lot of input from a lot of us. I believe it has met the expectations, particularly the section that concerns concessioning the present facilities to the private operators, I think we have achieved tremendous amount of success along that line.
Also because of sheer increase in traffic, particularly ship traffic, Nigerian Ports Authority has equally been up to date, dredging the channel, and maintaining the channel in such a way that much bigger vessels have started coming in. I have it on good authority statistics emanating from NPA (for which I must thank who has been keeping me updated), that the ship traffic a most double if not triple and cargo traffic is also, almost double if not triple as well. These are to me, signs of success. But from the feelers I’m getting from ports themselves, it’s not so just a question of traffic ease (whether ship or cargo), but that there’s a better quality in terms of service that rendered to them now, possibly because the private operators who are rendering the services do not have the same constraints that the Nigerian Ports Authority management has in terms of decision-making with respect to ports operations and management. But the aspect of deregulation, where third parties were going to be encouraged to build new facilities, I’m yet to see any significant or remarkable improvements along that line.
I have heard of a few that are trying to build facilities of their own, but it doesn’t look as if anybody is very serious about it now and that pains me, because the facilities that we have, have been used intensively and there’s a lot of improvements in the infrastructure now, but Nigeria is yearning for new-builds and the sooner we have these, the better it is for the economy. I still think the necessary guarantees probably have to come from the government for these would-be investors, if they have all the guarantees as I’ve always said several times, then we can expect that they are likely, if they are sincere about what we’ve been hearing them say, then there’s no reason why they should not go ahead and start building new facilities now; particularly in Lagos, whether to the West or to the East of the present port of Lagos.
But critics believe that the concession has brought with it high costs of doing business in Nigerian ports, how far do you think this is true?
Well, that’s likely to be so. What probably people didn’t realise is that the time when Nigerian Ports Authority was running the establishment; it was giving tremendous amount of subsidy to the port users. Let me explain what I meant. Nigerian ports, up to the time when I left in 2007, was still operating tariff that was approved way back in 1993 – that is some 14 years earlier and at that point in time, Nigerian ports still had with the government an application for increase in port charges which were turned down. So what people were then doing was that they were actually being subsidized; heavily subsidized, because Nigerian Ports Authority tariffs were being pegged on one spot for so long a time.
But now that the private people are in charge, it should be expected that they are likely to be charging the market rate. I think the major issue is for us to compare port charges in Nigeria today with what happens in ports of similar status in other parts of the region or sub-region, it’s only then you can talk of high tariffs being charged by the terminal operators. And of course, this is not to say that the terminal operators or the concessionaires themselves are not charging far in excess of what they should, I think the major issue which you also know and which everybody knows is that a regulator needs to be in position to be able to take a look at what is being done, but beyond the issue of a regulator being in position, I think my colleagues in NPA too ought to
(once in a while) take a look at what each of the terminal operators is charging, there’s is no doubt about it that the ports share out of the revenues from these terminal operators in accordance with their concession agreement but that’s not the reason why, as national ports you should not worry about charges. There’s no reason why they should not also look at it even if it will mean lesser revenue being given to them, they should take a serious look at this even before the commercial regulators are put in position.
The Shippers’ Council has been campaigning to be allowed to transmute into a commercial regulator. As someone who has headed the Shippers Council in Nigeria, are you in support of this campaign?
I remember in my days at the Nigerian Shippers’ Council, we did come up with not only what the charges are in Nigeria but also what obtains in other similar ports of the same status within the region and sub-region and even we compare with other parts of the world. Yes, Nigerian Shippers’ Council has what it takes in terms of mental and cerebral attributes to be able to do this. Besides that, their duties as protectors of cargo interest in Nigeria is being questioned particularly by providers of shipping services, saying that they think that contract of carriage is between the owners of the cargo and ship owners and therefore there is no need for a third party to come in and intervene in what is purely a bilateral contract. Of course they would be right with respect to this, but then it was in those days when shippers were not fully protected and when there was no free enterprise that they were put in position.
Meaning that as at today, you can add that to their duties or even transmute the entire job that they are doing to be called regulators now. And that would probably also give a very good reason for them to be able to do that job. Like I said, they have the manpower to do it, they have the knowledge and expertise to do it, why not give it to them and then you don’t have to be starting something new. One of the problems I think we have in Nigeria now is too many agencies. And this is an agency that can easily transmute and be called a regulator without necessarily having to start a brand new one with all the implications for the national economy.
There is the view too that the commercial department in the Nigerian Ports Authority should be given capacity to also constitute a regulatory arm to carving it out of the Nigerian Ports Authority. Will you support the view sir?
Well, the commercial departments of the Nigerian Ports Authority are revenue takers and revenue raisers. Yes, they possess the knowledge and they have the expertise, quite okay, but remember that they also are beneficiaries. Nigerian Ports Authority is a major beneficiary of the current arrangement as the principals of these people, so I think that carving out the commercial department of the Nigerian Ports Authority to form a totally brand new organisation does not look quite right to me. Like I said earlier on, that would amount to duplication.
If you want to, then you can just take a few of them and it’s not everyone of them, because you will still have to raise bills on the terminal operator, there are still certain services that are still being provided directly by the Nigerian Ports Authority. Marine services are still being provided directly by the Nigerian Ports Authority, conservancy services, dredging services, navigational services are still being directly provided by the Nigerian Ports Authority; then who would be raising bills for those ones? If you ask the commercial department to close down and to go on, maybe you will then go ahead and possibly also farm that one out to group of auditors or external auditors or something like that or accountants, with the possibilities that they might not be totally sincere to you as people that are private. Already, very many of the services have been outsourced, must you also outsource revenue collections? You don’t outsource revenue collection and that is what you would get, if you decide to ask the commercial department of NPA to go on to do that, I don’t think so.
But a few staff from commercial department of NPA can easily be, because of the knowledge they possess, the expertise they possess particularly with raising bills, yes they could be encouraged to go over to the Nigerian Shippers’ Council, but I still feel that the Nigerian Shippers’ Council are in the best position to do this job, they are totally neutral, they can be trusted to do the job impartially, and if there’s any need for training and retraining, injection of people from Nigerian Ports Authority into the system, why not? They could go ahead and do that.
Culled from NPT.
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