• Monday, February 26, 2024
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Chapter 7: Dredging of Calabar Channel

Pressure mounts on importers as clearance fees adjusted to N952

By the end of my first six months as Managing Director/CEO of the NPA, it was obvious to me that one was going to be swimming with sharks. Although, I had some inkling of irregularities, there was no way of knowing the pervasiveness until one got into the system. Suffice it to say that there were several revelations.

Even prior to my appointment, I was aware of the low-capacity utilisation of the ports outside Lagos. Tin Can Island port and Apapa port and their environs have become synonymous with congestion. Paradoxically, there were four other ports across the country with less patronage. The tour of the six ports provided ample opportunity for first hand assessment and interrogation of the situation.

During these visits, we discovered that insecurity in the South-South zone where the four other ports are located was the major reason for the reluctance of shippers to patronise the ports. Consigning their goods through these ports would throw up additional risks with attendant increase in insurance premiums.

In addition, decisions as to the destination of cargoes are at the discretion of the consignee. To that effect, consideration for the cost of transportation of cargo to the ultimate destination is a major factor in reaching a decision. Lagos remains the commercial capital of the country and most consignees prefer to ship their goods through the Lagos ports where there are ready consumers. Goods designated for other parts of the country are then transported by road by middlemen or directly to consumers.

Consumers may also receive the goods in Lagos and make their own arrangements for transportation. Some of the Eastern ports also face infrastructure challenges.

A good example is the Ikom bridge on the Calabar-Ikom-Ogoja road in Cross River State. Apart from being narrow, it is a steel truss bridge with headroom restrictions, which makes the movement of articulated vehicles with containers impossible.

This is an impediment to evacuation of cargo from the Calabar Port to the northern part of the country, even though it is the fastest route to the north from any of our ports. This was one of the roads we identified as priority in our conversations with the Federal Ministry of Works.

Most importantly, there is the vexed issue of the shallow draughts of the ports outside Lagos. Except for the Onne Ports, which has an average depth of 12 metres, none of the Eastern Ports has a draught deeper than 8 metres. The 8 metres was achieved at the Warri Ports with the Escravos Channel in 2019.

People wonder why the NPA has not dredged the Warri, Onne, Port Harcourt and Calabar Ports to attain the required depth to receive big vessels, which are now preferred by shipping lines. The answer to this question is that the ports are currently river-based ports with limitations of depth because of the design depth of the quay structure.

In addition, the rate of siltation is high in river ports, and this comes with the attendant demand of constant maintenance dredging. The huge cost of this constant dredging is, however, not commensurate with the economic viability of the ports. Because of this, we encouraged the use of flat bottom vessels in locations like Calabar, wherein a vessel berthed following our keen actions to provide solutions.

We also provided discounts on harbour duties for locations in eastern ports to encourage improved patronage. The ten percent discount, which came into effect on 10 June 2019 affected:

  • Container vessels with at least 250 TEUs
  • General Cargo vessels with at least 16,000 MT
  • Combo Vessels with at least 16,000 MT :
  • RORO Vessels with at least 250 units of Vehicles

Concerning Cabalar, certain events transpired months into my tenure that tested my will, and which could be described as my baptism of fire.

Sometime early in 2017, my office received a letter from the Ministry of Transportation. The letter, entitled: ‘Joint Venture Partnership between the Nigerian Ports Authority and Messrs. Niger Global Engineering and Technical Company Ltd on the Management of the Calabar Channel,’ requested that we investigate and provide information on a joint venture relating to the management of the Calabar Channel to the Honourable Minister of Transportation. The minister attached a petition from the law firm of Martin Aguda & Co.

The law firm were solicitors to Messrs. Niger Global Engineering and Technical Company Ltd and requested the minister’s intervention in their client’s claim for the sum of $22m purportedly owed to their client by the NPA.

They claimed in the letter that the Calabar Channel Management (CCM), a Joint Venture led by Niger Global, had undertaken the dredging of the Calabar Channel, and that the stated amount remained unpaid after the satisfactory conclusion of the contract. They therefore requested payment.

Upon investigation as directed by the Minister of Transportation, the Authority found no proof of the work that the company claimed to have executed, even though they had already received the sum of $12.5m.

We set up a committee which discovered several irregularities surrounding the work. We were therefore constrained to decline the request for payment and instead, demand a refund of the sum previously paid.

The investigation went as far back as 2004 when the NPA first placed newspaper advertisements inviting bids from companies for the management of access channels into the Lagos, Warri, Calabar, Port Harcourt and Onne ports.

