SEAPORTS CONCESSION: CONDUIT TO CEDE OR TO CHIDE NPA

The government plans to grant autonomy to some public jetty and seaports on a pilot basis, to see what might be the horizontal and vertical effects of the given autonomy, i.e. on the coverage of services in terms of the counts of service recipients and on the quality of services to be provided irrespective of consideration to any extraneous factors, e.g. socio-demographic variables of the service seekers. One quality indicator may be the opportunity or the marginal cost, such as the waiting time that might keep a bread earner from waged jobs or the money that a service seeker has to bear in traveling to attend the service facilities. Some other quality elements are the types and depth of available services in a given facility, the technical skill of and its application by the service providers, their attitude and behaviour with the service seekers, the way the service providers communicate with Clearing And Forwarding Agents, the varieties of alternate choices for solving the same problem that the service site may offer to the service seekers, the effect and impact of the provided services, etc. Quality as well as coverage of services is related with efficiency of management and thus sustainability of the nation's Seaport services and also that of the service providers.


As a facility for receiving ships and transferring cargo, the Seaport are usually sited at the edge of an ocean, sea, river, or lake as seen in Lagos, Calabar, Warri, Port Harcourt and some part of Ondo State. Ports often have cargo-handling equipment such as cranes (operated by longshoremen) and forklifts for use in loading/unloading of ships, which may be provided by private interests or public bodies. Often, canneries or other processing facilities will be located very close by. Harbour pilots, barges and tugboats are often used to safely maneuver large ships in tight quarters as they approach and leave the docks. Ports which handle international traffic will have customs facilities. To all embarrassment, limited portion of land congested the port spaces ,marred by poor access and timing to seafarers in ports; unsecured wall around the zones with poor security network; Customs/Immigration officials without refreshing roam ,Police post to provide security for the area hardly remain sighted, warehouses for ware-housing and storage of raw material and products were store-sized, Inefficient Telecommunication facilities with dilapidated masts carries the maritime aerial flag, No bleak electricity and water supply, internal/external road network obstructed with containerized items, Central Transit warehousing facilities stalls.

As a norm, neither the issues of quality or coverage nor those of efficiency are priorities in public seaport, as are rightly alleged by the people at large, because in the public-sector hauling system there is neither any incentive for performance nor any disincentive for non-performance. Since Ship transport is often international by nature, it can be accomplished by barge, boat, ship or sailboat over a sea, ocean, lake, canal or river. This is frequently undertaken for purposes of commerce, recreation or military objectives. When a cargo is carried by more than one mode, the transport is termed intermodal or co-modal. On the contrary, paying attention to the nitty-gritty of quality and catering of services by the cargo providers to a wider group of service seekers are burdens without any rewards, while there will be no admonition for not attending to these issues in the public sector transit facilities. The apprehension of damaging the prospects of sustainability of service facilities or individual responsibility of risking sustainability and thus losing his or her job are simply impossible in the public sector. It is no wonder, therefore, that the service providers can afford to be carefree as they will always be scot-free. If this is the sort of comfortable professional life offered to them, who would then be a fool to exhibit more commitment and dedication? The experience on the contrary is that too much enthusiasm may backfire on political and professional grounds.

Nigerians who had to do business at the seaports before the onset of seaport concession went through a baptism of fire because of the difficulties. Various forms of shoddiness, lack of plants and equipment, pilferage, bribery and allied vices were carried out by miscreants called wharf rats, by unscrupulous labour contractors who held ship masters and agents to ransom even after they have paid all official fees, and by a multiplicity of poorly coordinated federal law enforcement and security operatives. Some of the deplorable acts were, sometimes, committed by some of the over-bloated workforce of the authorities at the seaports or through their collusion. The fate of Nigerian maritime trade was hanging in the balance when the Federal Government acceded to the proposal of the Federal Ministry of Transport to invite all interested international stakeholders in Nigerian seaborne trade to partake in a competitive bidding for private operators to run the ports purely as profit-oriented commercial ventures which pay royalties to the Federal Government of Nigeria. This was the basis of the seaport reform agenda adopted by the Federal Executive Council and implemented by its agencies beginning from 2000. The proposed reforms were also to address the abysmal lack of development at the seaports which saw them stagnate, over the years, and operate at very minimum efficiency despite thousands of technical and administrative staff employed by the authorities.

