Don't Miss


Home   >   Business   >   Industries   >   Cash crunch threatens $6.5bn port concession agreements

Cash crunch threatens $6.5bn port concession agreements

By on February 8, 2016

The low volume of import and export activities in the maritime sector, which has created a shortage of cash in the industry, is threatening the port concession agreements valued at $6.5bn.

This is especially so for port terminal operators who are required by the agreement to pay their fees to the Nigeria Ports Authority in dollars.

Only last week, the NPA had in a public notice, demanded that all lessees should settle their rental obligations within four weeks from the date of the publication.

It warned that failure to comply within the stipulated period would be viewed as a breach of the lease agreement, which could lead to its termination.

The Chief Executive Officer, Ships and Ports Communication, Mr. Bolaji Akinola, said, “With the naira having lost over 50 per cent of its value in the last one year, terminal operators will now require almost triple the amount of naira to pay the same fees in dollars to the NPA.

“This is in spite of cargo volume, which has been on a decline since last year. Various terminals lost cargo volume ranging from 14 to 50 per cent, depending on the type of cargo they handle. “

The maritime expert appealed to the Federal Government to permit the payment of the naira equivalent to the dollar for the NPA charges at the Central Bank of Nigeria’s rate.

He said this was important so that the port concessionaires could remain in business and meet their overhead costs in addition to investing in the port development.

Akinola said, “The three types of fees payable under the various concession agreements are the commencement fee payable immediately after the execution date; the fixed annual payment of a sum as specified in the agreement; and the throughput fee payable on total volume of cargo handled on vessels that used the leased premises or property. These fees are paid to the NPA in dollars.

“The Federal Government should consider the collection of these payments in their naira equivalent. Whatever goes into the federation account will eventually be converted to naira before or after it is allocated to states, local governments or for the Federal Government’s use.

“We should not kill the goose that lays the golden egg. The stance must be such that will produce a win-win outcome for all. No one can live in denial of the present day realities in the country, just as no one can deny the NPA its legitimate revenue.”

The NPA in 2006, leased out various portions of the port to third parties to manage and provide services that used to be provided by the government.

It was also learnt that the NPA formed joint ventures with private partners for the provision of marine services. This reportedly resulted in the creation of the Lagos Channel Management, Bonny Channel Company and Calabar Channel Management Company to provide pilotage, towage and dredging services at the port.

It also entered into lease agreements with various firms for terminal handling and stevedoring operations, while it retained the role of lessor and technical regulator. The concession lease agreements range from 10 years to 25 years, depending on the nature of the facility.
[Punch]