How to end Apapa gridlock —NPA MD

How far has the NPA gone with the port concession review process?

We got technical support from the World Bank in form of technical aid to facilitate the know-how on international best practices as it relates to the review of the port concession agreement. We have also worked with the World Bank to engage the respective concessionaires because the review of the port concession is not one-sided. Each terminal operator has been invited and they have provided their list of issues.  We have had sessions with the terminal operators to look at the issues and determine what needs to be done on both sides, that is by the Authority and the terminal operators.

We have developed supplemental agreements which have been sent to each of the concessionaires for them to look at and revert back to us, and they have done that. Where we are now is that we are looking at the respective areas of rebate around some of our obligations that we have not met. For example, in the initial concession agreement, we had made provision for a depth of draft for certain terminal, which the NPA has not provided. That will necessitate a possible extension of the lease or a review of certain payments that will be made to us. We are also trying to make it across board, so that every terminal operator will get a commensurate review or response to their issues in the same manner.

So, if some terminals have issues of draft limitation, then they will all have similar rebate granted to them. If there are issues of encumbrance, like in instances where lands that were part of the concession were not taken over by the terminal operator, that will result in looking at the lease for the land that was given to the terminal operator.

This is where we are currently. We have reached an advanced stage. The World Bank adviser is working with us. In fact, the challenge that we have now is that he has finished his assignment based on what the World Bank asked him to do, but we need him to take us to the next level, which is the signing of the agreement.

Indeed, the concessionaires were always a bit concerned when the NPA says it is reviewing the concession agreement because they thought it will be one-sided, but bringing the World Bank in as a Technical Adviser really helped us change that impression.

Government and the NPA has not met up to certain obligations, the concessionaires too have not met up to certain obligations. We want to put a mechanism in place, which is, going forward, once any party fails to meet up with its obligations, there is a penalty. Even if a new government comes, the mechanism should remain. The era where a terminal operator is given an extension of lease for issues concerning depth of draft while another terminal operator with similar problems, doesn’t get same rebate because of lack of connections is over.

You talked about terminal operators not meeting up with certain obligations. Could you be specific?

Yes, for example, in the area of equipment and their deployment. How fast are they able to off-load and unload onto the vessels? How do the terminal operators manage their space? All these are part of the development plan obligation which the terminal operators are expected to provide. They were required to build certain things, and improve on infrastructure. Some of them have done it while some have not. We need to look at where they have not done these things, so they get penalized, and where we have also not lived up to our own obligations, we give concession in form of rebate.

Was the economic regulator Nigerian Shippers Council (NSC), as the economic regulator involved in the port concession review?

The NSC was not involved in the port concession review process because the agreement was between the NPA and the concessionaires, and there is also sanctity in contractual relationship that will not be required to be disclosed. So due to this, the NSC was not involved in the port concession review process.

The Apapa gridlock has been a constraint on the Lagos ports effectiveness, and the NPA had to convert the Lillypond Terminal into a truck park just to mitigate the negative effect of the perennial gridlock. However, it seems more truck parks will be needed. Is NPA looking at providing more truck parks in this regard?

