THE RIP-OFF AT THE PORTS

Government should collaborate with the private sector to build deep sea ports

As part of a recent agreement to reduce port costs by as much as N400 billion annually, shipping companies were to abolish container-cleaning fee and remove 15 other port charges from their list. However, the Memorandum of Understanding (MOU) in respect of the agreement has been delayed for reasons that are yet to be communicated by the Nigerian Shippers Council (NSC). This unfortunate situation is not only exacerbating the Apapa traffic gridlock that has become the shame of the nation, it has created an avenue for the shipping companies to continue to rip-off Nigerians.

The cost of doing business in Nigerian ports ranks amongst the highest in the world. These ports are notorious for high demurrage charges as a result of delay in cargo clearing process. That is aside the high insurance premium of vessels coming to Nigeria and trucks conveying containers to and from the ports and higher shipping and terminal charges. Added to these is the total annual freight cost estimated at between $5 billion and $6 billion, according to the Ministry of Transportation.

Recent numbers released by the Nigerian Ports Authority (NPA) reveal that on average, container traffic at the seaports across the country (Lagos, Tincan Island, Delta, Onne, Rivers, and Calabar) stands at 822 ,868 annually. It takes about N6.5 million to clear and transport a 20-foot container laden with cargo worth N36.42 million ($100,000) imported into Nigeria from China. Of this amount, about N5.3 million (representing 82.1 per cent) is paid to the Nigeria Customs Service (NCS) as Import Duty, Comprehensive Import Supervision Scheme (CISS), ECOWAS Trade Liberalisation Scheme (ETLS), Port Development Surcharge and Value Added Tax (VAT). Shipping companies are responsible

GOVERNMENT MUST SPEED UP THE CONSTRUCTION OF PORT ACCESS ROADS AND GET THE TERMINAL OPERATORS AND SHIPPING COMPANIES TO INVEST IN HOLDING BAYS

for 13.8 per cent of the port cost (N897,000); terminal operators 1.8 per cent (N117,000); transporters 1.1 per cent (N71,500) and clearing agents (N78,000). This means that N5.34 trillion is required to clear the 822,868 containers annually, while charges by the shipping companies stand at N738.112 billion.

As part of the long-term solution to the crisis, the federal government must embrace intermodal transportation, which includes rail and inland waterways. Also, the government must speed up the construction of port access roads and get the terminal operators and shipping companies to invest in holding bays where trucks can park pending when they are notified via a call up system to the port to drop empties or load cargo. Most importantly, the government must urgently collaborate with the private sector to build deep sea ports.

As things stand, the handling capacity of ports in Nigeria is put at 60 million metric tonnes, while demand and usage is about 100 million metric tonnes. These are expected to rise with the increasing population, urban expansion and attendant demand for more markets. The cargo throughput handled in the ports increased from 66,908,322 metric tonnes in 2009 to 74,910,282 metric tonnes in 2010, indicating a 12 per cent increase. According to global trends in port development, out of over 100 seaport development projects being executed in the world, approximately 60 to 75 per cent of these are deep sea ports or terminals. The balance is mostly inland waterway ports and jetties. This clearly indicates that Nigeria needs better designed port facilities in tune with increased cargo traffic, for the country to be globally competitive at a period emphasis is shifting to larger and more economical vessels that require deeper harbour drafts.

According to the World Bank in its 2017 Annual Ease of Doing Business Report, Nigeria ranks 145 among 185 countries with Mauritius ranking 32 as the best in Africa. From the report, Trading Across Borders, an indicator for measuring a country’s ports effectiveness ranked Nigeria very low at 183 out of 185 countries. This is a big shame!