… insurance can play key role in road haulage, container return
By Kenneth Jukpor
Mr. Hassan Bello is the Executive Secretary/ Chief Executive Officer of Nigerian Shippers’ Council (NSC). In this exclusive interview with MMS Plus newspaper, he gave a thorough appraisal of the transport sector in 2019 with special emphasis on the ports. Bello addressed the ease and cost of doing business at Nigerian ports, the challenges facing the Council in the development of Truck Transit Parks (TTPs) and Inland Dry Ports (IDPs).
Bello also spoke on the implication of the 2020 budgetary provision for the transport sector on the nation’s economy. Other areas he expounded include; development of national fleet, NSC’s relationship with sister maritime agencies, 2020 agenda for Shippers’ Council, maritime security, secure anchorage contracts, deep seaport development, among others.
The Secure Anchorage Area (SAA) has been on the front burner for some months as the debate between Nigerian Ports Authority (NPA) and the private company intensified. The Senate also put forward recommendations which noted that the issue was an economic yet Shippers’ Council hasn’t commented. What is the Council’s perspective on this?
This kind of practice has never happened anywhere in the world. Who sets the cost for the money collected by the private company? Shippers’ Council ought to be responsible for this but the Council was never consulted. If the Council was consulted, we would have measured the impact of this practice on the port and the economy.
I’m sure that the cost is passed on to the shippers and anchorage ought to be free like NPA’s is free. Anchorage is free in Ghana, Togo and other countries. If the private company has carried out this practice for several years, it doesn’t change the fact that it was null and void from the beginning.
It is not voidable, but it is void ab initio. It is incurable. They lack the legal capacity to do that. Right from the outset, this practice rests on nothing. It is like having a contract with an armed robber to steal. The partnership or agreement may be there but stealing voids the whole contract.
As part of efforts to address the high cost and operational challenges associated with road haulage in Nigeria, Shippers’ Council is pushing for a bill on Carriage of Goods by land. What is the latest development on that bill?
By March this year, we should have handed over the comprehensive bill to the Ministry of Transportation because it is the Ministry’s bill. We would also do wide consultation with transport stakeholders. We intend to see what the rail would do because there are some aspects in the Nigerian Railway Corporation (NRC) Act related to this bill. Transport agencies, transport users, employees and others like the Federal Road Safety Corps (FRSC) which is our crucial partner and other modes of transportation would also be involved in the deliberation.
There has to be a synergy with the Ministry of Works because they have a new law which is the Road Act. We also have to work closely with the insurance companies so that they can mitigate the risk borne by investors in road haulage. Insurance is very key. It is a whole industry deliberation that would be done because we need a law that is workable, usable, and acceptable in order to grow the nation’s economy. Hitherto, no investor would come into the industry when he can’t tell the liability. How do you measure the risk in taking tiles from Kano to Maiduguri when the tiles get broken?
In 2019, the contribution of the transport sector to the nation’s Gross Domestic Product (GDP) was below 10%. How would the sector fare in 2020 with regards the contribution to Nigeria’s economic growth?
The year 2020 would see the transport sector contribute significantly to the nation’s economy. By March, the port congestion in Lagos would be eliminated because we would have done the infrastructure and processes. The National Single Window seems far off, but we are also going to adopt the port community system. This system would have all the agencies in the Ministry of Transportation onboard to simplify the processes and procedures and also make them transparent.
We are also hoping to adopt the Cargo Tracking Note (CTN) which would block all loopholes and increase the compliance level of shippers. Most of the problems in the shipping sector would be eliminated if the shippers were compliant. Automation is also the way to go because technology is the key to efficient port processes.
Today, we have 22 days cargo dwell time but we want this to reduce this to 7 days. We also want 24hours operations at the seaports just like the airports. All agencies, operators and stakeholders would have to work together in synergy to achieve this. With 24hours operations at seaports and work done on Saturdays and Sundays like the airports, there would be no place for congestion.
We also have the dry port in Ibadan whose construction would probably start in April 2020 and this will take most of the cargoes off the seaports. We are speeding up the process of developing other dry ports across the country.
The game changer would be in 2021; when we would have the takeoff of the Lekki deep seaport. It is going to employ over 170,000 people. It would take large ships because the draft is 16meters. Ships which couldn’t access Tin Can and Apapa ports as a result of the shallow draft would have the option of Lekki deep seaport and Nigeria would start benefiting from the economics of scale from large vessels calling at the port.
However, we also have to be alert about the access to Lekki; the roads, rail and pipelines have to be connected to the port. Shippers’ Council is making sure that this connectivity is available at Lekki. Nigerian movies usually have Part 1 and Part 2 but we don’t want the Part 2 of Apapa traffic coming up at Lekki.
Recently, the Managing Director of NRC, Engr. Fidet Okhiria gave indication that the financial provision for the Lekki rail connection is a challenge as neither the government nor sponsors of the seaport have agreed to finance the rail. Has that problem been dealt with?
