Recently, the federal government through the Nigerian Shippers Council (NSC) announced plans to sign agreement with shipping companies that will see port cost reduce by as much as N300 billion annually. But as the parties involved get set to append their signature to the agreement, pertinent questions needed to be asked as to why the cost of doing business in Nigerian port is very high. One of the reasons for port cost in Nigeria, according to experts, is insecurity.
According to the International Maritime Bureau (IMB), despite the relative improvement in security in Nigeria waters in the last quarter, the country still remained one of the places shipping companies loves to avoid as a result of insecurity. This is despite the humongous amount the federal government is spending on security.
Last year, the government announced that it awarded a maritime security contract worth $195 million (about N60 billion) to an Israeli company, HLSI Security Systems and Technologies. The contract involves the deployment of unmanned area vehicles, helicopters, fast patrol boats and others. That is not all.
To further improve security on the country’s territorial waters, the Nigerian Maritime Administration and Safety Agency (NIMASA), recently launched its Command, Control Computer Communication and Information (C41) operation centre.
The C4I system, also called the Deep Blue Project, is expected to eliminate, or at least, reduce the scourge of piracy and other criminality in the Gulf of Guinea, particularly in the Nigerian maritime domain, and totally eliminate the incidental insurance premium and other country-specific charges on Nigeria-bound cargo.
The C4I centre, THISDAY checks showed, would create maximum security, strong surveillance as well as low freight costs, as there will be increased port calls due to a high level of security.
All these measures are aside several patrol vessels acquired by the Nigerian Ports Authority (NPA) for the Nigerian Navy, whose statutory responsibility is to secure Nigeria’s territorial waters, for patrol.
Secured Anchorage and Cost
Despite the massive deployment by the Nigerian Navy and NIMASA, vessels calling on Nigerian ports, especially those calling Lagos, Warri and Port Harcourt ports are made to pay exorbitant fees that are not remitted to the federal government. Ships that are supposed to anchor in designated areas at the port are forced to move to an area known as Secured Anchorage Area (SAA) where they are made to pay high charges or face threats of insecurity deliberate orchestrated to make it look like only vessels at the SAA are safe.
Speaking at a quarterly stakeholders meeting in Port Harcourt recently, operators in the eastern ports raised the alarm that government agencies were flouting the Federal Government Executive Order on joint inspection of vessels. They lamented that many indigenous shipping companies have closed down due to inability to afford the huge cost of private armed guards, which fluctuates between $30,000 and $50,000, following the spate of insecurity plaguing the eastern flanks of the nation’s waterways.
A cross section of the ship owners and brokers, who spoke at the meeting, revealed that about 90 per cent of vessels that call at the Port Harcourt port or Onne port come with armed guards.
According to a representative of Interserve Nigeria Limited, one of the indigenous shipping firms operating at the Rivers port, “We need the Nigerian Navy and the NIMASA to be up and doing as regards ensuring security around the eastern port channels.
“What is disturbing us today is that the eastern port channels are not secured. Pirates are hijacking vessels and abducting captains at will. That is why many of the foreign vessels that call here come with private armed guards, which is very expensive for indigenous shipping companies.
“Many of the indigenous shipping companies have collapsed because they cannot afford private security. It is very expensive to hire private armed guards to escort your vessel along the eastern waters of the country. Some charge as much as $50,000 per trip. The least you can get, at times is $30,0000. Only the foreign shipping firms can afford it and maybe few indigenous shipping firms who gets juicy contracts.”
Also speaking, another operator, who identified himself as Njoku Emmanuel explained that government agencies were flouting the federal government’s directive on joint inspection of vessels at the Rivers port.
In his words: “We don’t really understand the function of each government agencies at the ports anymore, because every agency that comes on-board a vessel dabbles into the functions of other agencies of government.
“For example, NIMASA has three sections that will inspect a vessel, and all of the sections do the same job. Port Health will come on-board to inspect, and after leaving, Plant Quarantine will come on-board to inspect the provision store that Port Health has already inspected.
“Immigration Service will come on-board and spend four hours scrutinising International passports and Seamen’s books, even when they knew that the vessel came from Lagos to Port Harcourt. All these have affected the turnaround time of vessels at the Rivers port and also exhaust Captains on-board vessels.”
NPA Takes Action
Concerned by threat to national security and the cost of doing business at the country’s seaport, the NPA recently notified the Nigerian Navy of its decision to dismantle the SAA, operated on behalf of the Navy by a private company, OMS Limited.
The NPA insisted that the security of the country’s waterways was the statutory responsibility of the NIMASA, Marine Police, and Nigerian Navy, which must all ensure a safe and secure Nigeria territorial waters.
