The success story of private hands in ports’ operations, by Haastrup

Princess (Dr.) Vicky Haastrup is the Executive Vice Chairman/CEO of ENL Consrtium – a terminal operator at the Lagos Port Complex, Apapa.

In this interview, Haastrup, who doubles as Chairman of the Seaport Terminal Operators Association of Nigeria (STOAN), speaks on the success of port concession and issues affecting cargo volumes at the port.
Excerpts:

 

It’s been 10 years now that your company started operations as one of the operators at the ports under the concessioning scheme. How has it been so far?
The experience in the port industry has been a good one, though, expectedly, it came with a lot of challenges. I need to state essentially that the port industry in the country was a completely run down system before we took over. And there were lots of problems associated with port operations, and when we started, we particularly had to tackle the issue of labour. Even when Nigerian Ports Authority (NPA) was in charge, it was practically impossible for it to get along with the dockworkers. So, we took up when the sector was very volatile and you can imagine the tasks we had to contend with, especially when there were also issues with the enabling environment.

But of course, we all quickly realised that that was why government in its wisdom, trusted us with the assets. The Nigerian port terminals do not belong to us but only leased out to us. It is on concession and we appreciate the enormous tasks ahead of us. So, we began to take the challenges right from there. Right from talking to labour, creating an enabling environment, of course government also had to create some enabling environment for us, but I can tell you, we also created an enabling environment for ourselves. The concession was a tripartite agreement. We know the greatest responsibilities lie with the concessionaire and we knew we were up to the task. Here we are, 10 years after and I can tell you that we’ve overcome the major challenges over the years. It is now a success story.

Which strategies did you really adopt to overcome these challenges at the initial period of your operations?
From onset, we decided to focus on labour issues as we identified them as the number one challenge we were faced with. Specifically, the issue of dockworkers was considered paramount since we realised that a terminal operator without dockworkers cannot discharge goods from the vessel. So, we realised first and foremost that forming a good relationship with the dockworkers and the labour unions of maritime workers was key to our successful operations. So that is the number one thing that we did, that is why I said, we created an enabling environment for ourselves. We engaged the leadership of the maritime workers’ unions into what I would describe as a friendly engagement. The first thing we did was to engage the leadership and to form a partnership and friendship because when we came, there was that lack of trust as our mission was not easily comprehended. They were very suspicious of us, so they didn’t trust us. They thought we were going to erode their sources of income.
Before we came, there used to be a lot of malpractices within the port sector, where the person working was not the person collecting the money. But we made the workers realize that we meant well for them and we started regaining their confidence. Eventually, they began to discover that their respective incomes have improved, together with their welfare package. I can tell you that we are now at peace with each other completely, where nobody stops any ship from working and nobody stops work arbitrarily. We have established an effective communication system with all stakeholders

But how were you able to address the issue of relative high cost of operations at the ports, which made neighbouring facilities to attract patronage of some Nigerian importers?
I need to stress that the high cost of operations at the Nigerian ports was not caused by the terminal operators. There are various charges been imposed in all importers of goods to Nigeria other than the charges of terminal operators. As far as I know, those other charges contribute about 85 per cent of the aggregate charges. If you look at it, terminal operators have their own legitimate charges related to services we offer. We have investments on ground. We have to discharge the ships, we need to buy equipment to discharge the ship. We need to develop the port. We have welfare packages for dockworkers and all the other staff. We have to take care of the environment, we have security to take care, we have to keep the goods, so we have a whole lot to do when it comes to discharging the ship. It is a lot of responsibility.

So, when you look at our charges compared with others charges, like I always said, there are other people who impose charges in the Nigerian port users other than the terminal operators. You have the shipping companies, you have the clearing agents, you have government agencies in the ports, logistics providers and when you add all these up together, the terminal operator charges are not all that much. There isn’t much we can do about these other charges but I think some of them can be eliminated or scrapped to reduce cost of doing business at the ports.

We should run the Nigerian ports the way other ports are run. I don’t what some of these government agencies are doing in the ports if you ask me. We need just three or four basic government agencies who are primarily required at the ports. There is need for customs service, immigration service, port health, to some extent NDLEA. I don’t even think we need them in the port as far as am concerned because the scanner is there to scan the goods, so why do you need NDLAE in the port.

The question is tougher when you consider you are the chairman of operators in that sector. What are you doing as a body?
We have spoken over several issues mitigating smooth operations at the ports. We have engaged government over these several times and I remember at one point when Dr. Ngozi Okonjo-Iweala was the Minister of Finance. She came to the port and had a meeting with all stakeholders, based on the point that were emphasised particularly the issue of multiplicity of government agencies in the ports. There and then, a lot of those agencies were actually asked to leave the ports. We are continually engaging the government on several other issues and I can tell you that we are succeeding on several fronts.

