Penultimate week, the Managing Director of Nigeria Ports Authority, Mallam Habib Abdullahi held an interactive session with select Business Editors in Lagos. He spoke of the challenges in the maritime industry, the role of NPA under the port concession agreement and other sundry issues.
A new direction
By way of introduction, I would like to say that I personally have been in the system for a long time, so it is not something that is new to me. I was Assistant General Manager, General Manager, and Executive Director before I became the Managing Director of the authority. So any other challenge that I might have encountered when we first came in may not necessarily be new to me. But in the last few months, you are very much aware there is change of government and this change of government is complete change of regime, it’s also complete change of ideas, complete change of philosophy.
It is not like from one similar government to another. It is a complete overhaul of the system. And so, in this new government, we had expected new philosophy and definitely there will be some challenges not only in the maritime sector but in the overall economy because the government itself must have sat down and understood the problem that it has encountered.
That in itself, also made us face some challenges because the maritime sector like every other sector is impacted by economic policy of the government. So, yes I would say that in the last few months, we have had some challenges and we are still waiting for the government and the economy to be stable. We are still trying to see how best we can, like every other industry, to accommodate and face some of these challenges.
Can you tell us some of these challenges that you are facing?
The maritime sector is dependent on import and export of goods. So definitely, there is less business now in the ports. Less business means less revenue for us. That in itself is a very big challenge.
In which way has the current policy direction affected the fortunes of your operations?
We are very much aware that there are some challenges in foreign exchange market which is related to the revenue of the whole nation. We are highly dependent on oil revenue and the price of oil has come down. We are very much reliant also on the world economy because the port industries are dependent on world trade. So in that way it has impacted in our activities. And when I say it has impacted on our activities, it goes without saying that it has impacted our revenues.
At what rate would you say your revenue has been impacted?
The year has just started. I would not even say that the year has started; after all, the budget has not been approved. If you look at the number of our goods and services, we are less by about 10 per cent. I have the statistics with me. The number of ocean going vessels was 5,090 as at last year, that is, a decrease of 8.1 per cent from upward of 5,541 for example in 2015. Generally if you look at all these traffic and the cargo traffic as well, you will see that there is some negative impacts and that definitely has to do with the source of our revenue and the economic activity of the nation. So it has negatively impacted us.
How are you reorienting the ports?
We have to go with the current government’s thinking. And that is diversification of the economy so that we are less dependent on oil. That is what the government direction is. And what we are trying to do now is to make sure that we encourage exports and we have already written a letter to the federal ministry of agriculture and the Nigeria Export Promotion Council. I will give you one interesting example. There are quite a number of empty containers in the port. Why are they lying idle? If only we can encourage people to export instead of taking them out of the ports as empty. People are exporting yams and other agricultural products, so if you create that, you can diversify the economy. We have quite a number of solid minerals as well. So we can diversify into agriculture, we can diversify into solid minerals so that these containers that are lying idle in the ports or are being taken away empty can be utilised; so in our own way, we are also encouraging exports. That is one of the areas that we think we can diversify and compensate for the revenue that we are losing.
The question is how are you preparing the ports, for instance the various terminals and what have you, to accommodate the volume of exports that will come with this change agenda we are facing?
Well, we have to work hand in hand with the concessionaires. You know that the terminal operators are the ones that are running the ports, so we have to reorient them. At the same time we are also synergising with customs. We are trying to see if we can make some ports dedicated terminals for exports. I have scheduled a meeting with the controller general of customs. Some of you may be aware that I was with him at Ikorodu last week. We were there and we saw that the number of empty containers is large and the place is messy. So we are trying to see how we can make that Ikorodu to be an export terminal for example. This is just an example and we have some other interested parties that are coming in and we are trying to have some dedicated ports. We have the Ilaje ports in Ondo State. You know the former Olukola port, they are trying to make that ports to be dedicated to solid minerals. So quite a number of people are coming and they are showing interest.
Using other ports apart from Lagos
You see, quite a number of people do not understand our operations. I do not tell you that when you are bringing in goods, you must use this or that port. It is dependent on the importer or the exporter. Now more especially now that all the ports have been concessioned, we are just landlords and all we need to do is to keep the entire necessary infrastructure and I think we are doing that in all the ports. It is left for government, the concessionaires and the terminal operators to encourage people to use their ports. It is interesting that people use Lagos ports even though Lagos is choked up instead of using Calabar ports. Although there are some challenges there but it is a very deep sea port which depth is even higher than Lagos’. And we have the West African terminal there but people still do not want to use them as much as they use Lagos even though some of the things that are coming in go to Aba for instance. But still people prefer to come to Lagos. Maybe it’s left for you to investigate and find out why.
