CEO INTERVIEW There is increase in export of agric produce at ports – MPA MD
The Nigerian Ports Authority (NPA) management, led by the Managing Director/CEO Hadiza Bala Usman, was at the last week. She interacted with the newspaper’s editors and management team. Here, we serve you the first part of the interactive session. Excerpts:
It’s about a year now since you assumed office at the NPA. What are some of the major problems you encountered and how are you tackling them, especially now that the Senate has also announced an investigation into the authority’s activities?
One of the things that is topical is the ongoing investigation by the Senate Committee on Marine Transport. There was a resolution passed by the Senate mandating the committee to investigate the NPA on its dredging activities. Basically, our dredging activities are being done through three channel companies. We have the Lagos Channel Management Company, the Bonny Channel Management Company and the Calabar Channel Management Company. They do our dredging works in terms of capital and maintenance dredging of the channels into Lagos, Bonny and Calabar. These companies are joint venture companies where the NPA has 60 percent and the technical partners have 40 percent. They were entered into in 2006 in the case of Lagos and Bonny channels while the Calabar Channel was entered into in 2013 and commissioned 2014.
The concern they raised was on the huge amount of resources that are deployed towards dredging. The dredging components include capital and maintenance dredging. The maintenance dredging is to maintain a level of draft required for vessels to come in. Capital dredging is to dig to establish that depth and maintain the depth. We have noted the concerns around the resources that have been deployed.
When I assumed office, I also questioned the volume of resources deployed viz a viz the amount of dredging that is being done. In addressing that, I saw the need to institute a dredging optimisation study around all our channels. The study will determine the required bathometric depth across the channels and will provide guidance on siltation rate, and it will define the level of dredging works required on our respective channels. That will mitigate any form of dredging work that is not tied to quantities not data driven. We commenced the procurement of the consultant that will do the study to enable us have this data. We are at an advanced stage now and will soon issue request for proposal (RFP).
So when I saw the request by the Senate to investigate the channel management companies and the NPA, I welcomed it. But beyond investigation, we have to put in place structures to prevent a reoccurrence. Because we do a lot of investigation but what is the outcome? What do you hope to achieve? What mechanisms do you need to put in place to address this seeming high cost of dredging? When they say, they are investigating the high cost of dredging, if you investigate and discover it is high, what are you planning to do? For us in NPA, it’s beyond that the cost of dredging is high because we have to address it. In addressing it, we commenced the dredging optimisation study that will guide us going forward.
I welcome the investigation. I have put together all the data they require. I have notified them to come look at the data and they should also go to the channels, look at them to enable them physically see the and determine the dredging as it were. The dredging companies will also show them where the spurs for the dredging works are deposited to further guide them. This is as it relates to Lagos and Bonny channels. As regards the Calabar channel, this was entered into in 2013/214.
We inherited a dredging company that has done certain work that was questioned by the last administration. They had submitted invoices of 13 million dollars in the first instance, the invoice was paid but upon payment, there was a petition and investigation by the EFCC questioning the validity of the dredging works that were done. The EFCC embarked on investigation and requested that bathometric forensic auditing is conducted to determine if indeed the dredging work happened because there where questionable positions around the dredging work that had been paid for.
The NPA was mandated to engage a consultant to do the bathometric audit. I inherited that position. But I further received another invoice of $21m from the same Calabar Channel stating they have done certain amount of work worth $21m. We decided to constitute a committee to establish the validity of that claim. We did a detailed investigation, and the investigation provided a report which stated that, we were not able to verify the dredging work claimed to have been done within the time stated. We stated the dredgers had come in without the notification of the authorities in Calabar. The report questioned the entire dredging work that was claimed by the company. We also recommend that the $21m be subjected to forensic auditing as well.
In furtherance to that, we also established that the joint venture was entered into without following due process. The Bureau for Public Procurement had issued a memo to the then President stating that they had concerns with the technical partner of Calabar Channel Management Company. Also, the establishment of the company didn’t follow due process. This document was emphatic and it stated that the then president was misled about the company. We are seeking the approval of our board to determine what we should do with the Calabar Channel.
We have seen several layers of attacks from the promoters of the Calabar Channel Management Company even against our persons because of our position that the company didn’t follow due process. We also anticipate several layers of attacks on the ongoing investigation of their activities. But we have prepared ourselves to go the whole hog with the proponents of the Calabar channel. We are committed to unraveling the true position because we are sticking to the right thing.