To attract export-oriented investment, the government established the Nigerian Export Processing Zone Authority (NEPZA) in 1992. NEPZA allows duty-free import of all equipment and raw materials into its zones. Up to 25 percent of production in an export processing zone may be sold domestically upon payment of applicable duties. Investors in the zones are exempt from foreign exchange regulations and taxes and may freely repatriate capital. Cargo containers allow for efficient transport and distribution by eliminating the need for smaller packages to be loaded individually at each transportation point, and allowing the shipping unit to be sealed for its entire journey. Standard containers can just as easily be loaded on a ship, train, and truck, or airplane, greatly simplifying intermodal transfers. Cargo often arrives by train and truck to be consolidated at a port and loaded onto a large container ship for international transport. At the destination port, it is distributed by ground transport once again. As at the turn of the 21 st century, the world was still waiting for Nigeria to get her acts right at the seaports. Seaports are the major gateways for many nations' international trade. Due to the huge population of the country, the Nigerian economy accounts for about 70% of all seaborne trade in the West African sub-region. Yet her seaports' operational profile ranked low in efficiency among maritime nations of the world. Of the five export processing zones established under NEPZA, just two, in Calabar and Onne, function properly. In 2001, both were converted into free trade zones, thereby freeing them from the export requirement. As a result, investment is quickly moving into Calabar, almost exclusively in industries that add value to imports. Only one firm in Calabar appears to be exporting in a consistent fashion. Oil and gas companies use the Onne free port zone as a bonded warehouse for supplies and equipment and for the export of liquefied natural gas.

Firstly, the seaport concession agenda benefited from a re-conceptualization of seaport operation in Nigeria. For the first time since its inception in 1954, the NPA had a role re-definition which enabled it to concentrate on the landlord aspect of its mandate, namely, developing and maintaining Nigerian seaport systems. Various government reports identified the over-bloated functions and staff strength of the NPA conglomerate as a weight it could not easily sustain and still deliver quality terminal services in the new millennium. Under the new re-definition, NPA concentrates on ownership and maintenance of its vast maritime infrastructure while ceding port operations to private terminal operators who must show that they possess the competence to deliver world-class terminal management services at Nigerian seaports. The process of their selection was via an international competitive bidding for the available concessions which will now operate as private port terminals paying royalties and levies to NPA and the federal government. In the new dispensation, roles reserved by the NPA include supervision for port planning and development, safety, security, environmental vigilance and keeping law and order amongst all port players, nautical management of the channels and waterways like lighting and dredging activities plus ownership and leasing of port land and infrastructure. Private terminal operators' roles in the new dispensation include terminal operations for goods passing through the ports, capital investment and maintenance of superstructure and cargo-handling plants and equipment.

To implement these objectives, the Federal Government established in September 2000 the Transport Sector Reform Implementation Committee (TSRC). The Honourable Minister of Transport was made the chairman. The TSRC then formed a sub-committee in NPA for the same purpose of coordinating the reform agenda. In 2001, the Federal Ministry of Transport through the World Bank Public Private Infrastructure Advisory Fund raised funds and commissioned Dutch consultants Royal Haskoning to do a Ports Modernization Project Study. The Study was tasked to do the following: Conduct a detailed technical and financial due diligence of NPA and all the seaports; Increase the involvement of the private sector in the financing and operation of port services and operations; and Define a revised role for the NPA shifting from operational tasks to regulatory and controlling tasks. Following the submission of consultants' reports and extensive consultations of maritime stakeholders, consensus was reached upon the strategy for reforming and modernizing Nigeria's seaport system. The National Council on Privatization endorsed the "landlord port model" for Nigeria and directed its secretariat to implement the concession process.

