The Managing Director, Nigerian Ports Authority (NPA), Hadiza Bala Usman addressing participants  (NPA Management) at a one-day Strategy Management Retreat held in Lagos.

Policy changes in port governance and development in Nigeria

The port industry in Nigeria recently experienced what could be described as a quiet tsunami with far reaching consequences on port services and charges in the country. According to a newspaper report, President Muhammadu Buhari before proceeding on another medical leave approved a policy review which supports the right of Nigerian shippers to choose the terminal or port for the discharge their imports or exports, a right that the extant port concession regime seems to have curtailed.

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This presidential approval may have effectively laid to rest the long acrimonious battle between two feuding parties led separately by Integrated Logistics Services Nigeria Limited (INTELS) and Lagos Deep Offshore Logistics Base (LADOL), over the designation of port terminals and classification of cargoes which followed the concession of the country’s seaports in 2006.

The argument by INTELS is premised on the provisions of the port concession programme of the Federal Government that all oil and gas related cargoes shipped into the country must be discharged at designated terminals in Onne, Warri and Calabar. The position of LADOL and other concessionaires is that shippers should be allowed to exercise their discretion on where their shipments should be discharged, in line with global best practice.

The two warring parties have employed all manner of “weapons” including subterfuge to promote their positions. President Buhari will be the fourth Nigerian Head of Government to intervene on this matter, following similar actions by Chief Olusegun Obasanjo, Alhaji Umaru Yar Adua and Dr. Goodluck Jonathan.

Perhaps a worrisome dimension to this latest presidential directive is the perceived difference of opinion between the serving Minister of Transportation Mr. Rotimi Amaechi and Managing Director of Nigerian Ports Authority Madam Hadiza Bala Usman with respect to this controversy.

The policy review memo sent to President Buhari that was reportedly sponsored by Usman clearly contradicts her Minister’s publicly canvassed position that all oil and gas related cargoes must be handled only at the designated ports and terminals in line with the provisions of the 2006 concession agreement.

Curiously, the Bureau of Public Enterprises (BPE) which midwifed the concession exercise on behalf of the Federal Government allowed INTELS to acquire concessions in all the designated oil and gas terminals in the country, to the consternation of other port operators. INTELS became a de facto private monopoly.

Let us hope that this latest presidential directive would not become inconsequential as previous executive orders, and INTELS which obviously would see this decision as setback may not proceed to the court to seek to stop the execution of this order but rather brace up for competition.

The President’s action perhaps is indicative of his administration’s desire to support the wholesome liberalization of port services in the country, to grant port users greater flexibility on transport cost and pricing.

Credit should go to Ms. Hadiza Bala Usman, who has shown that what a man can do, a woman can do much better. However, beyond the move by the Buhari led administration to enhance competition in our port operations, is the need to reset the entire governance structure of the country’s port system to optimize its contributions to the national economy.

The port industry in Nigeria is arguably the biggest contributor to our national wealth. Over 70 percent of what we use and consume arrive the country through the seaports, same applies to the crude oil and gas we export and the refined petroleum products we import.

The maritime subsector is the second largest employer of labour in the country after agriculture. The port industry in Nigeria has to be made efficient and competitive if we want poverty to disappear from our shore.

As a government working to transform the economy, the Buhari led administration should consider and produce a new national port policy that supports the liberalization of port services, corporatization and joint ventures, and a highly competitive port system. The Presidency should thereafter engage the National Assembly for the national port policy to be covered by legislation.

With the coming onboard of a National Transport Commission, the NPA would have to be divested of its pseudo- regulatory powers and left to act as a landlord/operator. Although cargo handling and channel management have been concessioned to private operators, a corporatized NPA aside its landlord role would champion the export trade drive of government by addressing deficiencies in port-hinterland connectivity (i.e. port access roads, freight rail network, inland water transportation, off-dock terminals etc.).

Similar to what Transnet of South Africa is currently doing under its Africa Strategy, a corporatized NPA should invest in the country’s transport infrastructure and expand its operations to other African countries.

With the advent of globalisation, port administrations now enjoy a good measure of administrative and financial autonomy so that they can respond effectively to market demands. Ports are no longer regarded as public utilities; they have become critical to the economic prosperity of nations.

China had to transit from a central-control to a liberalized port system before it began to experience exponential growth of her economy. The Chinese competitive port system is the enabler of the country’s impressive economic development and international trade. Of the top 10 container ports in the world, six are in China.

The slowdown of the global economy has pushed the major carriers to consolidate and form alliances, just as bigger ships are now being deployed in the market to drive down cost. Inadvertently, port calls are being streamlined with emphasis on transport efficiency. Therefore ports that are not competitive would continue to hold the wrong end of the stick.

Lanre Badmus
Transport and Business Development Consultant
Lagos, Nigeria
10th May, 2017

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