Need for urgent bailout for private terminal operators

Private terminal operators at the nation’s seaports otherwise known as concessionaires have typically been the whipping boy for everything that goes wrong at the ports.

In the English court of old, a whipping boy was a young boy who was assigned to a young prince and was punished when the prince misbehaved or fell behind in his schooling. Whipping boys were established in the English court during the monarchies of the 16th and 17th centuries.

Terminal operators, like the whipping boy of old, get blames heaped on them for the mistakes and inefficiencies of various sections of port operation.

Some people erroneously regard terminal operators as port operators, unmindful of the fact that the port is a multi-layered service environment with the terminals constituting only an aspect of the entire system.

There is also the erroneous believe that terminal operators are cash cows. The revelation, penultimate week, by Chairman of the Seaport Terminal Operators Association of Nigeria (STOAN), Princess (Dr.) Vicky Haastrup to the effect that the concessionaires have actually been hemorrhaging calls for concern and urgent action by the government.

Haastrup had disclosed that at the current exchange rate of the naira to the USD, Terminal Handling Charges (THC) have effectively been eroded by 58% in value over the past eight years. She disclosed further that declining import volume, as a result of the build up to the 2015 general election and the policy of the Federal Government on rice and vehicle importation, has compounded the challenges confronting her members’ operation.

In lamenting the terminal operators’ plight, Haastrup said, “Most of our commitments are in dollars whereas we charge in naira but due to the devaluation of the naira, you’ll see that what we charge today is effectively 42% per cent of its value in 2006.

“This is significant for us because we now need more naira to fulfill our dollar commitments.

“It might be recalled that in 2006, one USD exchanged for about N130 but today it is more than N220 to the dollar which implies a significant decline of about 65 per cent in the value of the national currency since port concession.”

No one is in doubt as to the tremendous value terminal operators have brought to bear on port operation in Nigeria. Even the severest of the terminal operators’ critics agree that eight years into the port concession exercise, massive investments by the concessionaires in modern cargo handling equipment, security, civil engineering work, IT and training of workers have resulted in the elimination of vessel queues and congestion at the terminals.

In addition to the above, terminal operators have carried out massive rehabilitation and reconstruction of quay aprons and stacking areas; expansion and reconstruction of container terminals; rehabilitation of terminal access roads; provision of lightening facilities including generating sets; rehabilitation of sheds and warehouses; reconstruction of drainages; construction of perimeter fencing and gate houses; and improved workshop facilities at the port.

To achieve the monumental feats recorded at their various terminals, the concessionaires have collectively invested well over $1billion over the past eight years.

Any situation or condition that could jeopardize the investments of the operators must therefore concerns from well meaning stakeholders and relevant arms of government.

Terminal operators need the ability to pay make further investments and pay their concession fees to the Federal Government. Since the factors threatening these – namely devaluation of the national currency and government’s fiscal policies resulting in a decline in cargo throughput – are none of their making, government should provide some sort of palliatives to cushion the losses suffered by the operators.

Our recommendation is that government grants some reliefs in the form of lease waivers and bail out funds to the operators as soon as possible.



Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.

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