• Friday, February 23, 2024
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BusinessDay

CHAPTER 15: Directive to reinstate an expired contract

Port Terminal

I dwelt extensively on two of the major business relationships that existed between the NPA and Integrated Logistics Limited otherwise known as Intels in previous chapters.

I explained that the company.
became concessionaires operating some of the terminals owned by the NPA in Onne, Port Harcourt, Warri and Calabar following the Port Reforms in 2006.

I also explained the service boat management operations for which the company monitored and collected revenues on behalf of the Authority from 1997 until 2020 when the contract expired.

At the expiration of the contract, the Authority placed advertisements requesting for expression of interests for provision of service boat operation agency for the Nigerian Ports Authority.

Intels joined other companies to submit bids for the contract. They were however disqualified for flouting some of the regulations guiding the process.

Upon disqualification from the process however, the company instituted legal proceedings seeking to stop the NPA from completing the procurement process.

It raised the issue of the construction of Onne 4B as one of the reasons it should continue to monitor service boats’ operations for the NPA.

Upon completion of the tenders process, the Authority, in a letter dated 9 November 2020, presented the four companies recommended by the Parastatal Tenders Board for the consideration of the Ministerial Tenders Board.

After this, it was to be presented to the Bureau of Public Procurement, to issue a certificate of “No Objection” and ultimately, the recommendations would be presented to the Federal Executive Council (FEC) for approval.

In the letter, we provided the Minister with details of the process that produced the recommended companies.

We also explained that we now provided an agent for each of the pilotage districts thereby removing the monopoly of one company managing all four. The contract would also be for a period of ten years during which agents would earn a commission of 15% as opposed to the previous situation where Intels handled the operation in four pilotage districts at 28% commission.

The Minister held on to the letter without declining the Authority’s request or taking any step towards completing the process. On 22 January 2021 however, he wrote to the President asking for the restoration of suspended contracts between Intels and the NPA.

In the letter, entitled: “restoration of suspended contracts between Integrated Logistics Services Limited and the Nigerian Ports Authority,” the Minister reminded the President of the “long-running issue of contractual disputes” between the two parties and how it has resulted in protracted legal disputes at the instance of the company.

He explained that court orders as a result of litigation had affected the financial projections of the NPA and the national treasury negatively. On the strength of this, he requested the President to approve:
‘The restoration of all contracts between NPA and Intels currently suspended or purportedly terminated by NPA which are now the subject of legal disputes between the parties.’

In addition, he sought a directive for the withdrawal of all cases in court or at arbitration by all parties with a view to administrative resolution by his office.
Upon sighting the approval, the COS to the President contacted me and requested that I provide details of all NPA’s contractual relationship with Intels.

I felt the minister’s recommendation were awkward as no contract between NPA and Intels was terminated.

While it is possible to withdraw cases in court and seek amicable resolution to all conflicts, the service boat operations contract had ended as a matter of effluxion of time in August 2020. It was not terminated.

In other words, at the time that we were asked to restore this contract, no contract existed. It was, therefore, impossible to restore something that did not exist!
More than that, however, was the flurry of court actions that would undoubtedly ensue because of the latest directive.

Tens of companies went through the bid process for these contracts. At the end, the best four were selected and recommended to the Minister. These companies were already waiting to receive final approval from the government and were not likely to take this policy shift with equanimity.

The floodgates of litigation would be opened with the attendant negative optics in the light of attracting foreign investment.

The disruptive effect of the directive on our efforts to sanitise the sector and ensure that the country gets the best of its resources, preoccupied my mind for the next few days. I ventilated on a few occasions during discussions with my colleagues on the Executive Management Team of the NPA.

On 25 January 2021, I responded to the Chief of Staff and forwarded a letter with the heading: ‘details of the respective contractual relationships between Nigerian Ports Authority and Intels Nigeria Limited.’

This letter started as follows: “In line with your request for the Authority to provide details of its respective contractual relationships with Intels Nigeria Limited, please find below as requested…”

The letter listed the following contracts with short notes that provided information on their import and guiding terms and conditions.

Concession agreement for Onne Terminal A and B in Rivers Ports, Rivers State

Concession agreement for Calabar Terminal A in Calabarorts, Rivers State

Concession for Warri New and Old Terminal, Delta Port, Delta State

Service Boat Operations Managing Agent, where I highlighted the following: “It is important to note that the agreement with Intels on this service was not terminated but it reached the end of its contractual period in August 2020.”

Construction of Onne 4

Construction of Onne 4B

Utilisation of berths 9,10,11

Managing Agent for the maintenance and operations of water supply at Onne.

Concluding the letter, I wrote: “based on the above, the Chief of Staff is invited to note the following:

1. Note the above listed 1 to 8 contractual relationships between the Authority and Intels.

2. Note that the Authority has not terminated any contract with Intels

3. Note that in the case of the service boat operations managing agent, Intels filed a suit against the Authority for a contract that expired but was not terminated.

4. Note that in the case of berth 9, 10, 11, Intels filed a suit against the Authority for the withdrawal of an offer letter not the termination of an agreement as no agreement was signed for the use of the berths.

Upon the review of the information provided by the NPA, the Chief of Staff sought advice from the Attorney-General of the Federation and Minister of Justice, the Director General of the Bureau of Public of Procurement (BPP) and Director General of the Infrastructure Concession and Regulatory Commission (ICRC).