Why running Intels. Can position? are you in battles with you clarify your
On Intels, we have two layers of relationships that are currently in conflict. Intels is the concessionaire to our terminals in the Eastern Zone. We had inherited a position where Intels had a monopoly on oil and gas cargo. There were recommendations from the last administration that gave monopoly to oil and gas cargo to Intels in Warri, Calabar and Onne. After a review of the industry, we agreed that recommendation was pertinent for the industry to thrive. We followed through with that recommendation and approval was obtained from the President that there will be no more monopoly in the oil and gas cargo and those cargo, like any other cargo, can be received in any port in the country. For us, this will enable the industry to thrive because you won’t be held hostage to a particular location where cargo must be delivered.
I believe providing enabling environment and opening up the oil and gas cargo will benefit Nigeria because you choose your destination based on price and other variables. There will also be competition among the service providers. Intels challenged the Presidential approval in court. We are currently in court with Intels but there is no injunction, no stay of execution, so we’ve gone ahead to implement. We have written letters to all the terminals notifying them there is no more monopoly and they can receive all types of cargo to the extent they have the facilities in their terminals to do so.
The second issues with Intels is to do with compliance with the Treasury Single Account (TSA). Intels has an agreement with the NPA to collect our revenues in the ports concessioned to them. Intels was appointed the managing agent. They receive the resources on our behalf and we pay them 28 percent of the value of collection every month.
The relationship as detailed in our agreement says Intels collects the revenue into their coffers and deduct the 28 percent due to them as the agent. Again, those revenue sources are tied to amortization, where a certain percent goes into amortizing a project. Intels deducts 28 percent, it also deducts the cost of amortization, and also deducts the cost of funds for that amortization and any balance of money left, they hand over to us. But with the advent of TSA, which takes root from the Constitution of the Federal Republic of Nigeria, there was a need to change that relationship. Based on this, the revenue should be collected into the coffers of government, Intels should then invoice the NPA on the 28 percent and we will pay. Also Intels will provide certificates for the amortization works that they have done and the NPA will pay them. Then the balance will be retained by the Federal Government.
We have gone through the process with Intels but they are opposed to complying with the TSA. They believe that the money should still come into their coffers. They have made
several layers of concerns about that. We have insisted that the policy of the government is above any contractual agreement that exists. There is a need for every business entity operating in Nigeria to abide by the policy of the Federal Government. This policy is not changing the amount of resources that accrues to Intels. The resources will be paid to them. They may have concerns about the time the money will get to them but with the fact that the money will be in our TSA account at the CBN, it will be an automated process that won’t be subjected to undue delays. We’ve made all that very clear to Intels but they seem adamant.
It’s not political as some people assume. It’s a function of sanctity and the national interest supersedes all other interests. When businesses refuse to comply with government policies and people reduce that to personalities, we are not being objective. With the removal of the monopoly, several other businesses will benefit. And these businesses may not have any political interests or personal affinity to anyone.
So it’s all about the Nigerian nation that will benefit. IOCs have even argued that oil and gas cargo going to a particular terminal makes the cost of doing business high. So this liberalization is a positive thing for Nigeria as a whole.
Stakeholders have also argued that this policy amounts to shifting the goalpost in the middle of the game. They’ve argued that, this policy reversal could stifle investments as it discouraged investors to enter the market? Is that argument not credible?
At the time of the concession to Intels, there was nothing like oil and gas terminal. No terminal was a dedicated oil and gas terminal from the beginning. We have all the letters from the BPE and the agreement that came through in the course of the contract.
There have been several approvals and reversals of approvals by past presidents. President Yar’Adua too had reversed an approval and indeed President Goodluck Jonathan had also reserved the approval on oil and gas terminal. This is alien to the concession agreement. But what’s more important is, how does that policy affect the government and Nigeria as a whole? If the government realized that removing the monopoly benefits the nation more, I don’t think there is anything wrong with government reversing it.
The attendant benefit for the whole nation is beyond the attendant benefit for a select group of people. The inconsistency of the policy revolves around Intels changing the terms of the contract.
You advocate the review of the concessions. Many of the facilities like scanners around the ports no longer work. We’ve seen recent scandals where goods have been cleared only be discovered later that they were cache of illegal arms. How do you think the review of the policies would stop these lapses?