Although 19 companies, including Niger Global Engineering responded to this public notice by submitting bids, the marine engineering company, Mobetek International Limited, engaged as consultants on the project, advised against establishing a channel management company for the Calabar Channel at that time. The consultants noted that vessel traffic at the ports was low and did not justify the establishment of a Joint Venture, which is usually funded from ship dues. So, while, the Lagos Channel Management and Bonny Channel Company were established in 2005, Calabar was excluded.

However, in June 2010, the NPA prequalified six companies that submitted technical and financial bids for the dredging of Calabar Channel. The NPA then requested that the Bureau of Public Procurement (BPP) issue a certificate of No Objection in favour of Messrs. Calabar Channel Management Limited, a non-existent entity at that time. This request was declined by the BPP, following a petition by one of the participating companies, Dredging and Reclamation Jan De Nul Limited.

Action was stalled on this procurement until September 2012 when the then Minister of Transportation sought the approval of President Goodluck Jonathan to appoint a consortium led by Niger Global Engineering using the Special Purpose Vehicle (SPV) known as Calabar Channel Management Limited (CCM), in conjunction with the NPA for the management of the Calabar Channel.

The Minister conveyed the President’s approval of this request to the NPA in a letter dated 26 November 2012. The letter directed the Authority to enter partnership with the consortium on the 60% to 40% ratio in favour of the NPA.

The letter also informed the NPA that the JV company would be known as the Calabar Channel Management Limited and that the agreement would subsist for an initial period of 15 years.

Shortly before this however, the BPP had secured the President’s approval for selective tendering for the capital dredging of the Calabar Channel.

In its correspondence with the President, the Bureau noted that there was nothing in the JV agreement between the NPA and Messrs. CCM that granted exclusive rights to the latter and that CCM’s request for first right of refusal was without basis.

It then sought approval for Messrs. Dredging and Reclamation Jan De Nul Limited; Messrs. China Harbour Limited; Messrs. Lagos Channel Management Limited; Messrs. Van Oord Nigeria Limited; Messrs Bonny Channel Company Limited (in association with Messrs. Dredging International Services Limited); and Messrs. Calabar Channel Management Limited (in association with Messrs. Nigerian Westminster Dredging and Marine Limited) to proceed to the next stage of the tender process to re-procure the capital Dredging of Calabar Access Channel without having gone through a procurement process.

While presenting the BPP’s request to the President in a memo, the Chief of Staff to the President wrote that “the capital dredging of the Calabar Channel be re-procured through a selective tendering process in order to fast track the exercise in line with Sections 40-43 of the Bureau of Public Procurement Act, 2007, and to involve all the six firms that submitted financial bids in the inconclusive June 2010 tender exercise and the newly incorporated CCM.”

The NPA, upon receipt of this presidential approval, commenced the re-procurement process by inviting all the six companies and the CCM to meetings. The CCM, which was yet to be incorporated at this time, chose not to attend these meetings after the first time arguing that the subject of the bidding already belonged to it. The presidential approval sought by the transportation minister, therefore appeared to have been planned to actualise CCM’s self-acclaimed advantage in the process.

On 23 January 2013, the NPA wrote Niger Global Engineering to convey the approval of CCM’s bid to manage the Calabar Channel. This was followed by an agreement, approved by the Attorney-General of the Federation, after an initial objection. The agreement was signed on 25 July 2013, and the consortium led by Niger Global Engineering was on its way to managing the Calabar Channel.

A series of petitions on the legality of the award to CCM by other participating companies, however, threw a spanner in the works yet again. The companies claimed that a re-procurement process was already on and that the advantage given to CCM was unacceptable. When President Jonathan became aware of this situation, he withdrew the approval given to the Niger Global led consortium, directed that the JV be set aside, and granted another approval for the re-procurement of the capital dredging aspect of the channel in accordance with the BPP Act. The NPA discontinued the earlier process involving CCM and started working towards getting the other companies on board again.

Niger Global Engineering then instituted a legal action against the Federal Government and the Federal Ministry of Transportation (FMOT). The company sought declarations: that the Joint Venture agreement between the company and the Nigerian Ports Authority was valid and subsisting and that the FMOT and NPA’s request for a BPP certificate of “No Objection,” to adopt selective tendering for the re-procurement of capital dredging of the Calabar Access Channel was a breach of the JV Agreement and therefore null, void and of no effect.

Finally, it sought an injunction restraining the defendants from taking any further step towards the re-procurement of the capital dredging of the channel.

Surprisingly before the hearing of this suit, the management of the NPA received a letter from the FMOT conveying yet another approval from the President for the cancellation of the re-procurement of the capital dredging.

