The Chairman of Seaport Terminal Operators Association of Nigeria and Executive Vice Chairman/Chief Executive Officer of ENL Consortium, Dr Vicky Haastrup, in this interview with ANOZIE EGOLE, speaks on the challenges terminal operators are facing in the country
There was a call by the Maritime Workers Union of Nigeria for an upward review of terminal charges by terminal operators. What is the association doing in that regard?
I would like to commend the union for their forthrightness and patriotism. The truth of the matter is that terminal charges are long overdue for upward review. The cost of diesel, which we use to power cargo handling equipment at the port, has tripled. The naira-dollar exchange rate has quadrupled and inflation has risen significantly. Despite rising overhead costs, terminal operators’ revenue has been eroded significantly as a result of the sliding value of the naira, high inflation rate, and low volume of importation. At the current exchange rate of the naira to the dollar, terminal handling charges have been eroded by more than 250 per cent in value. Most of our commitments are in dollars whereas we charge for most of our services in naira. Due to the devaluation of the naira, you will see that what we charge today is significantly less than its value in 2006 when you convert it to the dollar. The situation has been compounded by a significant drop in cargo volume at the port. Notwithstanding these challenges, our members remain committed to deepening reforms at the ports. We have achieved tremendous success in the ports and at our various terminals with well over $2bn invested collectively by terminal operators, and this has resulted in a more efficient port operation.
The ports enjoy relative peace and a high level of productivity because we treat our workers well. We review the wages and conditions of service of dockworkers biennially. The MWUN, as our partners in progress, knows that to be able to pay living wages to workers as we have done over the past 17 years, our books will need to be in the black. The review of port charges will also increase government revenue through the various payments that we make to the Nigerian Ports Authority. So, we support the call by the union and I believe that since we have a listening government, action will be taken along that line soon.
In an interview, the Managing Director of the Nigerian Ports Authority lamented the dilapidated nature of the ports. How has that affected your operations?
The quay aprons at the ports are aged and need total rehabilitation. Don’t forget that the quay aprons at Apapa Port and Rivers Port, Port Harcourt were built more than 100 years ago while Tin-Can Island Port was built about 48 years ago. The roads leading to the ports in Lagos and Onne are also dilapidated. The aged quay aprons and dilapidated port roads inevitably affect port operations. However, the quay aprons and port access roads are outside the scope of the duties of port terminal operators. The responsibility of terminal operators is cargo handling.
Is there any arrangement for fixing the quay aprons of the ports?
Repair of the quay aprons does not lie within the scope of the terminal operators’ responsibility. It is within the purview of the Nigerian Ports Authority.
There were claims that some concessionaires were owing the concession fee since 2006. Can you throw more light on this?
That is not true. The concession fee is the terminal operator’s license to operate at the port. A newspaper published that false report, but we have since refuted it.
NPA has said that it would need about $800m for the rehabilitation of the ports. Are there plans by terminal operators to support the agency on this?
We will always support NPA and the Federal Government if we are approached and the necessary agreements are in place that will enable us to recoup the investment.
What have been the challenges of running a port terminal in Nigeria?
Port operation is no tea party. Managing port terminals requires significant investment, strong commitment, and experience. Before the 2006 port reform and port concession, Nigerian ports were in a very bad state due to the high rate of inefficiency that characterised cargo-handling operations. Ships waited for more than 30 days to berth while consignees struggled to get their goods out of the port due to severe port congestion and a lack of cargo handling equipment. Corruption was rife at the ports as consignees had to bribe port officials to position their cargoes for customs examination or load containers on trucks. The ports were also very porous. Vandalisation of containers and imported vehicles, ‘flying of containers (meaning illegally taking containers that were not duly released by Customs out of the port), ‘machine outside’ (the forgery of Terminal Delivery Orders and Customs release documents at business centres around the ports) and several other criminal activities were the order of the day. Miscreants, popularly known as wharf rats, were the lords of the port. Dockworkers were also poorly paid. But all of that has changed. Thanks to the port concession exercise, investment by terminal operators, and the Nigerian Ports Authority. 17 years into the port concession exercise, there is a consensus that the exercise has impacted positively on the Nigerian economy. However, despite the significant progress recorded inside the port, the surrounding infrastructure such as the dilapidated port access roads are not complementing our efforts. Also, there is a lot of pushback from those who profited from the chaos of the past. They try to do everything possible to discredit the ports. The state of the economy has also been a major challenge to terminal operators. Our revenue has dwindled due to declining volumes at the port. For instance, at ENL Terminal, we now handle less than 50 per cent of the volume that we had 17 years ago. This is largely due to incessant policy changes by the government and a lack of accessibility to forex by importers. In the last few years, the government has also banned about 45 items from importation.