The other reason why the public sector does not perform well is that it is everybody's child and, therefore, nobody's child; hence, there will be a few in the public sector who will really bother about what the others are doing for the sector. It may be very dangerous, on the other hand, to catch the wrongdoers because most of the time they have very powerful coteries and clouts. These are some of the stark realities why the public sector does not perform well. These are the facts that we experience very painfully and not too infrequently. Is it not a very common complaint of the people that they are not happy with the haulage providers of the public sector? So, what is the way out? In two and half years, 21 terminals have been assigned to 15 different local and international terminal operators, notable among which are AP Moller, Bollore, Bremenports, and Eurogate .AP Moller won the bid for the Apapa container terminal, bidding a record amount of US$ 1 Billion! In terms of US Dollar value, the Nigerian Ports privatization is the biggest successful privatization endeavor in Nigeria's history.

As the nation reopens to global trade, the Nigerian Ports Authority (NPA) has been strengthening its position as the gateway to the nation's economy. To meet the challenges of the approaching 21st century, the NPA is constructing the Federal Ocean Terminal, an on-going project whose first phase was completed in 1996. This multi-purpose and ultra modern sea port is the largest and first of its kind in Africa. The NPA has also embarked upon an ambitious program to computerize all the activities of the major seaports with emphasis on billing, traffic (including container tracking), accounting, stores and statistical functions. With modern equipment which keeps abreast with rapid changes in technology, and a reputation for efficiency and excellence, the NPA is geared not only to be a pace-setting port but also to serve as an entrance to the most promising economy in Africa.

One of the Authority's port development projects is the Federal Ocean Terminal (FOT) which came on stream in 1996. Equipped to accommodate vessels of up to 60,000 - 70,000 metric tons, it is a Free Trade Zone designed to serve as a transshipment port for West and Central African bound vessels. Its land area is quite extensive - up to 260 hectares, and is thus ideal for international trading activities. With a quay length of 1,590 meters, six berths, and four transit sheds among other facilities it has up to 200,000 square meters of land for container storage as well as for bulk cargo. The declaration of this strategically placed Federal Ocean Terminal as both a Free Trade Zone and an Oil and Gas Free Port opens up immense business opportunities for Nigeria and her international trade partners. For one thing, it is located at Onne, Rivers State, in the heart of the oil operations in Nigeria. This means that investors can participate in a wide range of highly lucrative projects already operational, under construction or planned in the area. These include Liquefied Natural Gas, Fertilizer, Aluminum and Petro-Chemical ventures. The Nigerian Ports Authority, which manages the Zone, has provided a remarkable package of incentives to encourage individual and corporate investors from all over the world.

Skill, if not applied adequately and appropriately, is of no use to those for whom skill is. Service providers whom the service seekers do not find to be satisfactory are of no use to the latter. So, their presence is as good as their absence. By the way, absenteeism is, in fact, yet another reason that keeps the service seekers turning away their faces from the public sector. Again, turn around time for ships is too long; usually calculated in weeks, sometimes months, depending on the cargo being loaded or discharged. Cargo-handling plants and equipment owned by the NPA are few and mostly unserviceable, leading to shipping companies hiring these machines from private sector sources after having paid NPA, dwell time for goods in ports was prolonged due to poor port management. As a result, overtime cargo filled the most active seaports leading to port congestion, labour for ship work was held in the vice-grip of wharf overlords who controlled dockworker unions and supplied less than the manpower paid for. This fraud, which became accepted by the maritime community lasted for years and was usually perpetrated to extract maximum revenue from helpless ship owners and their agents without a care of how this impacted on the Nigerian economy and the already dented reputation of Nigerian seaports, Nigerian seaports were, as a result of the compounded problems, rated as one of the costliest seaports in the world. See the table on port charges in other West African seaports for a comparison, many port premises and quay aprons had fallen to disuse and failed road sections inside the ports made movement of goods within port grounds cumbersome and very slow, following the seaport congestion, complaints of untraceable or missing cargoes were being regularly lodged against the NPA, all to no avail, security inside Nigerian seaports was compromised by the relentless ingress of multitudes of all shades of persons into the seaports. As a result, miscreants called wharf rats easily gained access into the ports and pilfered goods in storage or vehicle parts. In fact, security within port grounds was at the mercy of an elusive racket.