It’s being alleged that some importers are enjoying some kind of protection from the government and this has been causing some confusion within the system.How true is this? 
I think that may be in respect of some operators in the oil and gas sector. I do not understand the logic behind their attempts to push their way through, against the interest of other port users. When you talk of port operations terminologies, you have only two types of cargo. You have containerised and general cargoes. Even in the time of NPA, there was nothing like oil and gas cargo. General cargo is general cargo. The general cargo terminology is well known all over the world. I don’t know the time oil and gas was coined into general cargo. General cargo is any cargo that is not containerized. It is a generic name. If it is not containerised, it is general. How oil and gas cargo came into being, I do not know. I believe that all the concessionaires that are into general cargo have the same kind of concession/contract.

For example, EML terminal is a multipurpose terminal, majorly built to handle general cargo. Of course, we also handle containerised cargoes. We decided to put more emphasis and specialise in doing general cargo. If you don’t do it, general cargo importers would suffer. So, general cargo is general cargo. But I believe that there should not be any special concession given to anybody because every port terminal has a right to handle any cargo that it wants to handle. That is how it should be. There should not be monopoly, as the country would suffer as a result of that. It is unfortunate when a cargo that is being used for construction or for water project is categorised as oil and gas.

So far, how supportive are the government policies to your operations?
The new policy of foreign exchange is highly commendable. If you look at the port terminal like ours for example, the number of ships that I have handled from January till today is actually the number of ship I normally handle in a month. And what is responsible is simply not being able to have access to forex. The importer of goods do not have access to forex in Nigeria and that is the kind of inhibition they were suffering from. It was a major constraint for everyone and that has affected cargo imports into Nigeria by at least 50 per cent. So, the volume of import has drastically dropped. It’s good the Central Bank has formulated a new policy which I think is good, where naira is allowed to find its true value. It is flexible enough, it can be N250 to the dollar in the morning and by afternoon, it can change.
That how it is done in other parts of the world. Naira would find its true value and that is actually good for business owners which would enable them to make projections and plan effectively for their respective operations. The system we had before did not allow anybody to plan, what everybody did was just to ‘siddon look’. So, this system that is been put in place, if duly implemented, is a welcome development but further than that, government should please look at the issue of those 42 items that are banned. It is important. They are not valid for forex. If they are not valid for forex, importers will have to go to the so called black market. That is not still good for business. To me, that is a restriction and the economy activities are being hampered by that. And I believe it would affect the manufacturers of goods in Nigeria. Government is emphasising on manufacturing of locally made goods, so if the locally made goods become unaffordable and expensive as a result of the manufacturers not having access to official forex, that puts a lot of burden on them.

But the policy really is for those who are importing goods of similar make in Nigeria. If you are going to import what is being produced locally, then you would not have access to forex to bring in those goods, so that those manufacturers in Nigeria producing those alternate goods can stabilise and increase their productive capacity.

Even for the locally produced goods, what are the landing costs of those inputs? Take for example, cars made in the country under the automobile policy, what are their market prices? Is it affordable to the common man in Nigeria? It is not. Those cars are still being sold in millions of naira.

It is like port operations are tilted towards one direction, that is, imports. We have not been talking much about export business and it has become worrisome especially with government diversification programme. How do you think we can promote export business in this country, so that movement of goods would not be uni-directional?
I can tell you that a lot of export business is now going on in Nigerian ports. It is just that most of the exports are actually going through containerised format and they are majorly farm produce. The exporters are taking advantage of the present administration’s disposition, which favours economic diversification. I now export business will now assume rising profile and I think this is good good for the economy. I am happy the government is now focused on encouraging local farmers and I will want the administration to look into the areas of food preservation and financial incentives for improved productivity.

How would you describe the state of infrastructure within the ports now?
The infrastructure in the ports have improved tremendously. If you go to ENL Terminal for example, the facilities are highly competitive. In those days, the potholes in our terminals could even swallow up a trailer. Now, there is nothing like that. Every parlous infrastructure within the terminal have been addressed by us.

Was it your responsibility?
Yes, it was part of our development responsibility as stated in the concessioning agreement. What we did was that we even cast the road with concrete in almost five layers that can withstand the weight of the heavy vehicles. The access roads to the port terminals are however the responsibility of the government.