How will you describe the impact of the port concession, 17 years after?
Well, to answer that question, I refer you to a study conducted by the late Akintola Williams Deloitte a few years ago. It was titled ‘Public Private Partnership (PPP) as an Anchor for Diversifying the Nigeria Economy: Lagos Container Terminals Concession as a Case Study’. The study affirmed that the ports witnessed increased ship traffic and cargo throughput, leading to a 400 per cent rise in container throughput from 400,000 twenty-foot equivalent units in 2006 to 1.6 million TEUs in 2014. The report also affirmed the eradication of ship waiting time at the port, as ships now berth on arrival. Vessel turnaround time has also been reduced from 30 days to less than a day while the average dwell time for cargo clearance reduced drastically from over 30 days to 12 days. The port concession, according to the Deloitte report, also saved Nigerian importers and exporters about $800m (N400bn) annually, which, hitherto, was paid to shipping companies as a congestion surcharge. Also, through improved security and lighting of the terminals, the ports are now better secured for cargo and safe for port workers. The port concession exercise has also created more jobs and led to better welfare and remuneration for port workers, including dockworkers who were shortchanged under the old order. Before the concession, dockworkers were poorly paid. They did not have conditions of service. Indeed, they did not have identifiable employers. Their safety, in the course of performing their duties, was not taken to heart. They were exploited, dehumanised, and underpaid. But all of that has changed, thanks to the bold move of the Federal Government to reform and concede the ports in 2006. Terminal operators have worked collectively to give a new lease of life to our dockworkers. Biennially, members of the STOAN and MWUN under the supervision of the Nigerian Maritime Administration and Safety Agency sign new collective bargaining agreements under the auspices of the National Joint Industrial Council to further enhance the welfare of dockworkers in the country. The CBA ensures fair treatment of dockworkers, payment of living wages, and institutionalisation of retirement benefits to them. In essence, unlike what was obtained before port concession, our dockworkers now have conditions of service. I am proud to note that today the average take-home pay of a dockworker has increased by more than 2,000 per cent over what it was in 2006. The collective bargaining agreement between the union and terminal operators has also ensured industrial harmony at the port. The landlord model of port concession adopted by the Federal Government has relieved the government of the financial burden required to develop and operate the terminals. This burden has been transferred to the private terminal operators also known as concessionaires. In addition to not spending money to acquire cargo handling equipment and other associated terminal operating costs, the Federal Government now realises much more revenue from the ports. This can be seen in the rising revenue profile of NPA and other agencies of government.
How has this floating exchange rate been affecting your operations?
It is the same way it has affected every other business entity in the country. Our overheads have increased significantly while revenue has been dwindling due to declining volume.
What is the relationship between terminal operators and barge operators like?
We support the barging of containers and other consignments in and out of the port. This is important to take pressure off the roads.
What is the update on the concession fee payment?
As stated earlier, I am not aware of unpaid concession fees. We are up-to-date with our payments to the government.
Terminal operators have no doubt invested in port infrastructure, but there are still concerns about the decaying port infrastructure.
Terminal operators are not in charge of those decaying port infrastructures. As stated earlier, the areas that need urgent attention are the quay aprons and port access roads. Both are outside the scope of terminal operators. However, we are desirous of supporting the government to address those challenges if we are approached and the necessary agreements that will give us comfort are signed.
