When Princess (Dr.) Vicky Haastrup, Executive Vice Chairman/Chief Executive Officer of ENL Consortium, took over as a concessionaire in charge of terminals C and D of the Lagos Port Complex (LPC) in April 2006, little did she know the extent of rot that had almost drowned the terminal.
As she settled down to the task, she appreciated the fact that she had to win several battles ranging from poor port equipment to protracted labour issues.
Haastrup also knew she had to bravely take on entrenched interests who feed fat on the rot if any meaningful achievement is to be recorded.
According to her, the battle took several forms including unabated campaign of calumny orchestrated by maritime cabals against the operators in a bid to gain relevance and perhaps return the ports to the old order.
The ENL boss, who also doubles as the Chairman of the Seaport Terminal Operators Association of Nigeria (STOAN), says the ports today are far more efficient than they were in 2006 when the concessionaires took over.
In this interview, she talks more about the company, the Nigerian maritime industry and more.
Excerpts:
Port efficiency
The improvement in efficiency at the ports cannot be over-emphasised. Eight years ago, we all can remember how things were then. We remember how difficult it was then to do business at the Nigerian seaports. The dwell time of ships has reduced drastically from 10 days to about three days. I remember the first rice ship we did in conjunction with the Nigerian Ports Authority (NPA) because we had a one-month handover period when we took over, it stayed 45 days at berth. It was a rice ship and I will never forget that. There was a particular one that stayed 60 days.W e can discharge those ships for 12 days today. When a ship enters into demurrage, it costs money. So, that we’re able to handle ships efficiently and practically knock down the dwell time of the vessels at berth is clear reduction in operations cost.
Since the terminals operators took over in 2006, there has been tremendous improvement in the way operations are conducted within the Nigerian seaport terminals. This is quite evident in the volume of activities we have experienced in all the terminals in Nigeria. For example, the volume of activities was 13 per cent higher than the previous year. All the terminals have done about 250 per cent increase in cargo throughput from 2006 till now. There is no better way to express this than to say something good is happening at the seaports. Jobs are being created, there is significant improvement in efficiency, there is better service delivery, there is development going on here and there, among others. Just go to the terminals and see how they have done in port development. We may not be where we want to be, but we’re making significant progress. We all know that when you have an old and dilapidated building, it’s challenging to modernise it. It’s not the case when you start from the scratch and input all you want into the structures from the onset like a terminal such as Greenview, for instance. The company built what it wanted for its operations from the scratch. For us, we took over run-down buildings. They were just completely run out, to say the least. We saw some structures and wondered how NPA managed to discharge ships when they don’t even have equipment; where there were deep craters within the ports that could swallow even a trailer. There were lots of pilferings, no gears to handle the ships, there were labour issues and many more anomalies. It was challenging to fix that because a whole lot was required. We surmounted all these and got to where we are today. That has brought in a lot of confidence in our operations and that is why we are experiencing this jump in ship traffic so to speak. Concessionaires in the seaports have done very well and I’m very proud of that, no matter what anybody says. We certainly know what we took over.
INVESTMENT
I think ENL has INVESTED a lot. We have not updated in the last six months but as at the middle of 2013, we had put in invest ment worth about $28.5 million. That figure has certainly risen significantly because there is a whole lot that we have done between then and now.
Challenges
The access road is really congested. In fact, that is about the greatest challenge facing us here. If you look at the whole Apapa, you see a lot of containers occupying the roads, causing horrific traffic snarl on a daily basis. They are at the highway, they are also at the adjoining roads all overA papa. It’s horrible. It shows the level of congestion. Port access is a major problem. Those coming in to take delivery of cargo and those going out face hell. It’s quite frustrating and that is why we are not able to discharge as much as we should do just because the trucks cannot easily access the terminal. A lot of businesses situated in Apapa not supposed to be here. Take for example, the tank farms, people don’t like it when I talk about it but that is the truth.T he tank farms are just too close to the Nigerian seaports where other cargoes are discharged. They are just too close to themselves. Granted that Apapa is an industrial area, it has tremendously increased vehicular traffic. It’s a clog in the wheel of progress and quite frustrating.
Again, we have the problem of power supply. The public power supply is still zero. So, we generate our own power to handle our operations. All the terminals (not ENL alone) still run 90 per cent of their operations on generators and this makes business very expensive. That adds to the cost of doing business in Nigerian seaports. You know what the cost of diesel is today. All the terminals are generating their own power.
Yes! NPA is supposed to provide us power as stated but the issue of poor electricity supply is a national challenge and not really NPA’s fault, though I’m not holding brief for them. The power is simply not supplied by the Power Holding Company of Nigeria (PHCN). So, that’s why I said I won’t blame them and there is no way NPA would want to be operating generators for us and so they leave that to us.
