Mr. Dayo Balogun is the Group General Manager of Ecomarine. In this exclusive interview with MMS Plus, Balogun highlights the challenges in the implementation of the port concession agreement, the effects of non-dredging of the Calabar port, sets the agenda for the new executive management of the Nigerian Ports Authority (NPA) and suggests ways by which the Nigerian maritime sector could be further developed.
Excerpts:
Several stakeholders in the maritime industry as well as the Nigerian Ports Authority (NPA) have reiterated the need to review the port concession agreement. If a review is to be done, what areas do you want reviewed?
For the concession agreement, I think there are provisions that guide the concession, as to the terms and conditions under which the agreement should be reviewed. It is in the interest of all the parties that the basis for the review must be agreed in accordance with the provision of the concession agreement. This is because it has implications on the image and integrity of the nation especially in our drive to attract more foreign investors to the country. This year makes it exactly 10 years since the commencement of the concession and like every new initiative, the concession has its own fair share of challenges but it has impacted positively on the development of the maritime sector as well as the economy of the country in terms of ports infrastructure development and increased revenue for the government.
I want to look at the concession agreement in line with our experience in Calabar port as the operator of Terminal B of Calabar Free Port. Today, the non-completion of the dredging of the Calabar channel is the most critical factor that is limiting the development of that port. Though the concession agreement we signed with the NPA provides that the lessor (NPA) should maintain the draught at 9.4meters, nine years after we took over the concession, the draught still remains at 5.4meters at low tide and 6.4meters at high tide which was the same situation we met on August 1st, 2007.
For us, the review should not take the focus away from the main issues in terms of delivering on the required infrastructure especially on the issue of capital and maintenance dredging of the channel. A review will not be a substitute for dredging of the Calabar channel to the advertised 9.4meters draught or for good road infrastructure and an efficient rail network to lead in and out of Calabar.
How has the non-dredging of the Calabar port affected your activities as a port concessionaire?
This draught challenge has limited our opportunities for growth and resulted in enormous financial losses over the years. Today, all our marketing efforts geared towards enhancing traffic at the port have been constrained due to the draught limitation of the channel.
For clarity, shipping is about economies of scale of size and the recent trend in the shipping world is the development of bigger capacity vessels which requires deeper draft because there is a correlation between the size of the vessel and the depth of the channel. As a result of this impediment, it has been difficult to attract container carrying vessels on regular call to the port. This situation has adversely affected our container throughput projections and limited the implementation of our development plans which were predicated on increased cargo traffic and the need to expand facilities to support the projection.
From the legal perspective and going by its implications on the projections we made and obligations conferred on us, the non-dredging of the channel could be considered a material breach of the agreement.
The potentials of Calabar port are very enormous but the port has been reduced to a jetty because of the constraint. Calabar port by virtue of its location has the potentials to service the 16 Northern states, the commercial cities of Onitsha and Aba in the South East of Nigeria, and can become a transshipment hub for the land-locked neighbouring countries like Chad and Niger. Similarly, commendable projects like the Tinapa project and the Calabar Free Trade Zone have not been able to fully realize their potentials because of the absence of port infrastructure required to support their operations.
Consequently, project cost in Calabar has become very expensive due to the additional logistics cost of conveying equipments and materials from Port Harcourt and Lagos.
It was on the strength of the assurances we received and the provisions in the concession agreement that the dredging would be completed that we invested in brand new container carrying equipments; sadly most of them are yet to lift a container nine years after.
From this scenario and in spite of the implications of the non-dredging of the channels, we have not been able to hold NPA accountable for the losses suffered as a result of non-performance. On the other hand, the lessor is always quick to invoke penalties on the lessee in any situation of perceived non-performance. This is what you get when a party is sitting as a judge in case where it has interest. This underscores the need for an independent technical regulator.
Is this the best time to discuss this breach in the concession agreement with the NPA?
NPA has a monitoring and compliance unit that undertakes regular visits to the ports to observe and ensure compliance to the terms of the agreement. We have also regularly engaged NPA on the various issues but the challenges of bureaucracy seems to have made it difficult for NPA to function effectively in responding to critical issues that affect the concession.
For instance, on the issue of dredging, the time lag between when the bathymetric survey is done and when the contract is awarded renders invalid the integrity and reliability of the survey which was the basis for which the contract was awarded.
What agenda would you set for the new management at NPA, led by Ms. Hadiza Bala-Usman?
Firstly, I want to congratulate the new management of NPA on their recent appointment and I pray for God’s divine wisdom and guidance for them throughout their tenure. Since charity begins at home, the first in the agenda should be to ensure the dredging of Calabar port and this entails both capital and maintenance dredging of the Calabar port. Another issue is to ensure that the port access roads are in good shape to guarantee hitch-free evacuation of goods in and out of Calabar and NPA should also ensure that Calabar is integrated on the national rail link.
On the national level, NPA should collaborate with other stakeholders in ensuring the passage of the Ports and Habour bill which has been in the National Assembly since the last dispensation. In addition, there is also a dire need for NPA to develop a 25-year port masterplan for the country which will help to shape the direction of our policy development in our aspiration to becoming a regional maritime hub.
Going forward, what solutions would you proffer to this low draft challenge facing the Calabar port?
I will identify the solutions as short, medium and long term measures. In the short term, immediate palliative measures may help to cushion the effect of such non-performance especially in the area of dredging. The 30% rebate on ships dues should be restored as an incentive for container liners that call at the port. Such rebate if granted, in addition to the concessions we also granted on our charges will help to reduce the port cost and make the port more competitive to container liners.
In the medium and long term, the contract for the dredging should be re-awarded and the process for the award should make the parties liable and accountable.
There are several problems bedeviling the Nigerian maritime industry today. In your opinion, what is the major problem in the sector and how do we resolve it?
Most of the problems revolve around the lack of planning and inconsistency in policy implementation. The gridlock that characterizes our port environment is a product of lack of planning. For example, the Apapa Port Complex which was built several years ago has evolved to become the biggest port in West Africa but unfortunately there has not been commensurate increase in the development of supporting infrastructure around the facilities such as road network and efficient rail network which would have helped to facilitate the evacuation of goods out of the ports.
On the other hand, policy inconsistencies have made it difficult for us to attract genuine investors and interested stakeholders to participate in our logistics value chain.
Give one last word of advice to the Nigerian government on the maritime industry
I would admonish the Nigerian government to strengthen the institutions that formulate and drive maritime policies of the nation through a collaborative effort with maritime stakeholders in repositioning the sector for enhanced service delivery, professional development and revenue generation.
By Kenneth Jukpor