The move by NPA was hailed by stakeholders in the maritime sector, who claimed the initiative was timely to stave off a financial burden that the consulting company had brought on them.
SAA is an area outside the Lagos port that the Nigerian Navy, with a private company, has defined as a secure place where vessels can anchor safely from the threat of pirate attack.
THISDAY investigation reveals that vessels are charged $2,500 for the first day at the anchorage and $1,500 for subsequent days. Numbers obtained by THISDAY also reveals that it takes between 28 and 30 days for a vessel to exit the anchorage.
According to vessel traffic numbers obtained from the NPA, 1,666 vessels called at the Lagos ports alone in a quarter and a minimum of 55 per cent of vessels that call at the Lagos port stays at the SAA.
This means that OMSL Limited, allegedly, owned by a prominent politician pencilled to challenge Edo State Governor Godwin Obaseki for the All Progressives Congress (APC) governorship ticket in 2020, on behalf of the Nigerian Navy, collects, averagely, $133.28 million (N47.98 billion) annually. It has been collecting this fee since 2014.
Worried by this, the Minister of Transportation, Rt. Hon. Chibuike Amaechi, had directed the NPA to write a letter to the Chief of Naval Staff to request that the Navy stopped the operation of the facility. The NPA, in the letter, stated that the revenue generated from the operation at a charge of $1,500 per vessel per day from 2014 to date was neither remitted to it nor the federal government.
NPA argued that the patrol boat, NNS Dorina P101, as mother vessel, and the interceptor vessels, NNS Agede P258 and NNS Torie P259, were all purchased by it for the Nigerian Navy to patrol the anchorage and not to be designated for use at a facility that has no relationship with it.
In the letter dated October 9, 2019, which was obtained by THISDAY, NPA stated, “Sequel to your letter ref: NHQ/CNS/015/54/00/Vol.X111/695 of January 2018 to the Honourable Minister of Transportation giving the background to your involvement with the creation and operation of the Secure Anchorage for vessels by OMSL, the Honourable Minister had directed that a letter be written to your service to request that you stop the operation of this facility for the following reasons listed below:
“One, by virtue of Port Act (1954), an Anchorage Area is an integral part of NPA statutory responsibility while NIMASA, Marine Police and Nigerian Navy ensure a safe and secure Nigeria territorial waters. Two, the Secure Anchorage Area (SAA) (Centre Point 06 17’30N/003 12’00E) established by OMSL is located within the port limit, which should be strictly under the management and control of the NPA.
“Three, it is established that vessels are directed and regulated to this facility by OMSL, who NPA does not have contractual agreement or other with. However, the Navy has a Memorandum of Understanding with OMSL and is providing security to the anchorage. Four, the continued operation of this facility by a private entity could pose security threat to the nation.”
Cost of Doing Business
NPA further stated that the operations of SAA added up to high cost for vessels coming to Nigeria through the charge of $1,500 per vessel per day.
It said in the letter to the Navy, “To this end, you are graciously requested to stop the operation of the SAA while a new framework – nearing conclusion – is being put in place to be managed by NPA in collaboration with your service and other government agencies that are critical to the operation of the anchorage.
“Please note that the authority will issue a notice to Mariners for the discontinuance of the SAA operation and a consequent amendment of the British Admiralty Chart-1381.”
When contacted for comments, Managing Director of NPA, Hadiza Bala-Usman, confirmed the development. She stressed, however, that she was worried that entrenched interests might fuel insecurity to give an impression that the SAA had to stay.
Bala-Usman said: “We have also notified the Nigerian Navy that, that arrangement cannot continue anymore, and we anticipate a pushback from the operators of these safe anchorage areas. But we are going to sustain our position that vessels should not be charged for safe anchorage area.
“The Nigeria government, Nigerian Navy, should provide that. And to the extent that the Nigerian Navy requires an additional support, we would provide that support. But, already, our vessels that we procured to secure that anchorage are part of the vessels that they are using to secure the safe anchorage area.”
The NPA managing director added, “I would like to say that any increase in insecurity in the Lagos waters, as relates to this, we are going to hold some people responsible, because once you remove, for example, a safe anchorage, they would try to intentionally create insecurity. I just needed to sound that as a point of reference.
“This safe anchorage has been removed, and we would work with the Nigerian Navy and NIMASA to secure the anchorage. Any attempt to create any insecurity, to justify the establishment of the safe anchorage area, would not be accepted, because our anchorage in the Lagos area has been very safe. We do not have any incidence or activities of militants in the waterways in this part.”
In their reaction, officials of many shipping companies applauded the NPA for the bold move, adding that this would go a long way in reducing port cost. The officials, who did not want their names in print, disclosed that NIMASA already collected security fees, saying the multiple fees are a major barrier to the growth of the shipping industry in Nigeria.