Maritime Sector Still Struggling 58 Years After

Eromosele Abiodun posits that despite the gains of ports concession, the Nigerian maritime industry has been held back by corruption, policy inconsistencies

With its 853 nautical miles of coastline located on the corridor of Gulf of Guinea and the Bright of Benin, 200 nautical miles of Exclusive Economic Zone, 30,000 kilometres of waterways, comprising over 50 rivers, eight out of the 36 states having littoral status coupled with vast and fast growing population estimated at more than 200 million, Nigeria has no reason not to be a force to be reckoned with in the global maritime community. That, however, is not the case.

Like many sectors of the economy, the maritime sector is also bedevilled by many challenges that look impossible to resolve.

Oil was discovered in commercial quantities in Nigeria in 1956, four years before independence from Britain. Before then, maritime activities in Nigeria had largely been stimulated and sustained by export of agricultural products and solid minerals for earning of foreign exchange. The leading agricultural exports then were groundnuts, cocoa, palm produce and rubber. With the discovery of oil in commercial quantity in 1956 at Oloibiri by Anglo-Dutch consortium, Shell D’Arcy, the oil and gas sector became the main driver of the economy and of maritime activities in Nigeria.

The state of the ports is a critical factor for efficient maritime operations. Hence the establishment of the Nigerian Ports Authority (NPA) by Ports Acts (Cap 155 LFN 1954) was to create a structural framework for the management and regulation of port operations. The authority executed its first wharf extension project between 1956 and 1961 in Lagos and Port Harcourt ports. Further expansion of Lagos Ports were done between 1970 and 1975 and, in 1977, the Tin-Can Island Port Complex was inaugurated to ease the pressure of heavy imports (mostly government cargoes) on Apapa Port.

In 1979, the new Warri and new Calabar ports were inaugurated. Port construction and expansion continued between 1981 and 1985, while the new Sapele port was constructed in 1982. In 1996, Federal Ocean Terminal Onne Phase 1 was constructed. Financing was done through agreement with the International Bank of Reconstruction and Development and the World Bank.

Statistics in the mid-1980s showed that the public ports operated at 47 per cent of their capacity at the best and cargo throughput dropped down to 28.7 per cent of previous years.

To increase efficiency, enhance capacity and introduce healthy competition in government enterprise. Government in 1988 promulgated the Privatisation and Commercialisation Decree. In 1993, the implementation of the commercialisation programme of the NPA was partially carried out and it became Nigerian Ports Plc. This was reversed in 1996 as a result of inherent weakness of the policy and government, through the National Council on Privatisation (NCP), upgraded the state of NPA from full commercialisation to partial privatisation called concession, to make room for private sector involvement in port operations.

Following the calamitous multi-year port congestion that gripped the nation’s ports and arrested Nigeria’s development for much of the oil boom years of the 70s, the federal government made efforts to reform the system. The efforts never yielded any reasonable fruits as corruption and inefficiency reigned, denying government the needed revenue from the sector.

As a result of the painful experiences of congestion in the 70’s, the federal government again made efforts to reform the Nigerian Ports Authority (NPA) in the 1980s.

Consequently, the NPA management was restructured into 4 zones: Western, Central, Eastern and Headquarters. The government also created Nigerian Ports Plc. However, the policy failed abysmally due to rear-guard action from the diehard culture of centralisation. Government interference was rife and patronage and self-enrichment by some government officials overseeing chunks of the maritime sector went to a new level. Foreign exchange earnings from Nigerian Ports Plc disappeared into private pockets and port infrastructure were allowed to rot.

In a bid to arrest the situation, the federal government, in 2001, came up with the idea of concessioning the ports to qualified private operators.

Dutch firm Royal Haskoning BV was commissioned to study Nigerian ports preparatory to the reform.

The resulting report, called Haskoning Study was submitted to the federal government and was accepted as a cogent x-ray of the Nigerian seaport system. The report criticised the over-centralisation of administration that saw NPA function as both regulator and operator; the overlap of authority in the system and the duplication of efforts. It recommended a “Landlord” port administration model where government’s role would be restricted to policy formulation while private operators undertake the day to day running of terminal operations, stevedoring, warehousing; and investments in port equipment and infrastructure, among other activities. The report called for NPA to be unbundled into three zones and for concessions by open bidding.

After examining the report, the National Council on Privatisation (NCP), endorsed the “landlord” model, and under a new transport policy NPA was given the role of technical regulator to manage the ports for which there were no bids. The National Transport Commission (NTC) was to become commercial regulator while National Ports Commission would become overall coordinating agency for the ports sector. Five landlord port authorities were slated for Lagos; the Niger Delta; Port Harcut; Calabar; and the inland ports. A total of 25 concessions were identified in 11 ports and there were bids from 110 companies to manage eight ports: Bonny, Calabar, Koko, Port Harcourt, Sapele, Apapa, Tin Can & RORO.

With bids submitted by March 2005, concession commenced in 2006 with 20 concessions concluded. In March 2006 the concessionaires commenced operations.

