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Making the ports efficient, competitive - THE NATION

FEBRUARY 11, 2019

by MUYIWA LUCAS

Generally referred to as the ‘Gateway to the Economy’, the nation’s seaports remain critical to economic diversification. But, for the ports to play their critical role of driving diversification, operators and industry stakeholders say there is an urgent need to ensure that they become more economically efficient and competitive. They argue that efficiency ports will benefit the maritime industry and the economy more. Assistant Editor, MUYIWA LUCAS reports.

It has become an annual routine, one filled with high hopes for the sector. However, the poser by the year end will be to what extent are these hopes realised? Last week, the Federal Government, through the Nigerian Maritime Administration and Safety Agency (NIMASA), released its maritime forecast for 2019/2020. Under the ambitious forecast, the government expects the maritime industry to contribute 10 per cent to the country’s Gross Domestic Product (GDP).

The forecast, the second in the series, tagged: “Harnessing the Maritime and Shipping Sector for Sustainable Growth”, aimed at giving direction to investors and stakeholders in the industry in their planning and investment decisions as part of efforts to attract more foreign direct investment to the economy. Major plans covered by the forecast are the economic environment, the maritime industry (local and global), regulatory framework, and emerging opportunities and challenges.

NIMASA Director-General (DG), Dakuku Peterside, who reckoned that the sector held high hopes for the country, revealed that the forecast will address how emerging trends in the global maritime industry would affect the Nigerian maritime sector as well as domestic factors that will influence the sector.

“The maritime sector has the potential of contributing at least 10 per cent of Nigeria’s GDP in no distant future, as Nigeria has the biggest market in Africa; and generates about 65-67 per cent of cargo throughput in West Africa, and 65 per cent of all cargoes heading for these regions will most likely end up in the Nigerian market,” the DG said.

The NIMASA DG also said the government has made consistent efforts to drive changes in the maritime and shipping sector through regulatory and infrastructural developments. He added that the main public bodies regulating the maritime and shipping sector had all keyed into the government’s strategies to reform the operating environment and improve on the country’s ease of doing business index, which has the potential of attracting more businesses to the maritime industry.

A foremost freight forwarder, Lucky Amiwero, shares the views expressed by Peterside. He is optimistic of a bright year for most major ports. Looking into his crystal ball, Amiwero, who is the President, National Council of Managing Directors of Customs Licensed Agents (NCMDCLA), foresees a continued uptick in cargo for Apapa and Tin Can ports. He was, however, quick to caution that not all the ports will escape the pressures of rising volumes on infrastructure constraints.

Perhaps realising the importance of maritime business to the economy, the Akwa Ibom State government, last year, announced the Power China International Group Limited Consortium (Bolloré-PowerChina Consortium) as the preferred bidder for the states’s Ibom Deep Seaport Project (IDSP). Upon its completion, the IDSP is expected to bring smart, world class port handling capacity to the doorsteps of Akwa Ibom State and serve the cargo handling demand of the West and Central African countries, including states in the Southsouth as well as Southeast regions of the country.

The Secretary to the State Government, Emmanuel Ekuwem, expressed confidence of a boom in the state’s economy upon the completion of the project thus: “We are confident that the IDSP will be pivotal to the economic development of the state and the surrounding regions.”

One measure to shore up the efficiency of the ports, according to Amiwero, is for the port managers to build up the refrigerated cargo ability and capacity of the ports, as well explore expansion plans for specialised cargoes.

Vice President/Chief Executive Officer, ENL, Princess Vickky Haastrup, in an earlier interview with The Nation, argued that the maritime industry has not been given enough attention, notwithstanding that port is the gateway to  the nation’s economy.

“When you come to Apapa, or Tin Can Island, you will know how well our economy is doing in terms of imports and exports. So, I don’t know why enough attention is not given to this sector; why we have such a decayed infrastructure. The access road to the port is impassable. Getting to the port is still a nightmare. It could take you four to five hours to even have access to the port operation,” she said.

Stakeholders are of the opinion that if port operation is made smooth this year, and a proper enabling environment is provided, then the year will be more rewarding for the industry. One of the steps to ensuring such smooth operations is for government to take a critical look at the number of government agencies at the ports, which is viewed by majority as being an obstacle to operational efficiency. Some of these agencies include Nigeria Customs Service (NCS); Nigeria Food and Drug Administration Commission (NAFDAC); National Drug Law Enforcement Agency (NDLEA), Nigeria Agricultural Quarantine Service; Port Health; Nigeria Immigration Service; Police and Department of State Security Service.

