Spanning a two-year period which begun in late 2004, the Nigerian Federal Government implemented one of the most ambitious port concessioning programs ever attempted. The success of this program resulted from the government’s determination, as well as the need to remedy massive shortcomings in the sector, which were sharply inhibiting economic development.
However the seaports in Nigeria are constrained by congestion with ships waiting on the high sea to discharge their consignments and the country losing billions of naira as demurrage increases on both the containers at the ports and on the ships waiting to berth.
Various reasons have been given for the congestion at the ports and include an increase in the container traffic; tendency of some importers to use the stacking areas of the port for storage of their consignment; technical hitches experienced in some of the ports which resulted in loss of some operational man hour; and the lack of sufficient capacity to handle the number of cargo traffic, especially container, in the nation's seaports.
However some have suggested that the single most damning cause of congestion is the number and activities of government agencies at the sea ports. As many as twenty agencies operate at the sea ports with some of them being accused of extorting illegal fees from freight forwarders before they are allowed to leave the port with their cargo.
To help ease the congestion at the seaports the Federal Government has embarked on a private public partnership (PPP) to establish Inland Container Depots at six locations over the country - Aba (Isiala Ngwa), Bauchi, Ibadan, Jos, Kano, Katsina, Gombe and Maiduguri.
The current proposal saw successful concessionaires bid under Build, Own, Operate and Transfer (BOOT) model to put the onus of building the ICD facility. Under the BOOT agreement, they will build the ICD, equip and operate it as their own. After operating the facility for 25 years, the firms will transfer ownership to the Federal Government.
The Federal Government has also mandated that containers should spend no more than two days being in the processed at the ports, however many believe that unless more reforms are brought about in the subsector, the Nigerian economy will continue to loss billions of naira due to the delays and these avoidable costs passed on to the Nigerian consumers.
Some of the ways that the government can maximise the contributions of the sea ports to the nation’s economy and fully establish itself as the shipping hub in the region include:
• Having clear cut laws and guides on the operations and role of the customs and other agencies at the port.
• Establishment of a Nigerian Ports Development Fund.
• Establish an expansion programme to increase the capacity and the number of ports along Nigerian coastline.
• Construct highways and railway tracks to the all the ports and inland depots.
• Create a regulatory body for port and inland depot operators.
Role of Agencies at Nigerian Ports
The number and activities of the government agencies, including the Nigerian Customs, at the Nigerian ports have come under a lot of criticism following the concessions of the operations at the ports.
The main agency for inspection of cargo at the ports should be restricted to the Nigerian Customs, who will act as an agent for the other agencies and bring them in if and when needed. For instance, if illegal drugs are found upon inspection of a container, the National Drug Law Enforcement Agency could be brought in to investigate the matter. This would help in getting rid of any bottleneck that might arise from having several agencies examine the same container.
Despite the introduction of the Destination Inspection Scheme, many importers have expressed dismay that all cargo is still subjected to 100% inspection by the Nigerian Customs, who still apply sections of the Customs and Excise Management Act (CEMA) to carry out the import inspection. The government should press on the Nigerian Customs on the need to stick with the faster and equally effective Destination Inspection Scheme, and possibly modify the sections of CEMA to accommodate the faster cargo processing guidelines.
The Nigerian Customs’ different inspection units should also be streamlined to ensure that there is no duplicity of effort and speed up the process of cargo inspection.
Nigerian Ports Development Fund
A Nigerian Ports Development Fund, which will be managed by professionals from both the private and public sector, will be established to assist the government in the expansion and maintenance of already existing ports and the construction of new ports.
The Fund will be registered as a company limited by guarantee and operate independently of the Nigerian Ports Authority.
The Fund will be administered and managed by a Board of Trustees representing various interests in the public and private sector and will be completely isolated from the management of the Nigerian Ports Authority.
The Fund will be required to release quarterly reports on the how much of its funds are being spent and how is being spent on any of the operations is it financing.
The Fund will be financed by:
• Grants from governments, organised private sector and international donors.
• Proceeds from the concession of the ports’ operations and inland depots.
• An ad valorem tax paid directly to the Fund by commercial users of the ports.
• Returns on investments made in the capital and money markets.
The Fund will used to finance:
• The updating and maintenance of already existing ports through the construction of operational infrastructure such as jetties and terminals.
• The construction of new ports along the Nigerian coastline.
• The construction of inland depots in the hinterland.
• Construction of highways and railway tracks linking to all the ports and inland depots to the national transportation network.
Ports Expansion Programme
This will be an infrastructural development programme to increase the capacity of already existing ports facilities and construct new ports along the Nigerian coast and Inland Container Depots (ICDs) in the hinterland. The programme will be partially financed by the Nigerian Ports Development Fund and private public partnerships (PPP) schemes.
The expansion programme will provide the following benefits to the Nigerian economy:
• Ease congestion at the ports and decrease the container processing period to the mandated 48 hours.
• Improve the country’s ability to handle an increase in containerised traffic and position itself as a strategic player in shipping to and from the African continent.
• The construction of ports and inland depots, with the consequent construction of highways and railway tracks, in the smaller towns and cities will act as economic boon, providing much needed economic development in these communities.
Nigerian Port Operations Board
Before 2004, the Nigerian Ports Authority (NPA), which is owned by the Federal Government, was the sole operator of all the ports in the country, and hence there was no need for a regulatory body to monitor activities in port operations.
However since the concessioning of the port operations and inland container depots, a need has arisen for a government agency to regulate the activities of all the private companies involved in the operation of these facilities. NPA only acts as a technical supervisor as regards the private public partnerships signed by the Federal Government and does not have the legislative authority to act as a regulator in this subsector of the Nigerian economy.
The new agency will provide some of the following services:
• Licensing and registration of all port operators in the country.
• Regulate the economic activities of the port operators to ensure they fees are not exploitative.
• Ensure that port operators comply with international and national maritime rules and regulation.
• Act as mediatory party in conflicts between port operators and other parties.
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