The Nigerian Ports Authority (NPA) recently revealed that 18 terminal operators owe the Federal Government $753million and N1.61billion as of December 31, 2019; and that all efforts to retrieve the debt as being futile. In this report, TOLA ADENUBI examines the implication of such debt on Nigeria’s port reform.
The Nigeria Port Authority recently revealed that 18 Terminal Operators at various ports in the country owe the federal government $753 million and N1.61 billion (N490billion).
This was down from the $852.094 million and N1.878 billion presented in an Audit Query presented to the House of Representatives by the Office of the Auditor General for the Federation.
The Query revealed that the funds were being owed by the Terminal operators as at December 31, 2019.
The report of the Office of the Auditor General for the Federation was based on alleged non-compliance, internal control weaknesses issues in Ministries, Departments and Agencies of the federal government of Nigeria for the year ended December 31, 2019.
The 18 Terminal operators are operating at the Lagos port complex, TinCan Island port, Delta port, Rivers port Complex, Onne Port Complex and Calabar Port Complex.
The query identified the Terminal Operators owing the said funds as; APM Terminal, Apapa owing $562 million, Apapa Bulk Terminal $4,621.20, ENL Consortium $957,020.77, Greenview Development, $20.8million and Standard Flour Mills $893.77.
Others include; Intels Nigeria Limited, operators of Terminal A at the Delta Ports Complex owing $2,429,382.80, Intels Nigeria Limited, operators of Terminal B of the Delta Ports Complex $4,589,576.75, and Associated Maritime Services $328,027.64, and Greenleigh Ports Nigeria Limited which is owing $1.7m
The rest are; BUA Ports and Terminal Limited owing $12,254,424.55, Port and Terminal Operators Nigeria Limited, $107m, Brawal Shipping Nigeria Limited, $226,541.72, Intels Nigeria Limited operating at Onne Port Complex owes $430,404.81, Intels Nigeria Limited also at Onne Port is owing another $670,954.72, the same Intels Nigeria Limited owes another $1.9million also at Onne Port while Shoreline Logistics owed $1.2million.
In the documents submitted to the House Public Accounts Committee as part of its response to the investigation, the NPA management confirmed that the original debt owed the Federal Government by the port operators stood at $852,093,730.77 and N1.9million.
It however disclosed that out of the initial amount owed by the Terminal Operators, $753 million and N1, 6billion remains outstanding and have not been paid.
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Matters arising
With many of the port terminal operators having huge debt profile hanging around their necks, findings further revealed that many are not set to pay anytime soon due to financial obligations some of them undertook on-behalf of the NPA.
Speaking with the Nigerian Tribune, a port official who wouldn’t want his name in print as he is not authorized to speak explained that some terminal operators undertook some activities in the ports that involved financial commitments, which is yet to be reconciled by the NPA, and thus these operators don’t see themselves owing as much as what the NPA thinks.
According to the port official, “For the records, when the concessionaires were to take over their various port terminals, some of them spent billions clearing the yard spaces allocated to them before they could start operations.
“This exercise gulped millions of Naira and the NPA was asked to reconcile this with what will be paid into government coffers as revenue, but the agency wouldn’t do that. I cannot really mention the number of operators that fall into this category, but APM Terminals has such problem. The terminal operator spent millions of naira to put that yard that is being used today into shape, but didn’t get any form of rebate or refund from the NPA.
“Now, the NPA has gone public with the figures being owed it, but has the agency removed monies spent by these terminal operators on getting the port terminals cleared? When the terminal operators took over those port terminals, the yard wasn’t what you people are seeing today. There were so many abandoned equipments and shanties everywhere, many already not in use and needed to be evacuated.
“I won’t be surprised if these terminal operators come out public with a different figure to what NPA is mentioning because some of them would have deducted at source what they spent before commencing port operations. If you ask these terminal operators, you will be shocked that the figures being mentioned as debt might not tally with what they will tell you.”
Implications
With huge debt facing terminal operators, port users have expressed fears that further investment in port facilities may not be forthcoming since these operators will want to sort their debt issues with government first before any other thing.
In the words of a clearing agent, Pascal Nnodim, “There were recent reports that sections of the Tin-Can ports are collapsing and needs repairs. Now, we have heard that the various terminal operators are indebted to the Federal Government in billions. Do you expect these operators to invest in port infrastructure repairs when they already owe government?
“It’s logical and straight. The operators have said they are ready to partner the NPA to repair failing sections of the ports. If that is approved, the issue of debts will have to be renegotiated. The operators will not spend a dime on port repairs if they are not sure that every kobo spent will be deducted at source from whatever NPA says they owe. And until that is sorted, nothing will happen at the ports from the end of the terminal operators when it comes to port repairs.
“So, you see the dilemma that is confronting port repairs? Imagine a tenant that is owing his landlord rent and the house is collapsing. Will the landlord repair the house from his pocket when he has a debtor tenant? Will the tenant ask the landlord to allow him repair the house and deduct at source from his rent? This issue will definitely slow down efforts to repair the failing port infrastructure and the sooner the NPA starts looking elsewhere for money or investors, the better it will be for Nigerian port system.”
“It’s obvious that the terminal operators are not willing to vacate their various port terminals to allow for any kind of repair works. Many of them are willing to partner NPA for the repair works, but how that will be done with so much debts on the necks of the terminal operators, time will tell.”
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