In a letter dated 23 February 2021, Prof. Gambari informed the recipients of this correspondence that although the President had earlier approved the restoration of all Intels’ contracts and the withdrawal of all court cases, additional information from the NPA made it necessary to seek counsel in assessing the legal and procurement related issues involved.

He directed an expeditious review of the submissions provided with a deadline of 9 March 2021.

In its letter on 9 March 2021, the BPP agreed with the NPA that the concession agreements for the Terminals in Warri, Port Harcourt and Calabar were subsisting and not terminated. It also agreed that the contract for service boat operation expired rather than being terminated.

The letter said about the service boat contract in part: ‘the effective date for the contract for the service boat operations management agent was 9 August 2010 and it was to continue in force for Ten (10) years until 8 August 2020.

This supports the NPA’s position that the contract naturally expired and was not terminated.’

It noted that Intels initiated the court case against the NPA to stall the procurement process for the engagement of a new service boat operation agent, which will negatively affect the Authority’s revenue.

On the construction of Onne 4B, which Intels uses as basis for the case, the BPP wrote: ‘Messrs. Intels and Deep Offshore Nigeria Ltd are recognised as separate entities under the law and as such, any perceived contractual issue between NPA and Messrs.

Deep Offshore Nigeria Ltd on the Onne 4B project should not form the basis for Messrs. Intels to institute a lawsuit against the NPA to stall a procurement process for a separate service. This is particularly so, as the NPA has already committed to Messrs. Intels that it remains committed to discharging its debt obligations on the Onne 4B project and will do so irrespective of the expiration of the Intels contract as service boat operations management agent.‘

It said further that the NPA’s decision to initiate a procurement process ahead of the expiration of the contract for service boat operation management was in order, and that it was important for the Authority to conclude the process expeditiously since a public tender had been issued and the country was already losing revenue from the stalled process.

In the final analysis, the Director General of the BPP, Mr. Mamman Ahmadu, who signed the letter, stated that while seeking amicable settlement of contractual issues like the one in question was desirable, ‘the correct procedure is that contracts should be won through a proper procurement process that complies with the provisions of PPA, 2007.

Furthermore, there is need to need to avoid the kind of monopoly being enjoyed by Messrs. Intels, which has cascaded into the entitlement mentality being demonstrated by the firm.’

Before this, the Federal Ministry of Transportation wrote the Authority on 17 February 2021. The letter, signed by the Director of Maritime Services, Mr. A.D. Suleiman, conveyed the President’s approval of the restoration of all Intel’s contracts and withdrawal of all cases. It informed the Authority that a committee headed by the Permanent Secretary supported by three directors in the ministry had been set up to engage with the company and Intels.

A meeting of this committee held on 15 March 2021, and I used the opportunity to explain that the Authority had suspended action on the issue pending the review advice sought by the President from the AGF, DG BPP and DG, ICRC. I pointed out that the FMOT and NPA were copied in the letter written by the Chief of Staff to the President for this purpose.

Nevertheless, the Minister directed the Authority to forward the agreement with Intels on the service boat operation.
On 18 March 2021, I sent the agreements to the Minister with a cover letter reiterating my submission at the meeting three days earlier and suggesting that the Authority was awaiting this review.

This situation subsisted until 5 May 2021, when I was asked to step aside from office for the investigation of the management of the Authority since 2016. It turned out that one of the allegations against me was “failure to obey presidential directive,” despite all the explanations I offered on the issue of restoration of Intels pilotage contract.

The issue, however, came to an end in November 2021 when the President was reported to have followed the advice of the AGF, DG BPP, Acting DG ICRC, who were unanimous in their conclusion that the NPA was justified in its handling of the matter.

The lead report in THISDAY, on 11 November 2021 had the headline; ‘Buhari Cancels Restoration of Intels’ Pilotage Contract.’

It had two kickers: ‘AGF, BPP back Bala Usman,’ and ‘President orders conclusion of the procurement process within 60 days.’
THISDAY quoted the AGF as having written to the President as follows: ‘…There is certainty in the duration of the contract and the position of the law remains clear that a written contract freely entered by the parties is binding on them.

Accordingly, the contract for Managing Agent awarded to Messrs Intels in 2007 validly came to an end and extinguished pursuant to the terms of agreement between the parties, which specified an end date of August 2020.

The agreement did not provide for any further extension of the contract in favour of Intels.

Read also: Chapter 14: The Channel management contract

“It is also to be noted that NPA, pursuant to the expiration of the contract, kick-started the procurement process to appoint another managing agent to forestall any break in the service being rendered. NPA submitted that it concluded the tender /bidding process and forwarded the result to the Minister of Transportation for same to be presented for FEC’s approval.”

The report said that: ‘Intels, the AGF added, resorted to litigation to frustrate the conclusion of the procurement process based on its grievance on a different subject-matter.

‘The development, the AGF added, had created a vacuum in the provision of this critical service in the maritime sector with its attendant loss of revenue from service boat operation to the Federal Government.

‘The AGF also stressed that the approval granted to the minister by the president in January last year (2021), which Bala-Usman was said to have disobeyed, was based on insufficient information at the time.

‘The purported termination, he concluded, could not have occurred since the contract came to an end in 2020 based on the agreement by the parties.’

Although it took a while before the truth about the conflict between Intels and the management of the NPA under my watch came to light, it was gratifying that Nigerians and the global maritime community eventually saw the justification for the stance that we took.