Train services
It’s completely skeletal. The percentage is low. It’s about one per cent. So poor. To me, the rail service is not working. In fact , to me, there is no rail service at the seaports . If APM Terminal transports only 40 containers a week, then the rail service is simply non-existent. That is not what happens in other parts of the world. That is why all our roads spoil quickly because of the pressure from these trucks when some of the cargoes should have gone by rail to various parts of the country. That is also why Lagos imposed wharf landing fee because the surface of their roads are constantly damaged. I don’t think the roads were built to withstand such pressure. You can’t blame the Lagos State government because they are spending so much to fix the roads. That is why we have container-laden trucks falling over themselves and that is also why the roads are constantly congested. So, we simply don’t have rail transport yet.
Arbitrary charges
It’s more expensive to run Nigerian seaports than ports in other countries. Republic of Benin, for example, has electricity supplied by the government. Nigerian government was providing them electricity before. But what is happening today? They are simply self-sufficient. Look at Ghana, they barely experience power failure there. Nigeria is still dependent on self-power generation and not the government. You know how much diesel is sold per litre here. Even as an individual, you know how much you spend on petrol or diesel almost everyday because the power is not there and you provide 90 per cent of the power you need. That is what terminal operators are facing here in Nigeria. We spend so much on power alone. So, how do we recoup that? But having said that, I want to tell you that the concessionaires are not increasing costs. In fact, it’s very difficult for us to recoup what we have INVESTED in running the ports because the truth of the matter is that, it’s more expensive to operate here. There are several anomalies here that actually build into higher operational cost for us. There is the issue of double taxation slammed on us; there is also all manner of levies heaped on us. Ask any industrialist too. The cost of production in Nigeria is high and at the market, the imported goods may be cheaper. That’s just to tell you it’s not easy to do business here.
Again, there are other factors that make doing business at the ports costly. Let’s start from the Customs duty on rice, which is 110 per cent today. In Republic of Benin, it’s 7 per cent, in Cameroon, it’s 0 per cent tariff. Look at steel and all categories of cargo in Nigeria; the duties are high compared to other climes. I’m not blaming the Customs but I’m just highlighting the fact that cost of doing business in Nigeria is generally high. Also, you have the shipping agents, clearing agents; who’s looking at what these stakeholders are charging? When you keep the container longer than necessary, you have to pay for that. It’s not the concessionaire that collects levies or fees on empty containers. It’s not us. It’s the shipping agents. As terminal operators, we are only collecting our statutory charges as contained in our concession agreement. Since we took over in 2006, what has been our increase or what percentage of increase have we imposed? It’s not commensurate with the increase in the cost of doing the business. When we took over, diesel from Otedola’s tank farm was N65 a litre. Today, it’s N155. That’s 300 per cent increase. In the area of plants and equipment, gears have increased by at least, 150 per cent since we took over. In fact, it increases every year due to inflation. The environment is there, you have to maintain it. You also have to develop the ports. What of cement cost? How much did it cost in 2006 and how much is it today? It’s gone up by more 200 per cent. So, if we have all these inflationary costs, how do you recoup it because you’ve got to? But then, we’ve not really increased to make it commensurate with realities of today. Simply put, terminal operators are the ones bearing the brunt of it. We’re the ones running the seaport terminals. It’s not shipping agents or clearing agents. In fact, you can be a clearing agent without having an office. The overhead is carried by us. After carrying all these, who pays for it? But we’re bearing the pain because if we are to charge what we should charge to cushion our challenges, it’ll kill the Nigerian people. Why are people screaming that terminal operators are responsible for high cost of doing business at the ports? It is because they made more money when we were not there than now. We have come and blocked all the loopholes. People, hitherto, benefited from a completely run-down system. So, we are the enemies of such people because it’s not business as usual at the Nigerian seaports. They were part of the battles we fought to enthrone efficiency at the ports. You can no longer bring in ship without being detected and without paying. That’s no longer possible. It’ll be captured in the system and you have to pay accordingly. Again, the era of under-declaration of cargo is over. Today, we get the right tonnage of cargo. If you under declare, I’ll find you out and impose charges three times the cost you ought to have paid if you were honest. It’s like a penalty. Today, the labour issues have been addressed. If we really want to be objective here, we the terminal operators have tried. To address the issues at the ports, we have to be holistic. We have to look at government up till the least person in the chain.
Security
We’ve been providing security for our waterfront since 2006. As a terminal operator, if you don’t protect your waterfront, you’re done for. How many times did pirates come into ENL and enter ships at berth and attack them? In fact, there were instances where ships’ crews were almost killed. All these happened a long time ago, they don’t happen anymore. It happened mainly in 2008 and 2009. It actually stopped a long time ago. But attacks on ships and vessels at sea or at anchorage rarely happen. That’s why those ships always go very far like 200 nautical miles. If they don’t, they’ll attack them. That still happens. So, if you do this call up of vessel, it may probably not be able to come as you want her to come in. This is because they are far away. Attack at seafront has stopped. We have done what we needed to do. We put adequate security to man our waterfronts.
