Govt policies, tariffs causing cargo diversion to neighbouring ports — Haastrup

Dr. Victoria Haastrup is the Chief Executive Officer of ENL Consortium Limited, operator of Terminals C and D of the Lagos Port Complex, Apapa, and Chairman of the Seaport Terminal Operators Association of Nigeria. She talks to ANNA OKON about the maritime environment and the challenges around doing business at the nation’s ports

Ihas been more than 11 years since the ports were concessioned, would you say the concessions were successful?

Yes. The terminal operators have improved the way and manner of doing business in the port and we are giving our customers a good service delivery and the dwell time of ships have reduced from 10 to three days and that has reduced cost of doing business in the Nigerian ports.

We also have more competitive port terminals. All the terminal operators are competing against each other, which is very healthy and it brings down the cost of doing business. We have also developed infrastructure within the port terminals.

The port was dilapidated; they were deplorable; the facilities were not working; there were no equipment, and dockworkers matter was a daily challenge in the ports.

When you look at what is happening today, the Nigerian port is a very peaceful environment to work in. we ensure security of people coming to the port, security of cargo that we ensure is parked in the parking area and we develop the port, we have equipment to discharge and take delivery of the cargo.

The NPA is generating a lot of funds owing to the way the port is being run by the terminal operation.

The NPA has recently talked about plans to review the concession agreement. What do you think?

I think it is long overdue. We have no problems with reviewing the concession agreement. That is actually specified in the concession agreement. For instance, the issue of guaranteed minimum tonnage should be something that should have been reviewed like every two years, according to the concession agreement, and that has never been done because in the 11 years when the port terminals were concessioned, there have been a lot changes in terms of volumes of cargoes that come to Nigeria, and the impact of government policies on volumes of cargoes.

These are the things that were not envisaged when those contracts were adopted and signed by both parties. So, now that we have seen what it is 11 years after concession, I think it is important for both Nigerian Ports Authority and ourselves to see that the concession agreement is reviewed so that both parties are protected.

You described the concession as successful, but why is the cost of doing business still high?

I would not say if the cost of doing business is high or not but what I would say is that it is not only terminal operators that are imposing charges within the sector. We have the terminal operators, the shipping companies, the ship agents, the clearing agents, transporters, Nigeria Customs Service, and so many agencies of government that are operating in that terminal and collecting one levy or the other.  Even agencies of government that are not supposed to be there are there and are collecting levies. So it is not terminal operators that are responsible for the increase.

Take NCS for example. NCS duty keeps increasing every year..NPA increases tariffs; everybody increases tariffs but it is more convenient for everybody to pay attention to terminal operators and conclude that they are responsible for high cost of doing business.

We are doing our legitimate duty and the cost of doing business has actually increased for us. The cost of replacing equipment has increased because the equipment is bought in dollars and if you look at what the rate of naira to dollar was 11 years ago, it is not the same as today. The cost of diesel, lubricants and environmental cost and cost of labour have equally increased.

There is a study by Deloitte that says that terminal operators are responsible for less than two per cent of the cost.

What is your stand on the report that some cargoes meant for Nigeria have been taken to neighbouring ports?

It has nothing to do with terminal operators’ cost. What is responsible is government regulation, policies and tariffs. Because of Customs tariffs, for instance, it is more attractive for people to drop their cargoes in the Republic of Benin and the same cargoes find their way back to Nigeria because it is cheaper. For instance, a brand-new vehicle that you would pay N15m to clear, if it is in Republic of Benin, it will not cost more than N2m or N1m as the case may be.

We have no role in this; any ship going to Benin, it is because of government policy. For instance, rice that goes there and still finds its way into the Nigerian market, am I responsible?

In Apapa, there is traffic gridlock, with containers falling all over the place partly because of bad roads; why is the problem so difficult to solve?

I think the government should pay more attention to the maritime sector, the right policies should be passed and issues that are constituting problems to the ports should be handled. These are issues that should have been handled long time ago, including the traffic and the roads. The port is the economic entrance of any country.

The maritime sector has huge potential but unfortunately for us, Nigeria is still an import-dependent country. We are not an industrialised nation; we are import-dependent so the government should pay attention to the sector because the people operating here are many and the sector has the capacity to employ thousands of youths.

And if attention is paid to it, it will be bigger than oil; so this is one critical area that government should move in and improve capacity by talking to all the stakeholders to know their problems so we can all solve them together.

The problems are enormous. There are problems of the roads and problems of having only one mode of transport in evacuating cargoes; so there should be intermodal and multimodal transport facilities from rail, waterways  to road to other means. I don’t know why up till now the oil tankers still go to the terminals to upload.

It is a whole lot of problems. Until government does something about it, we will continue to find ourselves in this situation.

Time is of the essence to maritime activities. Delay time of ships in the terminal has increased from three days to 30 days. For example, in the ENL terminal, I have a ship that has berthed and has been waiting to discharge for months because some other ships cannot discharge cargoes because the trucks do not have free access to the ports.

The roads are deplorable and the control of the road is a problem. This is a traffic control problem.  Everybody goes out in the night, the transporters, the truck drivers, and the oil tanker drivers would park on the bridge and I have been wondering if that bridge is built to withstand such pressure.

So, government needs to deploy traffic personnel in large numbers to manage the roads leading to Apapa and Tin Can Island ports. A minimum of 1,000 trucks come to the Nigerian ports and jetties every day to load. These trucks come into Lagos and just park everywhere.

The Federal Government’s right of way needs to be enforced because these trucks just park indiscriminately. Getting to the office is even a challenge. All the inland roads within Apapa are crippled by trucks, and Apapa is sitting on a time bomb waiting to explode. If that happens, it is going to be disastrous.

