The Federal Government needs to review all the leases granted by the Nigerian Ports Authority and Oil and Gas Exports Free Zones concessions from 1999 to date, if it is desirous of bringing sanity to the nation’s maritime sector and totally break the perennial cases of underhand deals in the sector.
This position forms part of the consensus of experts who spoke to our reporters in the course of investigating the seeming rot in the sector and how the government can realise its goal of earning 20 per cent of its internally generated revenue from the industry.
Two firms cited in some of the deals are Eko Support Services and Intels.
According to the experts, lofty policy measures which ordinarily should have helped to deepen government earnings have been thoroughly mismanaged to work for some favoured private sector players and their collaborators in the public service, leaving the Federal Government as the loser.
An example that was cited is the Oil and Gas Export Free Zone. Only on April 17 last year, according to the website of the Oil and Gas Export Free Zone Authority, the Federal Government approved the Oil & Gas Free Zone in Lagos under an arrangement it described as private/public participation model with a company called Eko Support Services (ESS) as the key driver.
Our sources say that this arrangement riddled with several holes and leaving many questions unanswered indeed, had the Federal Government holding the short end of the stick.
According to a letter by then Minister of Transportation written to Minister of Water Transportation dated 4th June 2008, with the heading, ‘Re: Proposed Development of Port Facilities at Bullnose, Lagos Port Complex, Apapa by Messrs Eko Support Services Limited-Request for Approval-in-Principle’: “In response to the Federal government’s initiative for private participation in port development, the above mentioned company (ESS) submitted a detailed proposal for the re-development of Bullnose Terminal of Lagos Port Complex that is presently in a state of disrepair”.
Following what the minister described as the appraisal of the proposal by a technical committee, and the vetting of the proposal by Messrs Coastal and Reclamation Engineering Services (CARES), NPA’s Technical Channel Auditors, the Ministry of Transportation recommended the approval of the project at an estimated cost of $124 million.
As part of the arrangement, $124 million recommended by CARES (as against $ 127 million proposed by ESS) was accepted, pending the determination of the actual cost from the final design, while the project cost would be amortised through service boat charges in all the ports of Nigeria.
Also, the cost of financing of 16 percent was to be applied to the cost of the project, as the full rental value on the developed facility would apply on completion of the project.
The lease was for an initial period of 25 years.·
An investment banker who analysed these terms for this newspaper said, “In plain language, Eko Support will use NPA’s revenue (service boat charges) to redevelop NPA’s terminal, plus 16 percent cost of funding that will be borne by NPA, while Eko Support will still have the sole ownership of the facility for an initial period of 25 years.
“No serious government should agree to go into such one- sided deal. It is simply a fraud perpetrated against this country and government officials should be held accountable and culpable in this instance. ”
Another industry player said, “From the word go, the arrangement was one-sided and secondly, pre-arranged. If this was a terminal that needed to be redeveloped and the NPA does not have the fund, due process and transparency require that such initiative should start with open tender, where all interested bidders will be invited to tender.
“Why the hurry to enter into this seemingly unholy partnership with Eko Support? Under the due process regulation, what transpired between NPA and ESS is unacceptable, if not totally illegal. Who knows how much would have been saved if other bidders were brought in.’’
There is also the major issue of the Nigeria Export Promotion Zone Authority (NEPZA), which statutorily is mandated to establish, license, regulate and operate a highly efficient free zones by providing a highly competitive incentive scheme, excellent support facilities and service for the purpose of creating an enabling environment for export manufacturing and commercial activities.
On NEPZA’s website, the 30 names of licensed free zones in the country are listed but Eko Support Services is not one of them.
Although some agree that Oil & Gas Export Free Zone Authority licensed ESS, industry players say there is no law that gives any agency the power to usurp the authorities of NEPZA.
Although the Eko Support Service’s deal is seen as a rip-off
which has deprived the Federal Government of maximizing revenue earnings from its assets, industry insiders contend that such deals and arrangements are legion in the maritime industry.
They cited, as an example, the subsisting practice where Intels, a terminal operator and, by that fact, an interested party, still collects vessel dues on behalf of NPA. Knowledgeable insiders disclosed that the arrangement has been perfected to work so well in favour of Intels, that it remits what it deems fit to NPA. There is no form of transparency and no means for NPA to monitor the process of collecting these revenues by Intels, said insiders. And the indifference of NPA officials to Intels’ activities in this regard, said a distressed terminal operator, only signposts their cold complicity.
In 2008, late President Umaru Musa Yar’Adua, having found this practice so objectionable, issued a directive cancelling the Intel Contract. In a letter dated 16th September 2008, President Yar’Adua not only directed that the arrangement be discontinued, he ordered NPA to put it to public tender and that Intels, being an interested party, should not participate in the tender.
Following President Yar’Adua’s untimely death however, NPA discontinued the implementation of the directive and returned Intels as its revenue collector, leaving the private sector player to remit whatever amount it claims to have collected at its own convenience. However, Goodluck Jonathan did not follow up on this directive, leaving the Federal Government to lose revenues in the region of millions of dollars.
The contention in the industry today is that NPA’s economic survival is at the discretion of Intels.
Knowledgeable industry insiders disclose to our reporters that Intels has more than a passing interest in ESS, saying that Intels is synonymous with ESS and that the arrangement in respect of the redevelopment of Bullnose Terminals has only further entrenched Intels in the nation’s maritime sector to the detriment and interest of a government badly in need of every naira it can generate.
A maritime expert who sought anonymity because of the sensitive nature of the issue, told our correspondent that the only way out for the Buhari government, if it must realise its goal of generating 20 percent of its internally generated revenue from the maritime sub-sector, is to revisit all NPA leases from 1999 to date. Experts say government could easily earn $50bn- $60bn annually if the monopoly of Intels and relentlessly rising monopoly pricing are ended. The Federal Government must also end the system which permits collection of government revenue without any auditing or effective accountability, say industry players.
In an industry stakeholder’s effort to press home this impunity, he said “President Jonathan signed a directive stating that all Oil and Gas related cargo must be handled only at the designated terminals at Onne, Warri and Calabar on April 17th, 2015.
These three ports are controlled by Intels. And this directive completely violated the concession agreement. The case is in court. But curiously, President Jonathan on the same April 17th, 2015 also allegedly, signed approval for an Oil and Gas Free Zone under ESS in Lagos according to the Oil and Gas Free Zone Authority website. How could President Jonathan on the same date abolish the so called ‘Oil and Gas related cargo’ from berthing in Lagos and at the same time approve an Oil and Gas Free Zone in the same Lagos?’’, he asked.
“No question, the Buhari administration has a huge task to unravel the quantum of corruption and impunity at the ports,” he concluded.
By our reporters