Ports infrastructure development
Again I have to re-educate the public. It is not our responsibility to provide access roads into the ports. I wish it were. If it were, I assure you we would have done something about it because it is very disturbing. You see anything that happens, it is NPA but access road is the responsibility of the federal ministry of works, Lagos State government as well, more especially when it comes to some policies. It is even part of the responsibility of the local government. But we spend quite a lot of money on the ports. Last year, we spent about N500 million in order to meet our CSR obligations. The only thing we can do is within the ports. And we are developing the infrastructure within the ports. You know the 1.6 km roads that we constructed in Apapa. We have also done similar works in Tincan Island. The federal government now is doing something about it and I would like to say that there is already a committee, which we are also members of which is trying to see that the access roads and the place is being cleared.
Inter-modal type of transportation is one of the key issues that I forgot to mention. If only railway is working as it used to be all these congestions would have eased off. Our responsibility within the ports is to develop the rail system. If you remember, about two years ago, the rail within the ports was commissioned along the ENL carrier. Also in Port Harcourt, we did that. We are also developing that infrastructure within the ports. And I think the work has gone 93 per cent and also the one within Port Harcourt is being completed. But there has to be a definite policy. I was telling the US Consul General that when I was in Secondary School, the rail line was by the side of my school, and we used to keep time because of the rail. And every day there were two trains running to and from Lagos. And somebody is saying we have achieved something because there is at least one train per week now.
High cost of importing through Nigeria
Those who are importing through Cotonou are simply smuggling. It is ridiculous. People are complaining that this port is congested which means there is a lot of business. And at the same time, there are other factors that work against bringing in goods through the country. The economy itself encourages smuggling. People smuggle because of some of the economic policies. Some people say that the port is expensive but compare it with other places in the world. People do not even know how much it costs to import. But people are just peddling rumours that it is cheaper to import through Cotonou ports. But it is actually because it is cheaper to smuggle goods through the Cotonou ports as they dodge the fee they are supposed to pay. So the issue is not necessarily what people think. Our port is relatively competitive and if you ask the terminal operators, a lot of people are making money, otherwise there would not be so many applications for people wanting to set up the sea ports in Nigeria. So it is not because the other ports are cheaper, but smuggling is going on but I think with the seriousness of Customs now, all that will change very soon.
Indebtedness by operators
First and foremost, there are quite a number of them that are owing definitely, but you see, business like this continues every year, monthly, and every quarter we sit down and reconcile our accounts just like the Nigerian National Petroleum Corporation (NNPC).
Well there are different kinds of revenue, different kind of dues that we are supposed to collect from the concessionaires. Government is very much aware of what is happening so it is dynamic and continuous.
And then due to the challenges that we face, the question of the Treasury Single Account, because some of them do not even know how to deposit the charges or due. Because of the introduction of the TSA, there is that challenge especially on the dollar component of the rents and charges. Because we insist that we must be paid in the foreign currency that is in the dollars that we agreed on they are saying that they can not access the foreign exchange and want to pay us in naira.
But, I am refusing to collect that because what they are also collecting is in dollars so they should go and find the dollar because that is what they are collecting.
So these are all the challenges that we are trying to sort out which is quite normal.
Some of this people are paying, some of them are current but, there are some that are facing some difficulties and problem, and every day we are making sure we reconcile with them and very soon you will see the result. I have written a letter to the government that there is a need to review all the concessions, so that at least, all the challenges are addressed from both sides.
Extension of some concessions
The second question is the extension of concessions, let me tell you what happen, some of these concessionaires when they took over with a dual responsibility, we have some responsibility and they have theirs.
Part of our responsibilities is development of infrastructure which we are engaged on. Let me give you a typical example, some of them want their site and when business increased, because some of these sites have been there for more than 50-60 years, some areas were even collapsing. We have so much challenge that we could not do everything alone, and these guys said ok why can’t we do it and when they did it, instead of paying them, they insisted you give them one to three years more so they can collect back the money spent on rebuilding the infrastructure and it is because of that reason we wrote to the government, Federal Ministry of Transportation, NCP and to the Federal executive council.
So it is the NCP that gave the extension, based on of cause on our recommendations that ok this guy has done this and that job. We need to extend their period to 2-5 years so in most of these cases that is what has happened. Like in the Port-Harcourt ports, when it was concessioned, the 2 terminals operators operating there inherited a dilapidated ports.
And so they were asked to fix them, which was our responsibility and not the responsibility of the concessionaires which they did and they had to recovered their money.
Some of your old traditional mandate has been taking up by this concessionaires to what extent has this affected your revenue generation profile?
It has affected it positively, you see then we had operators, we also take care of the infrastructures, engineering, cradles which you see around.
Also it was NPA that have to take care of them and to be honest that is how we work. As you are aware it is ours and we spend a lot of money on it. There are lots of patronages and when people come in they want to repair one thing or the other that is the whole essence of the ports reform. The port operation has become more efficient and we are assigned to take our own kind of responsibilities.
The volume has increased; the concessionaires them self now have to go out to look for market which increase the volume of business. If you compare all that to our annual report, for instance at 7 and 6 percent or 7 and 5 percent, and what we have earned between 7 and 15 percent, the difference is clear. I have said it everywhere that when people say that the concession is not working, it is not a success, I disagree with them. The port concession is a success and I think there are challenges which I believe could be much better.
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