I will say Lillypond was a terminal that was providing revenue for the country. We had also penciled it in for an agric processing terminal which is what the government has been clamouring for, that is improvement of agric processing. In view of the incessant congestion caused by the gridlock, the NPA had to review the lease for Lillypond terminal. We had lease fee of N200 million per annum that was to be paid the NPA for Lillypond, but we gave that up to ensure that the facility is utilized as a transit park for trucks. It is important to also understand that the NPA is not responsible for providing trailer parks and holding bays. It is the responsibility of local and state governments. Motor park, trailer park, and truck park provision all fall under local government responsibility across Nigeria. We have drawn the attention of the Lagos State government to the need to provide truck parks outside the port environment. In an ideal situation, we should have trailer parks outside the port environment. All trucks should be domiciled in that location. If you are a consignee, and you want to take your cargo out from the port, you go to that trailer park outside the port environment, negotiate with a truck driver and wait for your call-up when your cargo is ready to be picked up. When the trailer comes from outside the port environment, it transits in Lillypond before it enters the port. That is the ideal situation. We have approached the Lagos State Government over this issue, they mentioned that they have Orile Park, but what is the status of Orile Park? It is important that the parks are functional. The NPA only licenses truck parks, we don’t provide them. We have advertised about three times for licensing of trailer parks. It is only trailer parks that are licensed by the NPA that trucks will come into the ports from. The three times we have advertised on trailer parks, we have not seen anybody responding because land is an issue in Lagos. Because of the topography of the environment, people seem to be very cautious about issues that have to do with land. Trailer park business is a viable one because if we say every truck that comes into the port must come from your trailer park, that is automatic revenue for the trailer park owner. But most interested people don’t have a land title. We have even reached a stage where people ask the NPA to go and buy land and make it a trailer park, but the NPA cannot do that because it’s not our responsibility. If a land is suited for trailer park, and there are ownership issues, Lagos State Government can revoke the ownership of that land if the state is so determined to find a lasting solution to the Apapa gridlock issue. The state can revoke the land for overriding public interest if it so wishes. The state can even decide to run the park. Lagos State government needs to provide functional trailer parks that will facilitate easy access to the port. I can see that the Governor has strengthened LASTMA, which is a very welcomed development. LASTMA needs to be given the capacity to ensure it manages traffic within Lagos and the port environment. For the trailer park at Tin-Can Island, the Ministry of Works needs to complete its construction because they have been constructing that trailer park for so many years now. What we have been hearing for almost two years now is that they are concluding shoreline protection. They need to make that trailer park functional. The NPA has asked that it should be handed over to it to complete, but they have not handed it over. For us, we need that Tin-Can trailer park to be functional; we are not interested in running a trailer park. We need it to be available for use.

Talking about evacuation of cargoes through inter-modal means of transportation, the firm saddled to move cargoes by barges at the Ikorodu Lighter Terminal has been stopped by the Nigerian Customs Service (NCS). What is NPA doing about this?

The NPA has been encouraging firms to come and help move cargoes by barges by granting approval to interested firms. We recently gave Connect Rail Maritime Services approval to move export cargoes by barges from the Ikorodu Lighter Terminal. However, we received complaints recently that the Nigerian Customs Service (NCS) stopped Connect Rail from moving cargoes by barges. I have called the Comptroller General of NCS, Col. Hameed Alli, on the issue. There seems to be a general misconception about the Ikorodu Lighter Terminal that the NCS owns the facility, and I have called the Customs CG, explaining to him that NPA only leased a portion of the land for Customs operations. Customs doesn’t own the facility. Customs does not have lease for the whole land. The Customs should limit itself to the portion leased to it. We have also written to the NCS, explaining to them what space is assigned to them. The CG of Customs has given us the assurances that he will direct the Assistant Comptroller General of Customs overseeing that place to allow us access to the facility unhindered. The other misconception is that, many years ago, the Customs had written to the Presidency, asking that the whole of the Ikorodu Lighter Terminal be handed over to the Service, but that request was not approved. So probably they (Customs) are still nursing that ambition, thinking they own the whole of the facility, maybe that is why they have denied our partners access to the facility. I have spoken to the CG of Customs, and I have also written to the Service, reminding them that it is only a portion of the facility that is leased to them. I have told the Customs to allow users, as well as Connect Rail, access to the facility. It is important that Customs allows people that have cargoes there, including Connect Rail, access to the facility because the issue of intermodal means of cargo evacuation has been on the front burner for some time now.

The NPA recently introduced a 10 per cent discount for shipping companies at selected Eastern ports in order to attract vessel-call at these ports. Do you think this will change the fortune of these ports since the importers, not the shipping firms, decide the destination of cargoes?

