The Federal Government through the Nigerian Ports Authority (NPA) recently issued a directive that reviewed the concept of categorisation of cargoes handled by port concessionaires popularly known as terminal operators. The new policy seeks to introduce an internationally-accepted standard of categorising ports and terminals under bulk cargo or multi-purpose terminal. This will discourage the practice of categorising terminal by cargo, which created ‘unhealthy monopoly’ that reserved exclusive right to few to handle oil & gas-related cargo. In this interview with BDSUNDAY, Fidelis Oditah, a maritime lawyer, spoke on the implications of the new presidential directive, which according to him will deepen the market, enable competition and open up opportunities for other operators and importers to choose their destination port. Excerpts:
Some operators sometime ago kicked against a policy the alleged encouraged monopoly in the oil and gas cargo operations at the ports. Can we say that the new policy by the Federal Government has calmed the frayed nerves?
I do not know that there is presidential directive that says monopoly should go on. I think the presidential directive said many things. First of all, that general practice is to categorise ports and terminals to bulk cargo and multi-purpose. There is no such thing as categorisation according to cargo. If I say, this is the cocoa port or oil and gas port; that is what President Jonathan tried to do. I think he was misled by trying to designate, particular ports for oil and gas. By doing that you are trying to designate ports and terminals according to the cargoes that arrive there, which can only distort competition. Apart from that, if you take a step back, in 2006, the Federal Government entered into 25 concessions on the basis that some were going to be bulk terminals, others were going to be cargo terminals and there would be multi-purpose terminals. There was no provision for oil and gas or cocoa or Arabic gum or cashew nut; there was simply no categorisation based on the type of cargo arriving. What that meant was that it enabled concessionaires to invest monies in developing infrastructure along their coastal belt. And also allowed them make projections as to what types of returns you get. It wasn’t based on a particular type of cargo. They signed agreements which were binding, telling them they could receive cargoes. If you are a multi-purpose terminal, for example, you could receive every cargo. For someone to turn round after signing in 2006; and then in 2015, says to you, all oil and gas cargo must go to Onne or Calabar or Warri, it creates many problems. First, it distorts competition. I suppose that is why people talk about monopoly.
The attempt to monoplise oil and gas cargo is wrong. It goes against all the principles underpinning procurement law. The whole essence of public procurement is that you procure your services on a competitive basis, transparent basis and promote competition on a level playing field. That is the only way that users of the facilities or services will get value for money. If you are a monopoly, you can charge whatever you like. That is the first problem.
The second problem is that while distorting competition in that way, it means that some of those who had invested and borrowed money to invest (because people don’t have all these monies sitting idle waiting to be deployed), will not be able to repay their loan and then they become insolvent just because of one person’s desire to monopolise the entire business, especially in an oil and gas-dependent economy like this. If the economy were very diversified, perhaps people will not be too hung-on.
Thirdly, the attempt (to monopolise) also impacts on job creation. These terminal operators and concessionaires all have employees and they generate direct and indirect employment. When you kill them off by concentrating all the business in one person who you call a monopoly- oil and gas terminal, it simply means that the local economy suffers because people who were employed will be laid off. Whereas by allowing free competition people are able to plan. That is part of the problem in Nigeria and many developing countries- the inability to plan because governments keep changing their policy. This is something that is capital intensive. You need to take a five-year view and you borrow money and invest on the basis of five to ten years. Then one government comes two years along the line and says we don’t want it, XYZ company should now be the only one doing it, how do you repay you loan?
Then when you are talking to government officials, it is like you are talking to a wall. They say, ‘I am directed to’. That is the language of the civil service. Nobody takes responsibility. They are always directed to and they cause a lot of difficulty.