Haastrup described the existence of  plethora of agencies as “another bottleneck”. According to her, nowhere in the world does such number of agencies exist in the ports. “That’s not done anywhere in the world. I don’t know why NAFDAC is back. What is NAFDAC coming to do in the port? I don’t understand. They do not have to be present in the port unless they are called as the need arises. If it doesn’t arise, what are they coming for? Things like these, ultimately add to the delay in cargo clearance in the ports because everybody wants to feel important. Everybody wants to exert their authority. That’s how it’s been happening. We’re talking about ease of doing business,” she explained.

Operators in the industry are convinced that if infrastructural dearth at the ports are addressed, and also ports and cargo operations decentralised, the port business in the country would be more beneficial to all involved in the industry.

For instance, the Apapa port in Lagos, which began operations in 1970, was built with a capacity for 30,000 cargoes. Now, 49 years after, the same port harbours about 80,000 cargoes but without adequate infrastructural facilities to make it run effectively and efficiently.

This development, stakeholders contend, makes it imperative for the government to ensure that ports in other parts of the country are positioned effectively for operations. Doing this will reduce the pressure on Lagos Ports. For instance, the Lagos ports, with a capacity utilisation of about 50 – 60 per cent presently, can shed some of this for the ports in the Southsouth – that is Warri, Port Harcourt and Calabar, with a combined capacity utilisation of about 25 per cent. This submission is important, considering the impact it will have on cargo movement, especially when the volume of cargoes transported by road to this region is considered.  Sadly, the Onne Port, which is fairly busy because of the oil and gas operations it handles also begs for good road infrastructure, just like its Lagos counterpart.

The Association of Nigerian Licensed Customs Agents (ANLCA) Vice President, Kayode Farinto, regretted that Lagos Ports have become an embarrassment, especially when the revenue generated on daily basis from the place is considered.

To make the ports perform better this year, Farinto said: “If the road is fixed, about 70 per cent of the problem of Lagos port has been solved.  The congestion on the sea and the road will be solved, and it will be better for all.”

Yet, to exporters, the tariff charged and cost of clearing cargoes have become an important aspect that should be addressed if the industry is to be better positioned for business.

A freight forwarder, who identified himself as Mr. Tony Okafor, bemoaned the cost of clearing cargoes and delivering same to their destinations, describing it as “ridiculous”.  “Our ports  is the most expensive in West Africa and coupled with the bank charges on the money loaned from the bank, everything is frustrating.”

He lamented that given the parlous state of the roads around the ports, there is no cargo that does not go into demurrage  because the shipping companies will start collecting money immediately the cargo arrives at the port.

Haastrup agreed: “When we talk about increase in cost of port business, everybody at one time shouted – terminal operators, but we have been proved right, that it was not terminal operators. You have NPA, NIMASA, freight forwarders, Customs Service, etc.  How many times has Customs Service increased charges? There is a wide gap between the Customs duty paid here and that in Benin Republic. Maybe we also need to see the Customs duty in Benin Republic and look at Customs duty in Nigeria. I’m not condemning the Nigerian government. I’m just trying to tell you that it’s not about terminal operators’ tariff. In Nigeria the duty on cars goes as high as 70 per cent, whereas the in Republic of Benin, it is like 10 per cent. That’s why you see a lot of smuggling because it is more convenient and far cheaper for people to go to Republic of Benin and try to smuggle into Nigeria. That’s why smugglers are mounting pressures on Customs Service because of that disparity and wide margin in Customs duty,” she explained, adding that NIMASA’s levy, compared to other agencies of such in Africa and in other parts of the world, remains high.

Regulator’s intervention

Transportation Minister, Rotimi Amaechi, informed stakeholders that the Federal Government had initiated reforms to facilitate the development of the “Blue Economy”, saying this involves the enactment of laws and domestication of relevant international instruments.

These reforms, when implemented, will aid operations in and around the ports. For instance, over 40 per cent of the space at the Lagos Port Complex (LPC) and the Tin-Can Island Port occupied by empty containers, which do not augur well for port operations. In fact, one factor that stakeholders in the industry are unanimous on is the issue of holding bay. A holding bay is where containers are kept or stored after offloading their content.

However, findings have revealed that many shipping companies do not operate holding bays, contrary to the terms of their licence. This has made stakeholders in the sector to submit that having such a facility and making it efficient, will prosper the industry this year and beyond.