That constraint has been addressed and the provision for rail has been added. Shippers’ Council fought and insisted that that without rail there would be no port. We would have declared to the international community that it wasn’t a port. What is the value of a port when you can’t evacuate the cargoes? The Lekki port has to be a modern port where the access roads, rail and piping would be effective. It also has to be a port with effective and efficient procedures and processes.
However, I plead with NPA to consider the many interests and discuss with other stakeholders like the stevedores, shippers and freight forwarders so that their contributions would be part of the Lekki port policy. A port isn’t owned by one agency. All the institutions that have interest should be consulted.
Last year, one of the achievements of Shippers’ Council was the reduction in number of days for refund of container deposit to four days. Looking at 2019 in review, what were other gains recorded by the Council?
In 2019, we were able to stabilize the cost of shipping and port related activities. Recently, a group visited the Council saying they were planning to increase the cost but we were able to say no and insist with valid reasons. No cost was introduced or increased without consulting the Council this year.
The only place we had challenges was at the airports and we are currently battling it. I just finished a crucial meeting with my colleagues who are freight forwarders. We are trying to see what we can do about that. However, at the seaports there was no arbitrary cost added to the port process. The terminals and shipping companies have been compliant.
Nevertheless, the problems we have with costs are the government agencies. Why would NPA, Nigerian Maritime Administration and Safety Agency (NIMASA), Plant Quarantine, NRC, among others, raise cost without coming to Shippers’ Council?
We concluded discussions with NRC recently and the issue was about cost and they cooperated. These costs are very important. The ease of doing business at the ports is a different issue but the cost is equally important. We are in competition with ports in neighbouring countries so our tariff structure must be predictable and comparable to others in the region.
What are the major achievements Shippers’ Council intends to attain in 2020?
In 2020, Shippers’ Council intends to bring insurance to play a key role in the transportation sector. The insurance companies should be able to mitigate the risk. There should be no container deposit because this risk is something that insurance companies can handle. Many people could own their containers while the role of insurance would ensure that this tariff structure is eliminated.
Shippers’ Council doesn’t necessarily set the cost for most of the services at the ports as they are determined by market forces. However, we can set the upper and lower caps to allow for competition and fairness. Terminal A can have a different cost from Terminal B so that the customer can be a king with variety of options.
Few years ago, Shippers’ Council hosted a national conference on Truck Transit Parks (TTPs) but these projects are yet to come to fruition. What has been the challenge?
TTPs haven’t come to fruition as planned because of the encumbrances in the procurement. Some state governments have also not paid the compensation to the occupants of the lands, so the lands aren’t free from encumbrances.
However, by March 2020 we would go into the market and advertise the TTP projects in Lokoja and Enugu to expedite the processes.
The development of Inland Dry Ports (IDPs) has also been very slow but we are reviewing them. We are reviewing the business case outline for the project in Isiala-Ngwa, Abia State. However, you also have to note that these are private projects and some of them have low capacity. I’m sure that in the first quarter of 2020, we would see revocation of some of their licences.
Nigeria’s 2020 budget has been passed with about 24% for capital projects and N123billion apportioned to the Ministry of Transportation. What does this budgetary provision mean for the nation’s transport sector?
In the last three years, transportation has been given a chunk of the nation’s budget. It shows that the government has realized the crucial role of transport infrastructure in the nation’s development. If you have outdated infrastructure, your economy would be sluggish and suffer grossly.
On the other hand, modern infrastructure leads to growth of a nation’s economy. Transport is a derived demand, so the more modern your transport infrastructure, the better.
Look at the rail infrastructure development that this government has given significant attention. It is going to change the structure of the nation’s economy. The moment we have 30million MT of cargoes transported via the rail; taken from Lagos to Kano for instance, you can imagine the relief that would afford the roads. The train stations would also become major economic hubs, creating enormous job opportunities as there would be hotels, restaurants and other facilities that constitute modern train stations.
You’re also Chairman of the Nigerian Fleet Implementation Committee. How close is the nation to having a national fleet?
We have started the process of the national fleet. We are discussing with the new economic management team to make requests on several issues. We have gained special consideration for tax holidays but we are also working on other concessions.
The Cabotage Vessel Finance Fund (CVFF) is also going to be disbursed this year as promised by the Minister of Transportation, Hon. Rotimi Amaechi and this would mean improved capacity of indigenous ship-owners.
For every project in the transport sector, we should consider the volume of employment that would be provided. By 2021, 2022, you can be sure that the shipping industry would play a significant role in the nation’s economy.
In January this year, we would have a meeting with the economic team to discuss some of the key issues. We don’t want a national fleet that wouldn’t be sustainable. We don’t want to have two or three ships that wouldn’t be able to compete with already established operators on the international scene. We have to develop a national fleet that can be competitive, hence, we need modern facilities like the ship repair yards instead of towing our ships to Singapore and other nations for such services.
