• Tuesday, February 27, 2024
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Chapter 14: The Channel management contract

Chapter 14: The Channel management contract

One of the most important responsibilities of the Nigerian Ports Authority is the dredging of the channels into the ports to ease accessibility for vessel traffic.

Prior to 2004, the NPA utilised mostly in-house processes for the dredging of channels. These processes however began to fail due to the malaise that is synonymous with public service. Dredging equipment broke down due to red tape, corruption, inefficiency, and lack of maintenance. Consequently, port operations became slow and uncompetitive necessitating the reforms between 2004 and 2006.

Pursuant to the Ports Act, the NPA initiated Special Purpose Vehicle (SPV) Joint Venture relationships with a view to establishing a long- term structure for the continuous management of the water channels.

In 2004, the Authority established the Bonny Channel Company (BCC) Limited and the Lagos Channel Management (LCM) Limited with multinational companies with competency in channel management. In 2006, the NPA signed joint venture agreements in which the Authority held 60% equity with the respective companies. The agreement was for 15 years to terminate in 2021.

In view of the terminal dates, the Authority initiated procurement processes for the contracts in June 2020. We placed newspaper advertisements in compliance with the provisions of the Procurement Act on fresh tenders. When the Minister saw the adverts, he called me to request that we cancel the tender and extend the contract for each of the channel management companies by one year.

I explained to him that these contracts were about to expire after the 15-year tenure. I felt it would not be best practice to extend the contracts. The country would get better value through a transparent procurement process in which the extant partners would still be free to participate.

I argued that it was more in our interest to continue with the process, especially as we already placed advertisement for these contracts that were valued in the neighbourhood of about $70m. He argued that the budget of the NPA may not be able to entertain the contracts that year given the reduction in budgetary allocations induced by COVID-19.

I explained that I did not think this would be a problem. Given that our channels were at the heart of port operations and literally the gateway to the country’s economy, I was sure that priority attention would be given to the issue. He however insisted that I should cancel the invitation for tenders as that was his decision.

After this conversation, I decided that I could not go through with the directive without a formal document to that effect. I wrote to the Minister referring to the conversation on the contracts for channel management and the directive to withdraw the advertised invitation for tenders.

I adduced reasons why we should go on with the tender process including the value that would accrue to the country by throwing the contract open to qualified companies including those currently providing the service. I stressed the importance of concluding a transparent tenders’ process to avoid sending wrong signals to stakeholders and the international business community. The ministry wrote back to direct that we cancel the tender process and extend the current contracts by one year, in line with the Minister’s initial verbal directives.

Upon the receipt of this letter from the ministry, we wrote to notify the Bureau for Public Procurement (BPP) of the Minister’s instruction to cancel the advert and requested approval for the extension of the expiring contracts for one year as requested by the minister.

The BPP responded by declining our request to extend the contracts by one year as directed by the minister. They opined that it was against the country’s interest to grant the extension, and that the Authority should proceed to conduct a public tender for the JV partner.

The BPP noted that the companies operating the JV for the past 15 years did not go through competitive tendering when they were initially engaged and that to get the best value for Nigeria at this time. The Bureau however, granted a six-month extension of the contract for the purpose of completing the tender process.

We reported the BPP position to the Minister and attached the letter from the Bureau. The Minister wrote back to us directing that the Authority should instead procure the dredgers and provide information about wreck removal costs as opposed to proceeding with the tender as directed by the BPP.

This suggestion appeared rather incongruous, especially as the Minister had previously raised concerns about the impact of reduction in budgetary allocations to the NPA because of the COVID-19 pandemic.

Apart from the fact that it was wrong to attempt to circumvent the directive of the BPE, I was far from convinced about the economic wisdom of the suggestion.

From available information, the Authority would need to purchase a minimum of four dredgers and other equipment to maintain the channel. The cost outlay for the equipment, according to our sources were: Jumbo Trailing suction Dredger: 200 million Euros; Medium trailing suction hopper dredger: 100 million Euros; Cutter suction dredger: 150 million Euros; Multicart: 10 million Euros.

Read also: CHAPTER 11: Dismantling OMSL’s secure anchorage area

In addition to the cost of procuring the equipment, the Authority would require running and maintenance costs. Whereas with the JV, the technical partners, who are professional international dredging companies, used dredgers which they already have in their pool for deployment as and when required.

More importantly, there was a reason for the public sector reforms that removed direct responsibility for this service from the Authority. To consider going back to that failed system 15 years after would be retrogressive and self-defeating.

As it became apparent after my suspension from office close to one year later, the Minister never forgave me for the position of the BPP, which did not allow him to get his objective of extending the contract as he wanted. I believe this was one of the many events that turned the Minister against me.