How much are terminal operators losing to this situation?

Not only terminal operators, all private sector operators are losing. We cannot quantify it. Are we going to quantify it in terms of money and in terms of time? Time is money in maritime activities because the importers of goods are paying demurrage on the ships and that is why freight and insurance cost are more expensive for ships coming to Nigeria than any other parts of the world.

These are all the things that are responsible; so if government does not look at these factors and do the right thing and ensure that everybody is on the same page, we are in trouble.

I am not in charge of logistics; my job is just to ask the NPA to park the vessels and I will discharge the ships. If the situation continues, congestion surcharge will return and Nigerians will pay because the cost will be transferred to the consumers.

With this, do you see the 24-hour service directive working?

Absolutely not. If things are not addressed, 24-hour service will not work because trucks are not even moving.

The terminal operators have always been operating on 24-hour basis because port operations are 24 hours everywhere in the world. We have kept to that.

We do our bit but there are challenges of trucks not coming in the morning. You have the challenges of security; there are some cargoes that will not take some cargoes out of the terminal at night until security is assured.

We, as terminal operators, are also victims of the whole situation.

If we handle more volumes, we will make more money. I told you of the ship that has been in my terminal for the past one month and now there is congestion of ships right now and it is the people that hired that ship that will pay. The ship is already in the timetable billed to go to another terminal somewhere else in the world and it is still here in Nigerian waters.

We have the capacity to handle as much volume as possible. A lot of the containers handling terminals have offdock terminals where they transfer those containers to. So it is not a matter of not having enough space; it is just getting in and getting out.

The whole of last week, because the traffic right from Ijora extended right into the port terminals, even the trucks that we have loaded could not get out of the terminals because of the traffic. There was total gridlock even in the port terminal.

Do you see hope in the horizon?

Yes, if we are paying a lot of attention to the issues. It is difficult to fix up a structure that is already damaged. To begin to repair takes a lot of time.

Government needs to consider relocating the tank farms out of Apapa.  How can you surround the port environment where people live with tank farms? In other countries, tank farms are located miles and miles away from the city.

See what happened in Calabar recently; if that happened in Apapa, it will consume all of us. The problem we have is that we wait for things to go bad before we begin to run helter skelter and using fire brigade approach. If one tank farm explodes in Apapa, hundreds of people will die because those tank farms are sitting right in the middle of the city. There are houses next to tank farms and some are located around where people live in.

Government should look at that no matter who is hurt; government needs to be decisive to save Apapa. If the tank farms catch fire, the port terminals will shut down.  Government needs to look at companies that need to have a holding bay because they hold empty containers.

When containers are being discharged, they come back to the port and that is why we are having this problem.  And those containers, until companies like APMT are ready to load them, they have no business at the ports. And I don’t blame APMT because the containers do not belong to them; so everyone who needs to have a holding bay.

The Federal Government needs to make sure its right of way on the road is protected and deploy traffic officers; sometimes, you even see the Nigerian Navy and the Army trying to help us, and this eases off things a bit. So what is really needed is the management of the traffic.  The traffic controllers have to be on the road at night because that is when the trucks come in and pack wherever they like.

What are the biggest challenges facing terminal operators?

Number one, policy summersaults. Government makes policies without thinking deep about the consequences of those policies and without relating with people who are operating within the sector. Government needs to relate with the operators more and get our views so that the policies can be subjected to logical reasoning.

Mr. President cannot come down to Apapa to see what it is happening; it is only what people tell him that he acts on. We can a forum where all stakeholders are gathered to brainstorm. It happened before; there was a presidential retreat on maritime, and I remember that I served on the committee. So, we need such engagements where government will hear from people that are operating. That would help government in implementing the right policy that would help the maritime sector.

What policy of government do you think should be reviewed?

The National Automotive policy is a terrible policy. I don’t think it has helped Nigeria because Nigeria is not producing cars. Even when they assemble, what is the landing cost of those cars that they assemble for an ordinary Nigerian.

Rome was not built in a day. It is something that has to be done gradually so that the people whom you are trying to protect are not hurt or die before the food is cooked.

Another big problem is the Central Bank of Nigeria’s foreign exchange ban on 41 items.

Government is losing revenue as a result of this policy because the port terminals are empty and the landing cost of goods are too high because they don’t have access to forex. The landing cost is too high for people to affordh; so, if they were buying goods worth $1m, they will reduce it to $100,000. So government needs to hear from all sides before making policies so that the right set of policies are rolled out.

Since you became the chairperson of the STOAN, how has the journey been so far?

There is cooperation between all terminal operators; we sit together and talk about issues that affect our business and how we can add value to port operations in Nigeria and how to get port operations to world-class standard.

What was the port like before concession?

It was a chaotic scene. Potholes in the terminals could swallow up cars and people were stealing; there were a lot of malpractices, and in my terminal, there were over 150 wharf rats living inside the terminal.

Now there is peace and the dockworkers are at peace with us. The level of mistrust that was evident when we took over has gone.

When we took over, I remember the first ship we did together had stayed in the port for 58 days.

There was no equipment; they were renting equipment from themselves to do the job.

The terminals were reformed but there were no reforms in other associated functions. Freight forwarding, shipping agencies and others are still as they were. The road is as bad as it was. The only thing that was reformed was the terminals.

What is the future of the sector?

There is hope. No one gives up on Nigeria because Nigeria is too strategic for the economy of Africa. We are over 200 million Nigerians so such cannot be allowed to break.

How much can this sector generate if things are done right? It can double the income from oil and gas.

Source: Punch newspaper