At the International Association of Port and Harbour (IAPH) Africa Region Conference held last September in Abuja, President Muhammadu Buhari aptly captured the importance of cargo evacuation thus: “After the issues of adequate security and transparency, the one other important factor deciding the competitiveness of ports is that efficiency with which cargoes are evacuated to and from the ports.”

It is therefore, instructive that early this year, the Nigerian Ports Authority (NPA) has begun to enforce the delivery of all empty containers at designated shipping companies holding bays, to manage the traffic in and around the Lagos ports. The regulator also vowed to sanction truck drivers, who failed to comply with directive against bringing empty containers directly to the ports. The Authority has also advised shipping companies to stop using their terminals at the port to store empty containers and no truck driver or owner must be allowed by any NPA official and terminal operators to bring empty containers into the port after delivering goods to importers. The terminal operators are to also declare the number of empty containers in their terminals periodically.

New incentives

The Nigerian economy relies heavily on trade and over 70 per cent of the country’s external trade is routed through the Apapa habour. The poor state of access roads to the habour, home to the two biggest seaports in the country, has grown into a national nightmare with a paralysing effect on socio-economic life within Apapa, including the evacuation of cargoes from the Lagos and Tin Can Island ports respectively.

Last December, NPA Managing Director, Hadiza Bala-Usman, arising from a meeting with stakeholders in the sector, rolled out a regime of palliatives to reduce the financial burden of shippers transacting business in the port, facilitate quick evacuation of cargoes and encourage faster return of empty containers to the port, among other benefits.

For instance, effective from December 18, 2018, the rent-free period for cargoes stowed at the terminals was increased from three free days to 21 free days, for the next four months. The demurrage free period on return of empty containers was increased from five days to 15 days as well.

To further ameliorate the hardship faced by cargo owners, shipping companies were directed to immediately deploy barges to evacuate empty containers from the port and take steps to clear the backlog of empty containers under their purview. In addition, terminal operators were advised to negotiate and grant waivers to consignees to facilitate the evacuation of these cargoes, and mitigate against huge financial loss for the terminal operator as well as the consignee.

 

Intermodal Connectivity

The NPA, it was gathered, is keen on establishing a seamless intermodal system that allows cargoes to be evacuated from the nation’s port by road, rail and inland waterways. This effort, it is said, would ultimately eliminate delays and make Nigerian ports globally competitive.

It will be recalled that in 2013, there was an attempt to commence a scheduled freight service for the evacuation of cargo by rail at the nation’s premier port in Apapa. According to the Nigerian Railway Corporation, Apapa and Onne seaports are currently the only two connected by rail of the country’s six major seaports.

But, despite being the cheapest mode of transport, the percentage of cargo evacuated by rail from the port, remains abysmally low, leading to the congestion experienced at the Lagos ports, since the huge volume of imports being evacuated are mainly by road.

It is believed that having an efficient interconnectivity will improve the country’s economic competitiveness as targeted under the Economic Recovery and Growth Programme (ERGP). Hence, it becomes imperative that every port must have the compliment of rail infrastructure.

The NPA projects that by the end of 2021, the ports will be linked by standard gauge railway across the main North-South trading route.

 

Improved cargo clearance

According to the NPA, the regulator, like other IAPH Member Ports, is committed to the provisions of the Convention on Facilitation of International Maritime Traffic (FAL) and  has adopted measures that would keep to a minimum, time spent for port traffic flow arrangements  such as loading and unloading; customs clearance; and provision of aids to navigation.

Besides, the regulator, having succeeded in helping shippers to regain the right to choose the port to land their shipments, irrespective of the type and quality of the cargo, has also stepped up collaborative efforts with the Nigeria Customs Service (NCS) and other sister agencies on the implementation of the National Trade Platform (NTP).

When achieved, the initiative is believed to have the capacity to revolutionise the cargo supply value chain in the country as it will make cargo clearance simpler, faster and more transparent. The project comprises the deployment of a National Single Window along with the provision of scanning services at all the ports.

The NIMASA DG also disclosed that the government had made consistent effort to drive changes in the maritime and shipping sector through regulatory and infrastructural developments. He added that the main public bodies regulating the maritime and shipping sector had all keyed into the government’s strategies to reform the operating environment and improve on the country’s ease of doing business index, which has the potential of attracting more businesses to the maritime industry.

If Dakuku’s assurances of NIMASA’s resolve to push for reforms that will help grow the maritime sector prevails, then government, stakeholders said, would have ensured that freight forwarders and all involved in the sector, are not frustrated in the process of carrying out their business, while the ease of doing business mantra would have been aided.

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