In the given circumstances will any increase in the perks change the present situation? Will the practice of hiring at market price and swift firing of service providers, if necessary, change this situation? Will it be, in fact, possible to have a separate set of public sector administrative rules for the public sector harbour providers? Will it sustain or give sustained results? Will selection of good human beings and their recruitment at paltry levels of salaries, as service providers, change this situation? How many service providers will check their temptation for as long as they serve in the public sector from rent seeking, when there will be ample scope to do that?

Let us consider now another set of inquiries. Are public sector Seaports and Marinas providing required services in a professionally satisfactory manner to those average citizens and participants who cannot afford to pay for unlimited services? Are all the required services, including cranes (operated by stevedores) and forklifts use in loading/unloading ships, which may be provided by private interests or public bodies? Often, canneries or other processing facilities may be located very close by, but Harbour pilots, barges and tugboats could be used to safely maneouver large ships in tight quarters as they either approach or leave the docks. Ports which handling international traffic would as well have customs facilities, available in the public sector piers, wharfs, docks and roadsteads to intending clients, particularly to the lower class slash or even on payment? Should everyone, in fact, continue to get the half-baked services, as they are getting now, because they are available free? What if some people can afford service prices? Should or should not the public sector ensure full range of quality service to them at an efficient pricing level? Will it be unethical because of the fact that government is pledge-bound by the rule of the constitution to ensure availability and the presence of deep water in channels or berths to every citizen of the country? Well, what if the public sector pays for the services of only those who cannot afford the price of the sought services?

As in above, we are basically considering several alternative and at times opposing options, but all with the fundamental aim of ensuring good quality Infrastructure, Harbors, Seaports and Marinas host services to all but under different conditions - for some at some price and for some free. This means that the government is making the services available to all alright but is not taking the responsibility of making those available free to all. Now if the government is not taking responsibility for all then should the government take the responsibility of running the service facilities for all? Will it be a viable or an efficient option? Do we really understand the complexity of running a successful business or industry? There are several things that the government, as a steward, has to tackle in order to make public facilities available to the public. It has to set standards of quality and coverage; establish norms for packaging of services; identify and target the different types of beneficiaries at different locations and in different socio-economic conditions, who on the other hand, would require different sorts of services at varying quantities and varying degrees of complexities; review, supervise, monitor and evaluate provided service quantities and qualities; plan intervention programmes; generate and fund service provision; ensure services; set policies and then also provide services. It is not three in one; God knows how many in one it is (mind it, the maritime sector works in a dynamic environment, where the environment keeps changing, as the people and their demands keep changing).

With some careful scrutiny it will not be difficult to notice a subtle conflict of interest in the design through which the present public Maritime system operates. The government alone decides what services should be given, to whom, how, where, when, at what standards and at what cost and it is also the entity that evaluates its own performance and the effects and impact of the services that it provides. How amazing! Should not, therefore, the government give up some of its conflicting roles and instead ensure availability of required services truly to all? How could it be possible? We all know the answer - firstly, ensure accountability, right. But the question is how. Clearly, in the given circumstances and under the present design, it is not possible. Somebody will have to account for its performance to someone else who is not responsible for providing services but who buys the services, i.e. the seller, the buyer and the shipper will be independent of one another; the buyer will be the chooser of the required services from among available alternatives services and service providers at efficient pricing.

Privatization has the advantage of improving efficiency of marketing of services as it has to perform in a competitive market, which as a consequence effectuates reduction of service prices to attract buyers in a 'no monopoly' environment. The public sector's job then becomes assuring the quality of services for the purchasers of services through some regulating functions, that it can then do in the best possible way, as it will not have to spread its strength too thin in order to please everyone (and then ending up pleasing no one) and also to ensure that everyone is covered with required services by purchasing service for those who on their own cannot otherwise afford to buy these services. Privatization also puts the responsibility of shopping in the hands of the shoppers of services. What the public sector can and must do, however, in this regard is to educate the public to behave as responsible and informed shoppers. These functions will cost the public sector less, improving thereby the public sector efficiency, help the public sector in ensuring overall quality of the provided services and also ensure coverage of services to all better. Experience and studies should teach us by now that, if accountability and transparency are not effective then the government should not try to provide those services free or least under some pricing system that have high demand in open market. It is also evident to all of us that accountability and transparency can hardly be ensured in a situation where there is conflict of interest.