We believe this will improve the fortunes of these ports because the importers bring their cargoes to the ports through the shipping lines. So, if there is a 10 per cent discount for shipping companies calling at these ports, it will definitely rub off on the containers that they carry. If the shipping companies are paying government less 10 per cent, then the consignees patronizing those shipping firms will get a cheaper rate for the carriage of their goods. A major reason why we made that decision is down to the ease at which cargo owners get their cargoes to their final destination. We looked at the state of the roads, how navigable are they? We have identified all our roads linking our ports to the hinterland, and have written the Ministry of Works for them to prioritise rehabilitating those roads. From geographical calculation, Calabar is closer to the North-East and the North-Central part of the country, but there is a bridge there that does not permit movement of containers. So the Ministry of Works, last year approved the contract for the fixing of the Ibom-Ikon bridge in Calabar. The state of the roads linking these ports to the hinterland is another issue people look at before deciding the port destination of their cargoes. We will be reviewing the 10 per cent discount policy after some months to see if it has attracted the desired vessel traffic to these ports. We are also encouraging the use of flat-bottom vessels in Calabar because flat-bottom vessels require less level of draft and dredging. The dredging of the Calabar port, due to the windy channel, is about 80-something kilometer in length. For us to dredge it, it will cost about N40 billion. We have done the Cost Benefit Analysis for now, and found out that it is not financially viable for the NPA to embark on that dredging to those meters. What is more required for us as a country is for us to fast-track the development of deep seaports. In view of the change in the dynamics of the shipping industry, larger vessels are now calling at seaports. Larger vessels require a draft of 17 meters to 18 meters, and it is not possible to dredge a channel of five meters to 17 meters. So, what we need to do now is to prioritize having those deep seaports that will have the required draft for larger vessels. Even if we dredge the Calabar port to 10 meters, that is not the industry practice for now. The industry practice now is for deep seaports. If we don’t have those deep seaports, then we will not be competitive. Our ports are river ports, and we need to move on to have deep seaports. In that area, we are working with Lekki deep seaport. We have signed the necessary papers, and they are on the process of completing their payment as regards their financing terms. They have built the Breakwater. We are hoping that it will be a milestone achievement. We also have other proposals like the Ibom deep seaport and the Ibaka deep seaport.

• NPA cancels contract for $2.6bn Badagry deep seaport project

What about the Badagry deep seaport? You did not mention that in your list of deep seaport being worked on.

With Badagry deep seaport, the Outline Business Case (OBC) was reviewed. Some of the responsibilities of government was taken and put in the OBC for Badagry port. I have objected to that and written to the Federal Ministry of Transportation on this. I have also written letters to the promoters of the Badagry deep seaport, telling them that roles like marine services are responsibilities of government as stipulated within the Port Act. So they cannot take it away and say they are going to provide such services. This is where we are with the Badagry deep seaport. We are currently discussing with them to review the projects OBC, so that it states what their obligations are and what government obligations are. And while doing that, we also understand that they will need a Port Master Plan. That is also a challenge that we have with the Badagry project. When I assumed office, I inherited a consultant that was supposed to do a Port Master Plan for the Badagry project, but the consultant did a very bad job. When we took the job to the consultant that did the projects Terms of Reference (TOR), our internal people looked at it and said it wasn’t good enough. Even the consultant that did the TOR confirmed that the job wasn’t properly done. So, because of these issues, we cancelled the contract, and the project promoters took us to court. We are currently in arbitration. Now we are working on re-awarding the contract. I just gave the go-ahead for the engagement of another consultant that will do the Port Master Plan. The master plan will allow us to know where ports should be deployed in the country in-view of environmental issues, as well as commercial and financial viabilities. If you look at the Badagry and the Lekki projects, they are all within the Western ports. The port master plan will guide us on whether it is okay to have two deep seaports in close proximity to each other.

Talking about competitiveness, neighbouring ports in the West African sub-region like Lome and Accra ports are ranked ahead of the Lagos ports. As MD of the NPA, how does this make you feel?

Of course, it makes us feel really bad. I will also want to clarify that port competitiveness also has to do with the operations of other agencies of government, not just the NPA. One of the key things affecting our ports is the absence of scanners. This means that every cargo that comes into our country has to be physically examined. Again, we do not have single window technology at our ports. This makes every agency of government to interface physically with the consignees, and this also creates another bottleneck at the ports. The process with which cargoes are cleared when they come into Nigerian ports is cumbersome. The Nigerian Customs Service (NCS) got an approval for procurement of scanners sometime last year.

As regards NPA’s responsibilities, which include channel management, our channels are deep enough to accommodate vessels when they come. Our berths are also deep enough. When the vessels want to offload their cargoes, the terminal operators offload the cargoes and put them in for inspection. At this point, the task of the NPA ends. On our own side, our area of efficiency is to make sure our terminal operators have the right equipment to allow for quick turn-around time for vessels. These are our own portion of efficiency that we are working on. But for most consignees, they just want their cargoes to get to their warehouse on time. The moment that does not happen, they say the NPA has failed. Again, the absence of inter-modal means of cargo evacuation has been an issue. You cannot have a port where all your cargoes are evacuated by road.