When you talk about infrastructure within the ports, there has been a discomforting scenario emerging with the location of Nigerian ports especially Lagos ports. It seems they have been overtaken by city development. Don’t you think there should be a plan by the government to ensure that roads are diversified away from the cities to ease logistics problems currently being experienced?
When the ports in Nigeria were developed, I don’t think government envisaged this kind of population explosion, especially along the seaport routes. The port terminals in Nigeria are too close to the city. If you look at other ports around the world, they are usually away from most cities. Apapa is a city, the port is sitting right in the middle of Apapa and the same Apapa is surrounded by a lot of tank farms. By the last count, I think they were well over 50 tank farms within Apapa and Tin Can Island areas, which is very dangerous.

I do not know why tank farms were allowed to be built within Apapa, particularly within the port environment. I haven’t seen that in any other place. Having said that, I think it is never too late. Before now, I used to suggest a lot of those tank farms should be moved away from the city because we are sitting on a keg of gunpowder. We just pray that there is no explosion of any kind, because if one happens, it would consume the whole of Apapa, but God forbid. Let’s hold and continue to pray. I think there wasn’t a proper planning the way the port was positioned particularly the Apapa and Tincan Island port. Creating a proper vehicular movement for inbound and outbound would have been the best. Nigeria should begin to look that way if it is possible, create a special road, dedicate lane on rail.

Well, we have the rail but the logistics is not right because the rail connectivity as far as am concerned is still yet to be completed. We needed a dedicated road if it is possible. Look at what Lagos State government is doing, I couldn’t even imagine that it could achieve what they are achieving with the metro line. So it is possible that there is room for improvement, if we are really very serious because the port industry will continue to explode and enlarge.

Don’t forget Nigerian population is getting bigger by the day. We are very lucky country, we are lucky as a nation. We hoping that Nigeria port would become hub port particularly in West Africa. Already we have the capacity, the potential but not the capacity. So government needs to create that capacity where Nigerian port would become a hub port for other ports in West Africa. Unless we do things like that where we have dedicated roads. The state of the roads leading to the port is a nightmare. It is in a deplorable state.

Before now, oil has become a main stake for revenue generation in the country; people say the maritime sector can be alternative source of revenue for government, what is your take?
I have said that overtime, I told the immediate past president when he invited some stakeholders to a maritime retreat at the villa about three years ago, I was one of the speaker at the retreat. The sector that has the potential to be alternate to oil is the maritime sector by extension, the port industry. I told him that and he got the message which struck him. I was able to explain why it is an alternative aside oil. It is a sector where you can make an instant huge revenue with the volume of activities. How much has Nigerian Customs service earn in the last one year. Ask NPA, NIMASA, what have they earn as income. It is a very huge sector. Now the price of oil is at the bottom level now. If government is looking for a sector, an avenue where they can earn good revenue, it is this sector. They should pay attention to the sector.

It provides job opportunities. Looking at the thousands of clearing agents, they don’t need an office to be clearing agent. You have shipping companies, terminal operators, transporters which also adds to job creation. If you a ship of rice for instance, you need about 700 trucks to transport the cargo which also contributes to job creation. To me, this is a very wide and huge sector. It is a good alternative to oil if right attitude is applied, if attention is paid to it, if right policy is put in place, if right decisions are made. Government needs to get to that level where the maritime sector needs to be put into serious consideration before policies are made. Policies sometimes somersault and has also affected. Policy somersault, government should think well, maybe invite the stakeholders, engage them in discussion. Let government engage the stakeholders in the maritime industry before evoking any policy. Because policy somersault has adverse somersaults sometimes, serious effect in the industry.
How do you access the level of port automation in the country?
The container operation is fully automated if you go to the port but the general cargo is not fully automated. I have been to so many countries to see how general cargos is being handled and I know to a large extent we are compliant. But to some of them, if you want to automate them, you need to get rid of most dockworkers and that won’t be done in our economy. We haven’t gotten to that level where you won’t see anybody in the Nigerian port. You don’t want to remove those young people into the labour market who wont have source of income. To us that is part of the consideration where we think we should use that, which I think is by and large good.

Background
My background wasn’t maritime, my background was oil and gas, I have worked with NNPC for more than 23 years and I started this job in 2006. I was enjoying what I was doing in NNPC, I didn’t want to take over this job but my husband drafted me to this job. But am happy I took up the job because it poses a lot of challenge. It has enabled me attained my potentials. I read a lot of books and attended seminars. I seek for advice in the industry.

To be chairman of STOAN is ability, having the ability to lead, because STOAN members constitute of catching of the port industries. There are some of that are even call captains, we have among the foreign terminal operators, there are managing directors, who have served in various capacities within their organisations in other ports of the world, being deport to Nigerian port, there are timbers and calibres of port industries. So it takes a lot of ability to be able to get along with them, it takes one that can be respected whose opinion can respected by other members, it takes someone who has a sense of responsibility and who also is very committed to the need of other members.

 

 



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