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Private Sector Impunity: Presidency, Amaechi Set To Tame Terminal Operators Heads may roll in NPA
- How concession agreement is misinterpreted
The Presidency and the minister of transport, Rt. Hon. Rotimi Amaechi, in particular, were recently miffed at what they described as “impunity” of the terminal operators operating at the nation’s seaport.
The terminal operators under the umbrella of Seaport Terminal Operators Association of Nigeria(STOAN) in a fresh battle, filed an action at the Federal High Court, Lagos restraining the Federal Government or its agents from regulating the terminals, a move that has been interpreted as a strategy to prevent the government from taking action when they increase terminal charges as planned.
However, the Federal Government has concluded plans to deal with the terminal operators as well as the leadership of the Nigerian Ports Authority (NPA), which, according to sources, the presidency learnt, instigated the STOAN’s action. Consequently, heads will soon roll in NPA, while the contracts of some of the terminal operators may be revoked as soon as the concession audit is completed.
Amaechi had severally questioned the justification for the port concession exercise on the grounds that it has not stimulated significant growth in the maritime industry, while the scale of concession agreement breaches by the operators is becoming unmanageable.
In an originating summons issued on behalf of the terminal operators by their counsel Femi Atoyebi, SAN and Chidi Ilogu, SAN they have sought amongst other reliefs, a perpetual injunction restraining the President of Nigeria, the Minister of Transport, the Attorney General of the Federation and the Nigerian Shippers’ Council (Port Economic Regulator) order of 2015.
Ruling on an exparte application by the plaintiffs for an order of interim injunction against the Defendants, Justice Idris ordered parties to maintain the status quo pending the hearing and determination of the motion on notice, which has been set down for hearing on 31st May, 2016.
Earlier last year, Justice Ibrahim Buba had ruled that the Nigerian Shippers’ Council was validly appointed as economic regulator of the Nigerian ports.
Terminal operators have continued to increase the terminal charges in disregard to the court ruling against that, with the argument that there is a provision for annual charges review in the concession agreement coupled with the rise in foreign exchange rate with has eroded the value of the naira.
However, while the concession agreement, states, “ the operations rates shall also be adjusted throughout the term on an annual basis in accordance with the Consumer Price Index(CPI)”, it equally states that “ the throughput fee( paid to NPA) shall be adjusted on annual basis in accordance with the Consumer Price Index(CPI)”.
Since the concession exercise, MMS plus gathered that neither the government nor its agent has reviewed the throughput fee, which should be paid to the government on weekly basis but the terminal operators pay yearly. According to the Spokesperson of NPA, Capt, Iheanacho Ebubeogu, there was no record that the throughput fee was increased, meaning that an increase in one should equally attract the increase in the other.
Corroborating him, the managing director of Ports and Cargo Handling Services Limited, Mallam Mohammed Bulango, said no review of any sort has taken place since the exercise ten years ago, but noted that the agreement made a provision for that.
He, however argued that the terminal operators deserve an upward review of terminal charges because of rising overhead costs, operational expenses, among other costs. “ We have to generate power ourselves, and the price of diesel has gone up by 40 percent, and we need to import equipment to keep the terminals running.”
Asked why terminal operators always circumvent the due process of discussing and negotiating with the relevant government authority, NSC, the economic regulator, he stated,” We will write letter and it will take ages for them to reply”.
In his reaction, the Deputy Director, Compliance and Monitoring of NSC, Chief Cajetan Agu, said ,” We cannot act on the letter because we are in court with them. If they want us to act on their letter on charges then they should withdraw their case from court.”
Industry observers were shocked at the latest court action by the terminal operators, as many wondered what they want to achieve, especially against the background that the port reform programme which has no legislation backing it was done by the government, yet STOAN is claiming that the terminals cannot be regulated by the government or its agent, thereby raising the question: Who regulates them?
The agreement, of which copies were made available to MMS Plus is clear on who regulates the terminal operators. According to Article 6 Subsection 7b of the concession agreement,” The lessee shall not make any increases in the operations rates, unless agreed in writing by the parties and any required consents of the government authorities have been obtained.”
Subsection 7a states thus:” The lessee shall ensure that operations rates shall be in accordance with applicable laws and competitive with the port and with other competing ports of Nigeria”
The agreement also made provision for the terminal operators to subject their operations to the supervision, monitoring and evaluation of the “Regulator”. Under the Tracking and Evaluation Performance section, “ The lessor shall evaluate the lessee’s performance of the operations on an annual basis”.
In a chat with the Executive Secretary/CEO of NSC, Barr. Hassan Bello, he said nobody had approached the Council for increment in terminal charges, neither was any letter written, saying that the Council is not averse to any increment but the due process has to be followed, even as the interest of the nation has to be considered.