The flagship concession, Apapa Container Terminal was signed in March 2006 with APM Terminals, which had taken over P&O Nedlloyd earlier in the year. The Danish shipping firm, A.P. Moller (APM Terminals’ parent company beat 25 other bidders to the 25-year concession. Doing Business in the Ports Prior to the concessioning of ports to private operators in 2006, doing business in the nation’s ports was a hellish experience laced with a myriad of problems.

One of such major problem was the turnaround time for ships which took too long before their cargo could be loaded or discharged.

Most of the few cargo-handling facilities owned by the NPA were moribund, so shipping companies had to hire such facilities from private sector sources, leading to extra costs. Dwell time for goods in port was so long that overtime cargo filled the most active seaports and led to massive port congestion. Labour for ship work was controlled by a mafia that controlled dockworker unions and had no scruples supplying less than the manpower paid for. Many port premises that could have been put to good use were abandoned, giving maritime businesses less options. Decaying infrastructure In recent years, however, essential infrastructure has been left to rot leading to the loss of life and properties.

For instance, two tragic incidents have occurred that indicate the situation in Apapa is reaching implosion point, and these are the stoning to death of a LASTMA officer and the burning of banks.

Both incidents are directly related to the traffic gridlock in Apapa and are the products of the frustrations and stresses being borne by truck and tanker drivers.

The first was the murder of the LASTMA officer, allegedly by some tanker drivers protesting the death of one of their motor boys they blamed on LASTMA officers trying to seize a tanker for wrong parking.

The second and most disturbing was the burning of two banks and destruction of other business premises by some truck drivers protesting the killing of a truck driver by a policeman for wrong parking.

With numerous petroleum tank farms in Apapa, no one knows what will trigger the next altercation over the traffic gridlock that can cause a melt down and massive destruction in Apapa.

Regarding how to resolve the ongoing traffic gridlock in Apapa, Lagos State, we may have started on a wrong premise and will end up with a wrong conclusion or solution going forward.

Apapa is home to Nigeria’s key ports (Apapa and Tin Can), numerous petroleum tank farms, national dailies (THISDAY Newspaper, Vanguard and BusinessDay), numerous manufacturing concerns, businesses and residents.

For the last few years, Apapa has been a no-go for visitors, hellish for those who reside and work there, and traumatic for business owners and those exporting or importing cargo.

The primary reason for the traffic gridlock, experts said, has been the complete collapse of the two km Wharf Road which leads from the base of Ijora Bridge entering into Apapa to the entrance of Apapa Port.

This, the experts believe, has resulted in a backlog of trucks and tankers on the Ijora Bridge sometimes all the way to Western Avenue making it difficult for other road users going in and out of Apapa.

“Likewise, the only other access road out of Apapa through the Liverpool Overhead Bridge and Apapa-Mile 2 Expressway is similarly in a state of complete disrepair and blocked by trucks and tankers, “said a leading operator who do not want his name in print.

Fading Dream What is happening today in the industry betrays the plans of the founders of Nigeria whose lofty aims of using the maritime industry as a launching pad for economic prosperity when they established institutional structures to drive the dream.

Nigeria once had a national carrier called Nigerian National Shipping Line (NNSL) which was then the pride of the nation. At the time, indigenous shipping thrived with many indigenous shipping companies dotting our maritime landscape.

Nigeria’s seafarers, unarguably among the best in the world, were the toast of the international shipping community, our cargoes, which we had and still have in abundance, were being freighted by Nigerian owned ships.

The NNSL, which boasted of about 20 vessels, for which Chief Olusegun Obasanjo prides himself as his legacy and which he is still lamenting their loss till today, had packed up. It was liquidated in 1995 with all these vessels gone.

Today, more than 80 per cent of our indigenous shipping companies have equally gone under, swept away by the harsh tide of the inclement economic climate.

While regulators were busy playing politics with the disbursement of the Cabotage Vessel Financing Funds (CVFF), an interventionist programme meant to empower the struggling indigenous ship owners, foreigners took over the coastal trade, ostensibly reserved for the locals through the instrumentality of the moribund Cabotage law.

Recently, government’s attempt to revive the national carrier from its ruins expectedly fell like a pack of cards when the leading investors, Pacific International Lines, (PIL), pulled out of the inglorious deal.

This has further compounded the agony of the country that has cargo but no vessel to convey them.

Sadly, the implication of this fundamental system failure was that the country would be at the mercy of foreigners who now dictate the terms of trade. Ending Foreign Dominance Executive Secretary and CEO of the Nigerian Shippers Council (NSC), Hassan Bello believes effort must be made to reverse the trend

“What we have now is a sector dominated by foreign ships and they dictate to us. We have no choice than to listen to them, yet we own the cargoes. To correct this anomaly, we should have the ships. No matter how wide or long our coastline is, no matter how long our inland water is, and how our ports are, if we do not have the ships, then we cannot pretend to be a maritime nation, ”he said.