Counting the gains of port concession 

Why cost of shipments to Nigeria remains expensive —STOAN


Prior to the port concession exercise of 2006, Nigerian ports were in chaos due to the high rate of inefficiency that characterized cargo handling operations. 

Ships waited for more than 30 days to find berthing space while consignees struggled to get their goods out of the port due to severe port congestion and lack of cargo handling equipment. Corruption was also rife at the port as consignees had to bribe officials of the Nigerian Ports Authority (NPA) to position their cargoes for Customs examination or load onto trucks. 

The ports were also severely 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 port) and several other vices were the order of the day. Miscreants popularly known as wharf rats were the lords of the port. 

Dockworkers were poorly paid while the then almighty Maritime Workers Union of Nigeria (MWUN) ruled with fear. The union detained ships and willfully paralysed port activities at the slightest provocation without regards for the economic implications of such actions. 

But all of that has changed, thanks to the bold move of the Federal Government to reform and concession the ports in 2006. The port concession transferred cargo handling operations from NPA to professional private terminal operators, who won lease agreements ranging from 15 to 25 years.  NPA remained the landlord and technical regulator of the port and provider of marine services. 

Fifteen years into the exercise, there is a general consensus that the exercise has fully delivered on its promises. The landlord model of port concession adopted by the Federal Government has freed the government of the financial burden required to develop and operate the ports. This burden has been transferred to the private terminal operators also known as concessionaires. 

In addition to not spending money to develop the ports, the Federal Government, through the Nigerian Ports Authority, now realizes much higher revenue through the ports. 

Private terminal operators have invested more than two billion US dollars in port development over the past 15 years. This amount is far above the amount spent by the Federal Government in developing the ports in the 30 years prior to 2006. 

Also, the annual income of government through the ports has grown exponentially from less than one billion dollars to as much as $6.54 billion annually realized through the payments to NPA, Customs, Federal Inland Revenue Service (FIRS), Nigerian Maritime Administration and Safety Agency (NIMASA) and other agencies of government. 

A recent study conducted by Akintola Williams Deloitte titled ‘Public Private Partnership (PPP) as an Anchor for Diversifying the Nigeria Economy: Lagos Container Terminals Concession as a Case Study’, affirmed that the ports witnessed increased ship traffic and cargo throughput, leading to 400 per cent rise in container throughput from 400,000 twenty-foot equivalent units (TEUs) 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 to from 30 days to less than a day while the average dwell time for cargo clearance reduced drastically from over 30 days to 14 days. 

The ports concession, according to the Deloitte report, also saved Nigerian importers and exporters about $800 million (N400 billion) annually, which, hitherto, was paid to shipping companies as 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 of port workers, including dockworkers who were shortchanged under the old order. This much was confirmed by the President-General of the Maritime Workers Union of Nigeria (MWUN), Comrade Adewale Adeyanju, when he commended the Federal Government for concessioning the ports to private terminal operators, saying the exercise has impacted positively on the lives of port workers.

Adeyanju said prior to the port concession in 2006, the wages of dockworkers were nothing to write home about. 

“The era of using dockworkers as slaves in their fatherland no longer exists. We want to thank the Federal Government for concessioning the ports because that reform has changed the lives of dockworkers all over the nation’s seaports.

“Before concessioning, the wages of dockworkers was nothing to write home about. In those days, an average dockworker that worked for eights hours a day would go home with four thousand naira at the end of the month. We used to have stevedoring contractors but they did not care about the welfare of the workers. Some of the stevedoring contractors even ran away with the pensions of dockworkers.

“But since the terminal operators came in, we have seen the difference between the stevedoring contractors of those days and the terminal operators of today. We have been enjoying the present arrangement. My happiness today is to see dockworkers retire back home with something reasonable as retirement benefit,” Adeyanju said during the signing of a new three-year Collective Bargaining Agreement by members of the Seaport Terminal Operators Association of Nigeria (STOAN) and the union in March 2021. 

Curiously, the union fought vehemently in 2006 to stop the port concession exercise. It appears understanding has now dawned on all stakeholders. 

The Chairman, Seaport Terminal Operators Association of Nigeria (STOAN), Princess Vicky Haastrup, who led other concessionaires to sign the Collective Bargaining Agreement, also corroborated Adeyanju’s position. She noted that terminal operators have ensured industrial harmony at the seaports by prioritising the welfare of dockworkers.

She said, “We are happy as employers of labour to give the dockworkers the wages they rightly deserve. It is always our joy to bring succour and joy into the hearts of our workers.

“Before the 2006 port concession, the monthly income of an average dockworker was less than five thousand naira but today, we make bold to say that we now pay our dockworkers very well. Our dockworkers are now well respected and well compensated for the work they do. This is because we acknowledge dockworkers as the bedrock of port operation.

“Before we became their employers, dockworkers were not respected. They were seen as troublemakers and thugs at the ports. But today, we have worked together with the Maritime Workers Union of Nigeria to change the narrative.

“Dockworkers are professional quayside workers who are vital to port operation. They are essential workers and we are happy to treat and remunerate them as such. I am proud to say that the present crop of dockworkers at the various ports across the country are well trained and they conduct themselves professionally.”

The gains of Nigeria’s port concession exercise are not in doubt as it the exercise has received several commendations from home and abroad. It is a model exercise that has stood the test of time and that has been studied and replicated by other countries in Africa. 

An elated former General Manager Public Affairs of NPA, Chief Christopher Abiodun Borha, who played a key role as the spokesman of NPA during the port concession exercise, captured the sentiments of the port community about the exercise thus: “Not only was the port concession excellent, it should serve as a guide and it has served as a guide for ports development.” 

According to Borha, the purpose of Nigeria’s port concession “has been achieved 100 per cent”.  


SOURCE: Ships&Ports