The Chief Executive Officer of ENL Consortium Limited, Dr. Vicky Haastrup, in this interview with COMFORT OSEGHALE, speaks about the effects of harmful government policies on shipping operations in Nigeria.
How would you rate the performance of the maritime industry for the first half of the year?
The industry has performed quite well, except that a lot of government policies are having an adverse effect on the cargo throughput. You can see from the pilotage that fewer vessels are coming to Nigeria. There has been a reduction in the volume of cargo coming here particularly in the last few months. Some of these policies like the one from the central bank on forex and the ban on the importation of certain goods have not helped matters. A lot of us are operating at 30 per cent to 40 per cent of our usual capacity.
We are in a situation where we are gaining something to lose something but at the end of the day, it is going to impact negatively on our economy. As it is, the impact is not being fully felt now but in another two months, we would definitely feel it. We hope that the situation will be short-lived because right now, importers have challenges getting forex to order for goods.
For instance, at the ENL, in the last one week, only two vessels called at our terminal and this is how it has been with other terminals at the Tin Can Island. You have an occasional vessel here and there and for some, they would not even have any vessel berthing there at all. That is a big challenge for terminal operators because we have a lot of responsibilities in terms of developing the ports, paying salaries and running the terminals. So, whether you have ships coming or not, we are still obliged to run the port with the same amount of money. This has serious consequences on our operations and income.
What would you have the government do to ameliorate the situation?
I know the CBN policy is meant to shore up our natural reserve but this should be done with a human face. It shouldn’t be a drastic change to the effect that these things would become unaffordable for people. Already, the costs of some imported goods are going up.
For instance, Nigeria is not yet a producer of iron rods; so, we are still importing iron rods and pipes. What we are producing locally cannot meet the demand of the nation. All we are doing with this policy is creating a situation where these goods will become very expensive and unaffordable for the ordinary Nigerian. Ultimately, the cost of building will increase because the price of iron rods has gone up. Even when you have the money to order for these goods, it is a serious challenge because the CBN is not making the money available for anybody to order for goods.
The Manufacturers Association of Nigeria is feeling the pinch because a lot of raw materials that are used for their products have been banned. You just need to look at the pilotage and see that the volume of cargo has reduced drastically. It is affecting everyone now even the government through the Ministry of Finance because they are in charge of the Nigeria Customs Service. Other countries of the world don’t joke with their maritime industry, so we shouldn’t.
Are you requesting for the reversal of these policies?
I am saying these policies should have a human face; they should be implemented with the welfare of the ordinary Nigerian in mind. Take the auto policy for example, I have my reservations about it. How many cars do Nigerians use and what is the landing cost of such locally assembled cars? It is still unaffordable. This is a nation of 180 million people. Right now, second cars are expensive except we want people to suffer; this policy should be executed with a human face. It should be gradual until our local capacity can meet up with the demand in the country. If we don’t do that; two things will happen and the populace will suffer. The first is that goods will be diverted to the Republic of Benin. That is exactly what is happening now.
Ships containing rice and other cargo are being diverted to Cotonou and their government is smiling. This same cargo will find their way back to the Nigerian market. Nigeria is not ready for the auto policy until certain things are put in place and we have the capacity to meet demand. Let us first get to the stage when we would be able to produce our own cars and they are offered at affordable prices for most Nigerians. We have not developed to that level, so why are we implementing the policy?
The RoRo terminals like Five Star Logistics and Grimaldi are suffering because of this. It is cheaper for importers going to neighbouring countries to clear their cargo there. First, the customs duties are minimal compared to the custom duties being paid on cars coming into Nigeria, especially new cars. Even second hand cars, the minimum amount you can clear one is N300,000, it doesn’t matter if the car was bought for $500. We should first work towards developing the auto industry to about 70 per cent before implementing the auto policy.
What are your expectations from the new government?
The maritime industry has a huge potential; unfortunately, this is one industry that has not been attended to by any government. This industry can create employment; generate revenue for the government and wealth for its citizens. One wonders why such an industry has not been receiving the desired attention.
For instance, look at the access roads to the ports; the kind of gullies you see there can swallow trucks. It is a nightmare coming to Apapa. If you come to Apapa without facing any traffic congestion, it would be an exception rather than the norm. One can spend three to four hours on the bridge because of bad road. On a daily basis, you have containers falling on people along this axis. If we are getting enough attention, we would have an enabling environment that would allow port operators come in with ease instead of the nightmare we are presently experiencing.
Every port user coming to the Lagos ports is suffering. There are only two routes; one from Ojuelegba and the other from Apapa/Oshodi. I find this very strange considering the volume of cargo coming through the Lagos ports. Then, there is the concentration of other activities in Apapa like the tank farms which are not supposed to be in the port environment. The tank farms we are surrounded with at Apapa and Tin Can Island are almost 60. This is too much. The roads and bridges in Apapa are not built to withstand the pressure that it is currently taking.
I hope that the new government will look at these issues critically, call all the stakeholders. I am sure the President would want to know what is happening and there are people who are in the position to know. Often, what happens is that the President is in Abuja and those who give him information about the industry don’t say the right thing. If I were the President, I would want to know about the challenges in the industry, how the port is run and what revenue accrues to the government from this industry and how to develop this industry. He must look at these things holistically.
We need an enabling environment; don’t forget that terminal operators have invested so much money to develop Nigerian ports. We all know what Nigerian ports used to be like before the concession. People who are regular port users know that we have made improvements. Some attention must be paid to the issue of policy somersault, changing things suddenly without any notice. Policies are changed in the industry without giving enough time to the private operators to adjust, especially those who have opened Letters of Credit.
As with the case of the CBN policy on forex, for those who have already imported cargo, where they should have paid 10 per cent duty, they are compelled to pay a 30 per cent or 40 per cent duty. If there is no money to cover up the unexpected increase, the importers leave the cargo at the port. They may have to borrow money from the bank to make the import possible in the first instance. In the end, the terminal operator bears the brunt by way of discount on terminal charges. This has been a habitual occurrence.
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