Server breakdown
I won’t sit here to judge Customs. The Pre-Arrival Assessment Report (PAAR) is good but it’s new. Every new thing has its teething problems. Don’t forget the Customs is just replacing the RAR with PAAR. Probably, they need some time to settle down and things will be fine. It’s just like when terminal operators took over, there were teething problems as well. I believe they are doing everything possible to give stakeholders the best. I’m not speaking for them but only being objective. Yes, the delays will be borne by importers like storage and all that. They will pay. Terminal operators are doing the best we can to help the importers, Customs and other stakeholders.
Rice smuggling
Don’t believe what you see in some maritime media that shiploads of rice now come in at the seaports. Those saying rice-laden vessels have been calling at our terminal are not getting their facts right. There’s no iota of truth in it. I’ll tell you one thing. In 2013, the Republic of Benin handled 2.2 million tonnes of cargo in rice. Out of that 2.2 million tonnes, 1.6 million tonnes was parboiled rice. It’s only Nigeria that eats parboiled rice in the sub-region. I just can’t recollect how many ships berthed in the Republic of Benin and Cameroon. We at ENL do like 1.6 million tonnes yearly and those figures recorded in other ports find their way back into the Nigerian market where they are sold. This is because it is far cheaper for rice ships to be discharged in Republic of Benin and Cameroon than in Nigeria. Like I said, it’s 7 per cent in Benin Republic and 0 per cent duty in Cameroon. But the unfortunate thing is that those shiploads of rice are still coming in. I’m not afraid to say it. The trailers are coming every night. So, what government was trying to do is penny wise pound foolish. Government is talking about increasing the capacity of local rice producers, but we’re not doing it well because those rice are still coming in on a daily basis and the Nigerian government is losing huge amount in revenue because of that. It runs into several billions of naira annually. The Nigeria Customs Service (NCS) can actually attest to that. They know how much they have lost in terms of Customs duty on rice. So, to me, it doesn’t really make sense. The approach of government on the matter should have been gradual where we get to a level where we are fully self-sufficient in production of rice locally.
Right now, the volume of rice, which local farmers are producing in Nigeria cannot feed 170 million people. So, if that is the case, rice will always come, whether you allow it to discharge at the Nigerian ports or not. It’ll always come in and by extension, the Nigerian government will be losing a lot of money in revenue. Customs has lost over N100 billion and far more in a year due to this policy of 110 per cent levy and duty on rice. That income is going to our neighbouring countries. I think the Republic of Benin is the happiest country right now. We have ships that have been declared to us in the last two months that cannot berth because they still cannot afford to pay that 110 per cent Customs duty. The importers have incurred a lot of demurrage on the ships running into several millions of dollars. We’ve not handled any rice shipment since January last year.
This policy just gave some people OPPORTUNITY TO MAKE MONEY because it is tempting and hard to resist the bribe to allow trailer load of rice to enter into the country. We know how much the importers pay, but I’m not going to tell you here. The policy should come up once our local capacity meets our demands. Then, it would be no more attractive importing rice since people would be eating our own rice. It should be a gradual thing. I’m not against supporting local content but it should be done gradually. The quality and quantity has to be superb. It’s not rice that you’ll buy and still winnow to remove the stones and all that. With parboiled, I don’t have to and until our local rice meets that standard, imported rice will remain in high demand.
Port operations
The government ordered all ports to operate round the clock. But I can tell you that there are certain factors like security, the environment militating against achieving that. In fact, there are certain ships you can’t just discharge at night. Even if you discharge, the truck will not leave the terminal. Let me give you an example of what is obtainable in my terminal. For instance, rice cargo, because of security issues, when you discharge such cargo, what the trucks do is just park within the terminal. They can’t move because of security challenges. If they attempt to move at night, they’ll be attacked on the road, that much I can tell you. So, government needs to address the issue of security. Again, the environment is not conducive.
Terminal operators are doing 24 hours really and some agencies like Customs are there working 24 hours, but I can still tell you that the 24 hours is not really 24 hours. If you discharge a ship and it cannot move out of the terminal, it remains there. So, what we do is that when we come in the morning, the first thing we do is clear the backlogs, including those trucks that have been loaded. So, we discharge the ships, but they won’t want to move out of the terminal. So, it’s not really complete 24 hours until the security challenges are addressed.
Clearance of goods
The 48-hour clearance of goods at the ports is feasible but certain things have to be put in place. The operating environment plays a major role here. How easy is it for trucks to come in and move out of the ports? That’s a major problem. Apapa is always jam-packed. Traffic is another nightmare. So, when the owner of the cargo tells you I’m coming to load, we sit there, we don’t see them. Perhaps they’ve been held up at Mile 2 or Tin Can or some place.