That is the background to it. That is why in 2015, we went to court to challenge President Jonathan because we thought it couldn’t possibly be in the interest of Nigeria, as a country. How could it be in the interest of a nation for you to say only one person should monopolise oil and gas business, even if it is logistics or importation, why? How could anyone think that it would be beneficial to Nigeria to have just one person as opposed to having many people? If you have many people, there will be some competition. Imagine if I were the only landlord in the whole Victoria Island, Lagos, instead of people paying N5 million, N7 million or N10 million as rent, they will be paying N50 million because you don’t have options; so you must always deepen the market by encouraging competition. President Jonathan must have been misled because I cannot see how he could have done that. He had directed that every oil and gas cargo must go to oil and gas terminals.
Do you think there was any political undertone to that?
Whatever interest it tried to protect, he was very misguided because when you are president; you are president of the whole nation. You cannot be president of a section or a political party or for your region. For example, the fact that these ports are eastern ports- Onne, Warri and Calabar- and they are all controlled by the same company; when you say everyone must go there, you give room for political insinuations because the ports are in the Niger Delta and he being from that region wants to do some kind of good service to that region. But I would not really credit President Jonathan with the sufficient presence of mind to think like that. The simplest thing he would have done would have been the East-West Road, which he did not do and therefore, he cannot even go to his village now. Why should he be concerned about the location of oil and gas terminals when he has not worried about the basic infrastructure, which is the road that he and everyone uses. It just shows how selfish they are. It wasn’t strategic. I believe that President Jonathan was entirely misguided and to do it in the twilight of his administration was terrible. Having lost the election on the 20th of April, he comes up with this crap called change of policy. He was behaving as if the country belonged to him.
How did that decision affect the nation’s economy?
Of course, that meant that there could not be further investment in the country. Why would you go borrow money to invest in a sector which is monopolised by one person? To make it worse, it led to double handling. It meant every person must go to these three ports first to pay your dues. Even for the consumer and the importer, it was increasing the operational cost unnecessarily. These costs are going to be passed to the final consumer of the goods. You ask yourself, how could this happen in the interest of anybody? Consider the delivery time, because you are going up and down. You are increasing cost in every possible way and then you are killing competition because you are saying to me I should come to you; imagine as lawyers, you say to me that I should file all my cases at Mr. Tarfa’s or Mr. Olanipekun’s office? I wake go there to file the case before I then take it to where it is supposed to be. How could that possibly engender completion? It was just designed to benefit one person only. That is what has characterised politics in Nigeria- that people fail to rule for the benefit of the masses. They rule for the benefit of a few people. It is impossible to see how a rational person could possibly think that it is in the interest of any Nigerian to create a monopoly in any sector. You can see that we don’t have the framework for monopoly laws. Various monopolies have lobbied the government to ensure that the people continue to suffer.
What has happened to the matter you took to court?
We took President Jonathan to court and it was interesting because he had four weeks to go, but since he had time to issue this policy directive; we also felt that we had time to quickly stop him in his tracks, so we went to court. The directive of Jonathan was conveyed in an NPA letter of 27th of April, 2015; so we went to the Federal High Court to get injunction against the implementation of the Jonathan directive. We joined President Jonathan, the Attorney General, the Ministry of Transport and the National Assembly; because the National Assembly was also at that time trying to amend the law, so as to create the monopoly, which itself was sickening. Imagine the National Assembly trying to make laws that every cargo must go to a particular port. That is what happens when a country is in the grip of a certain interest that is trying to feather their own nest. We got the injunction, because we were trying to prosecute the case as quickly as possible, but then the people who are beneficiaries of the monopoly applied to join in our case. We didn’t sue them. Our dispute was with the government, but they applied to join and the court joined them.
The government was very interested in the case because it was going to review what was happening, but for these interested parties where the beneficiary of monopoly kept making submissions and filed all sorts of claims. Following the government’s new directive, we then took steps to discontinue litigation. One of the things that the government said to us was that we should withdraw the pending suit against the Federal Government; in order to ensure a litigation-free environment in the maritime sector. We filed a notice to discontinue and the government said they were happy with the application we filed, but these same interested characters said they don’t want us to discontinue. Have you ever seen such a thing? They are contesting our application to discontinue the case that we issued which we did not join them. They were the people who gate-crashed into our case, we did not make them defendants. And now we want to discontinue, they said we can’t terminate it; we must continue.