We need the flag administration to be modern and competitive. We need our nautical colleges to train seamen according to the global best standards. So, there is need to develop all these sub-sectors in order to ensure that shipping thrives in the country and plays a lead role in the nation’s economic growth.
Despite the Global Shippers Forum organized by Shippers’ Council and the Gulf of Guinea (GoG) conference organized by NIMASA in 2019 on piracy and related issues like insurance and surcharges; maritime security problems persist. What is the solution to this menace?
It’s true that the problem of maritime insecurity persists, but that is why I always call on the maritime press not to talk about frivolities on the issue of piracy. There is somebody at Lloyd’s whose role is to record all reports of piracy and increase the insurance cost as a result of these reports. We have to know what piracy is. A common disturbance on a ship isn’t piracy, pilfering isn’t piracy; even armed robbery at sea isn’t piracy. Piracy means the complete takeover of the ship and its crew, but we label small incidents as piracy in Nigeria.
However, we have got the anti-piracy law which wasn’t available in the past. There is also the Blue Economy project which is a security architecture that is championed by NIMASA to monitor all transactions along the Nigerian waters. These developments would lead to fewer incidents on Nigerian waters and the war risk clause and the consequent insurance would be removed.
We don’t even know how these charges are developed. The Global Shippers Forum would also be hosted in Nigeria again. The last one was on behalf of Africa but Nigeria is in competition with Canada to host the next GSF conference in order to bring down these costs.
Nigeria is saying don’t charge us war risk levies, but if we must be charged, then we should be part of the decision making process. Otherwise, the situation can be likened to shaving a man’s hair without his knowledge and consent.
On the land border closure, the Federal Government proposed the reopening in the first quarter of 2020. Have the underlying challenges which led to the closure been addressed?
Nigeria has been taken for granted economically and we cannot have our borders opened to make the nation a dumping ground. The neighbouring countries were violating international trade protocols. Organizations like the World Trade Organization (WTO) have commended Nigeria for its action. The Economic Community of West African States (ECOWAS) didn’t say anything because what the nation has done is right.
However, Nigeria Customs Service (NCS) needs to have stakeholders meeting because there are others who have suggestions as to how best to address this problem. The border closure shouldn’t be permanent. It is simply to ensure that we sanitize the process and we can do that by deploying automation.
Nigeria also has to trade through its land borders. People have to export products and services through the borders. We can’t remain an import dependent nation. We must become an export nation and that is the trajectory that Nigeria is going.
The major issues are balance of trade and smuggling. The lesson learned is that there is a time in the history of a nation when the nation has to take stock of its economy. The Customs has led us to take this important decision. Nigeria has to show that it is a serious country that is willing to trade, but with people willing to follow the laid down rules and protocols. We can’t ban items in Nigeria and have other nations import them with Nigeria as the target market.
The concession of the seaports in 2006 brought numerous gains as well as new challenges. Some of these challenges are set to be addressed in the ongoing concession agreement review. What role has Shippers’ Council played in this?
The port concession agreement had a void because there was no economic regulator. That was a serious lacuna. The Bureau of Public Entreprises (BPE) was just a confirming party. BPE isn’t grounded on the activities concerning ports. If you want to privatize a government entity you need BPE to play a role which it played in that agreement. However, there should have been a regulator in that agreement.
There was provision for a regulator in the maiden agreement but it wasn’t mentioned. That is why we have insisted that Shippers’ Council should be included as the economic regulator in the agreement. We have insisted, we have written and we would make sure that it is done.
If we had an economic regulator from the outset, most of the issues wouldn’t have arisen. The economic regulator would have ensured competition among the terminals. Inter-port or inter-terminal competition would have existed if there was an economic regulator.
Have you ever seen a terminal or port advertise? No! This means there is monopoly in the system. Why should we take away public monopoly and replace it with private one? Telecommunication companies advertise, why should terminals and ports not advertise? If ports and terminals do advertisements, the Hollywood artists and musicians would benefit as well as the media and other persons involved in such publicity.
The terminals and shipping companies have made significant investments, but if we had a regulator we would have measured the level of competitiveness. We would have measured the level of efficiency, and audited the performance of terminals because some of the gridlock can be attributed to the inefficiency of terminals. It is unfortunate that this wasn’t addressed earlier and it is a sabotage on the nation’s economy.
In 1978 when Shippers’ Council was created, it was created as a regulator but it wasn’t emphasized because government was also in the business of ports. Now that the ports have been privatized, it makes it more pertinent that Shippers’ Council is involved in the processes. We are having this agreement with NPA to be involved. Shippers’ Council isn’t the landlord, that role is for NPA but we can’t allow private operators to carry on without economic regulation.