Nigerian ports undergo critical reforms to boost operations, trade
Globally, the efficiency of ports operation of a country is its major driver of trade and economic activities. In Nigeria, revenues from ports are about the third highest, behind oil and revenues generated by the Federal Inland Revenue Service.
Though the Nigerian ports are considered inefficient because of the huge down time in clearing and exporting goods, the ports remain a fulcrum of our economy.
The Lagos Chamber of Commerce and Industry (LCCI), in a report titled, “Nigeria: Reforming the Maritime Ports,” estimated that over N1 trillion annual losses in Nigerian ports and business community occur due to port inefficiencies. The LCCI also said that about 71 per cent of the time spent to import and 64 per cent of the times spent to export are linked to delays at the ports, making Nigerian ports uncompetitive to even the neighbouring Ports of Benin, Lagos and Togo.
Some of the known challenges that have made Nigerian ports largely inefficient over the years include infrastructure shortcomings, policy and regulatory inconsistencies, overlapping functions and duplication of roles among ministries, departments and agencies operating at the ports and high incidence of infractions.
Port reforms usually have the general objective of promoting global trade through faster clearance of goods, shorter waiting times for ships awaiting berth, and eliminating redundancies in the functions of the several regulatory, government agencies in the ports, among others.
For Nigerian ports to be efficient, reforms are critical. Already, under the President Buhari-led government, reforms have begun to happen, and in no distant time, they will begin to crystallise to real efficiencies in the ports.
Also, a 24-hour clearing regime has commenced, and the ease of doing business initiatives, backed by executive orders, are already being implemented at the ports.
Recently, the managing director of the Nigerian Ports Authority (NPA), Mrs Hadiza Bala Usman, said officers were deployed to provide 24-hour services in the ports, in compliance with one of the executive orders. All the agencies of government deployed to the ports are also providing 24-hour operations, she added, saying that this and other reforms are making Nigerian ports more efficient.
She also said that going forward, further concessions to the private sector of certain facilities would take place to further drive efficiency.
Cascading from the reforms, stakeholders have agreed that, to rev up efficiencies in the Nigerian ports, healthy partnerships with the government and the private sector is critical.
In recognition of the importance of efficient ship movements in Nigeria, the NPA has, through its PPP initiatives, executed several successful projects towards this objective. One of those successfully executed initiatives is the Channel management companies. We have the Lagos Channel Management Company (LCM) and the Bonny Channel Company (BCC). The companies handle dredging works in terms of capital and maintenance dredging of the channels into Lagos and Bonny. The Channel Management Companies are Public Partnership (PPP) arrangement between the NPA (60%) and the Channel Management Company, TCMC (40%), through a Joint Venture Agreement.
The Bonny Channel Company’s objective is to create and maintain a safe navigational passage for all marine users, to and in the Eastern Ports of Bonny Island, Onne, Okrika, and Port-Harcourt. The Lagos Channel Management Limited’s core operations are centred on the management and dredging of Lagos channels. The companies have managed the channels for about 12 years.
The BCC is said to have impacted positively on shipping operations in Nigeria. The company’s dredging of the Bonny Channel from fairway buoy to KP27.5 to a depth of 13.8m in 2009 enabled the Nigeria LNG Limited (NLNG), to operate round the clock, seven days a week with no tidal restrictions. In 2011, the BCC deepened the channel even further to accommodate larger vessels. The company is reported to have removed 14,000,000m3 of materials by capital dredging, 61,000,000m3 of material by maintenance dredging, installed and monitored 83 buoys, removed 45 wrecks (enabling safer navigation through Bonny Channel and River) and invested over 6,000 hours in training and knowledge transfer. The Bonny Channel is currently maintained at 14.3m draught.
The BCC management said the company was focusing on improving shipping activities in Nigerian waters by ensuring that the Buoyed Navigational routes are free of obstruction by focusing on continuous dredging, the removal of wrecks, maintenance of aids to navigation and by providing towage services.
As a result of the operations of the BCC, the WAFMAX vessel visited the Federal Ocean Terminal successfully on a ‘trial run’ in 2013 .The BCC made this possible by expanding the Onne Turning Basin to accommodate the vessel. Also, in 2013, the BCC did a towage trial run with WAFMAX at Onne port, the biggest vessel till date to enter the Onne Port. The trial run was successful and WAFMAX has since then been entering the Onne port.
According to a Due Diligence Report on the Joint Venture Partners (Dredging International N.V. Vinci and IPEM N.V) submitted to the executive management of the NPA, Lagos, Nigeria, the JV has complimented the technical capacity of the NPA with regards to marine operations, buoys works and the maintenance and capital dredging.
“It has ensured safe navigation at the required depth in an efficient and effective way. This has led to increase in flow of maritime traffic. This has transformed into more revenue to the authority. This has also earned BCC commendation from stakeholders” it said.
The report also said the works had been carried out in a cost effective way, based on the fact that competitive rates for third party jobs carried out are higher than rates charged to NPA by the BCC as per transfer pricing preliminary works done by the PWC on transfer pricing documents.
The LCM, on its part, said its works had greatly improved ship movements within its area of operations. According to the company, “While the LCM is now relatively well established, our continued belief is that with the co-operation of the concessionaires and private jetty operators, we will not only achieve the stated objectives for which we were created, but also surpass them. Already, dredging done in the last 12 years exceeds what had previously been done in the last 40 years, and our goal is to continue on that note and put Lagos at par with other major hub ports throughout the world.”
The LCM said it carried out an extensive visual and side scan wreck survey of Lagos ports, which identified the existence of over 70 submerged wrecks that required urgent removal to aid vessel navigation. As a result of this survey, the company commenced work and removed about 48 critical submerged wrecks along the Lagos channel.
According to the LCM management, “The company has built a culture of refurbishing all buoys every two years while the damaged ones are repaired within 24 hours. This is in addition to the reinstatement of shore beacons and upgrading of entrance channel buoys with active AIS transponders, while the East and West moles beacons were also refurbished.”
Industry stakeholders and maritime watchers are in agreement that the PPP has increased shipping activities and has ensured the smooth navigation of oceangoing vessels by making it possible for bigger vessels with deeper draught requirements to call on Nigerian ports in an efficient and effective way. This has resulted to increased cargo in the port, which has in turn helped to boost the revenue profile of the NPA.
JV works are carried out all-yearround, and lack of mobilisation fee and delay/ late payment by the NPA does not affect the operation.
According the JV partners, “The technical partners are capable and able to pre-finance the works to ensure continuous operation with their own equipment,” all to ensure increased and uninterrupted ship movements in and out of Nigeria.