What interest would that serve?
I think for them, they probably think that by opposing the withdrawal of our case, they can then go back to the government and say that LADOL has not complied with one of the terms with which the government reversed the policy. That must be it.
But your willingness to discontinue the case is apparent?
We have filed. It is not a question of it being apparent. We have filed a notice of discontinuance, which is the normal process when you want to get out of a case, you file a piece of paper, giving notice that you want to discontinue your claim completely or you might file and say you want to withdraw against a particular individual. In this case, we are not withdrawing against an individual; we want to discontinue the whole case. When we were in court recently, they said the judge shouldn’t grant the order because they were going to file something. You can see the monopoly fighting back, just like corruption fights back. It is very shameful. We would thought that the policy which the government communicated recently would encourage investment and improve port infrastructure, create competition in the sector. And competition is always good for the consumers. It improves product quality, service quality and reduces cost.
If you were to anticipate their next legal move, what do you think it would be?
I don’t care about them. I believe we must always do something which is legitimate, proper. I do not see how one company can hold up the interest of an entire nation. While other concessionaires are borrowing money and investing their own capital, this monopoly is collecting government money without any accountability. They say, I expended N2 billion, I collected only half. There is no proper audit to know whether the expenses which he claimed are legitimate; whether the monies which he said are correct or if it has collected more. It is just a drain pipe to waste public fund. The fact that there are Nigerians who are supporting it; who are pushing them because of what they are getting. It is very easy to compromise people. You give money and people are behaving like headless chickens. It is very disappointing. When you open up a sector, you encourage a lot of direct and indirect employment. People forget the impact of employment. It is not just that you have money to take home, you pay your bills, you pay your PAYE, and you pay your pension. It means that in a system like this where we don’t have social security, you now become the provider for a whole lot of people. Apart from that you contribute to the local economy. If there are shops around here, you are able to go to those shops to buy goods and services and then they are able to employ people. That is why you are able to talk about direct and indirect employment. That is really how every economy grows. You cannot want to do it alone; so that everybody eats from your palm.
I do not see how you want to kill local businesses for the benefit of foreign investors who have brought no money; who are using our money to make their own investment; using our own money to collect and repay without any form of audit. That is why they call us a Banana-Mickey Mouse republic. If we were proper people, how can you allow that? You don’t know how much they collect; you don’t know how much they spend. They just tell you what they like and then you are falling all over yourself.
What are the legal issues behind their trying to stop you from discontinuing the case?
I don’t know the basis. You have to understand this. When I went to court, I went on several premises. First, my client was granted a lease of land by the NPA. Under the lease, you have certain rights. Just like the landlord of this property has given me a lease; so the idea that having granted me the lease, you turn round to say I cannot carry on my business doesn’t make sense. One of the things they said in that letter was that they should re-locate the Ladol facility from there to Bayelsa, which is silly. If you want to create a fabrication and integration facility for your people of Niger Delta, you should go and build one for them, not to tell a private person to carry his business and go to your place. It just tells you the impunity and the abuse of power in the system.
Two, LADOL itself is part of Apapa Port. It doesn’t need any further designation. The government gave its approval to carry on the business of deep offshore logistics. Looking at it, why do you want to concentrate all your logistics business in the eastern ports as opposed to encouraging western ports? There are many deep offshore oil fields that are closer to Lagos than to Port Harcourt or Onne. Why would you increase their operating cost by saying they must all go back to that area? The Niger Delta area itself is restive and you are asking us to concentrate the entire oil and gas logistics to that region so that they can hold the entire nation to ransom. Does it make common sense for you to try and reduce the risk by opening up competition and encouraging facilities along the coastal belt rather than concentrate in an area that you know is very unstable, very restive and has capacity for disruptiveness. It is very difficult to see anything positive in what the last administration did.