We have looked at the agreements. Both the authority and the concessionaires are in agreement for the review of the concession agreements. Most of the agreements are over 10 years old and due for review. We have started the process of reviewing all the concession agreements of all our terminals. We will appoint a transaction adviser that will guide us in determining the financial model around each of the concessions because 10 years later, some of the projections are different and the numbers are different. We need to review our guarantee minimum tonnage. So we need to review the financial and infrastructural models.
On the scanners not working, scanners belong to the Nigerian Customs Service. But I’m a cochairman with the Comptroller General of Customs on the committee to develop a national framework for Single Window, the deployment of scanners at the ports and the ports community system. We have concluded the operational framework and the business plan for setting up an entity that will provide scanning services at the ports. The entity will provide the scanners, maintain the scanners and provide data to all agencies that need that interface.
The same entity will deploy the national single window, which is a very critical tool for us to compete with neighbouring ports. The framework should be presented to the Federal Executive Council in the next few weeks to obtain the necessary approvals to deploy. The challenge of having arms coming into the ports undetected is attributable to not having scanners. We do physical examination which is quite challenging because every container would have to be opened and be examined. The entity will prioritise the deployment of the scanners in the seaports before going to the airport and the land borders.
What about around your Heritage Bank? the issues money at
On assuming office, I discovered that Heritage Bank had our monies, about $24m. These are monies which our clients paid to the bank before the advent of TSA. We drew the attention of the CBN to that effect. Heritage confirmed that they will make payment to the authority. They have paid $4m so far to us. We have written several letters to the CBN and we have held several meetings with CBN and we’ve held several meetings with the Accountant General of the Federation. We have still not been able to get our monies from the bank. In one of the meetings, the CBN agreed to provide guarantee on the monies in Heritage Bank and we have written to the CBN to provide the guarantee because for us, we need to have our money. We are also looking at the interests since the time our monies have been with the
bank. W e have written to the CBN to sanction Heritage Bank so that we have our money.
Is it the same issue with Aso Savings and Loans?
It’s a bit different. Aso Savings is a staff contributory scheme.
One of your objectives when you got this job was to make the ports attractive to importers and exporters, have you been able to get more cargo since you took over?
The economy has not helped us in terms of increase in cargo. Also, government policies banning certain items from being imported affected us. For example, vehicles. There is a policy restricting the importation of vehicles of certain categories. The policy also imposes high duties on vehicles of certain categories. These have reduced the amount of cargo coming to Nigeria. But with the 24 hours ports operations in compliance with one of the Executive Orders, we have our officers deployed to provide 24 hours services, and all agencies of government deployed to the ports are now also providing 24 hours of operations. This will enable us clear more cargo.
We have not seen any significant increase in imports but we have seen marginal increase in exportation of certain agric produce. We have reached out to our terminal operators to create priority desks for the export of agric produces and solid minerals. We have issued a standard operations procedure on how to prioritise export of agric produce. All the terminals are committed to exports. We have communicated to the Federal Ministry of Agriculture to this effect.
One of the challenges around agric export is having rail access to the hinterland but government is committed to resolving that. We need to have a good transport network that will ensure food produces get to the ports. As soon as GE gets the concession, they will deploy railways to the ports for evacuation of cargo and bringing cargo to the ports. We are also executing the Presidential Order around eliminating touting in the ports, prevention of collection of bribes by officials and we have issued a directive that only on-duty staff are allowed into the ports.
We have also to some extent tried to reduce the human traffic into the ports. Also only the clearing agents with Customs license are only allowed to go into the ports but only if they have business in the ports. We will begin to issue port passes, and we will deploy biometric access into our ports as it’s the practice globally in compliance with ISPS Code. We have advertised for the vendor that will deploy the biometric access. This will be the solution to touting in the ports.
We also have the executive order collapsing all cargo examinations into only one unit. We will start implementing that on the 18th of July 2017. So once a cargo is examined, no government agency will further inspect the cargo. I and the CG of Customs are anxious to ensuing full compliance on that.
We also noted some agencies that are operating in the ports that are not a part of the eight approved to function in the ports. We have communicated to them to remain outside the port and only come in when their services are required. The framework has been communicated to them on how to implement their functions without necessary domiciling in the ports. Through the Presidential Committee on Doing Business chaired by the Vice President, we are reviewing the eight to determine if it’s the international best practice. The recommendations will soon be ready. The agencies allowed are: The Nigerian Ports Authority, NIMASA, Nigeria Immigration Service, the NDLEA, Customs, Port Health, the Nigerian Police and the DSS.