The letter, dated 11 August 2014, reversed the setting aside of the JV and directed that the CCM execute not just the capital dredging but also the maintenance dredging of the Calabar Channel using the Authority’s approved measurement rates. Niger Global Engineering then filed a notice of discontinuance of the suit and the court struck out the action.

Shortly after this, the Minister of Transport directed the Authority to convene the inaugural meeting of the Board of the CCM for the discussion of modalities for the operation of the company within two (2) weeks.

Ten months later, the minister performed the flagging-off ceremony for the contract on behalf of the President. Subsequently, CCM submitted two invoices amounting to US$34,565,998.21 (Thirty-four million, five hundred and sixty-five thousand, nine hundred and nighty-eight dollars, twenty-one cents) for the fourth and first quarter of 2014 and 2015 respectively for dredging works.

The NPA paid Niger Global the sum of US$12,500,000.00 (Twelve million, five hundred thousand dollars) for work the company claimed to have done on the Calabar Channel.

However, the Economic and Financial Crimes Commission (EFCC) in 2015 soon received petitions against CCM and with the investigation of the petitions, the Authority suspended further payments. It also embarked on a forensic bathymetric survey to verify CCM’s claim of work done.

The investigations revealed a variety of underhand dealings which were detrimental to the interest of the country. To start with, even though the NPA understood the imperative of dredging the Calabar Channel, the management adduced cogent commercial reasons why maintaining a channel management company would be unviable.

The enthusiasm of the Ministry of Transportation to unilaterally champion the appointment of Niger Global Engineering as Joint Venture partners for the Calabar Channel, without the technical input of the Authority also raised questions. It became even more worrisome with the various attempts to ignore the advice of the BPP on the need to subject the process to competitive tendering and mislead the former President more than once into taking decisions out of tune with due process and commercial prudence and reality.

The Director General of the BPP noted as much in a memo dated 18 May 2015 to President Goodluck Jonathan.

The memo read in part: “Your Excellency, I am of the humble view that you were not properly informed by the Hon. Minister of Transport’s letter ref T.016/S.107.IXI dated June 10, 2014, and the subsequent brief to you on the matter by the Chief of Staff, leading to your consequent directive rescinding your two earlier approvals for the re-procurement of the Calabar capital dredging contract along with your instruction for the award of the contract for capital and maintenance dredging of the Calabar Channel to CCM.”

He said in another part of the memo as follows: “The persistence demonstrated by the FMT/NPA to engage Messrs. CCM without subjecting the procurement process through any form of competition is strange considering that Messrs. CCM was incorporated after the initial procurement was cancelled by the BPP, it appears as if Messrs. CCM was surreptitiously incorporated for the purpose of obtaining this contract without competition… In line with extant regulations, and procedure on public procurement, a project of over N26billion should be procured through a competitive bidding process to ensure value for money among others as per your earlier approval….”

The process by which Niger Global Engineering secured the Calabar dredging job was marred by irregularities. Also, the investigators were unable to verify the work the company claimed to have executed.

The company claimed it carried out the dredging activities between November 2014 and January 2015, but neither the Harbour Master nor the Port Hydrographer was aware of any dredging activity at this time. The company did not at any time communicate with the management of the NPA during these purported dredging activities.

Although MV Altantico Due, MV Hurricane and MV Waterway, which were dredgers and a survey boat were sighted in and around the ports on various dates, between August 2015 and September 2015, they either just showed up for the flag-off, disappeared without communicating with any personnel at the ports, or showed up for a few days and sailed off without documentation. It was evident no point did any of the vessels engage in actual dredging activities.

They apparently just put up these appearances to create the impression that dredging activities were on.

Everything, including the report of the Management Committee on the Review of the Calabar Channel Management Limited contradicted Niger Global Engineering’s claims.

One excerpt from the report read: ‘a comparison of pre and post dredging depths of the channel with a survey carried out six (6) months before the commencement of the dredging work revealed that the dredging of the affected areas was questionable.’

The Management of the NPA consequently rejected the request for payment of the balance and demanded a refund of the US$12,500,000 paid to the company for work not done.

In a letter, signed by me and addressed to the Minister of Transportation on 19 April 2017, the management of the NPA made three recommendations on how to handle the CCM matter.

These include the immediate dissolution of the partnership between the NPA and Niger Global Engineering and Technical Company Limited in line with the provisions of the Joint Venture Agreement; that the NPA establish the best mode of transparently managing the Calabar Channel and that the law firm of Messrs. Martin Aguda and Co. be informed.

After this, the NPA and I faced a series of targeted attacks. One of these was the allegation that 282 vessels got missing at the various terminals of the NPA between 2010 and 2016.

Read also: CHAPTER 6: Apapa traffic congestion and Eto

On 20 July 2017, we were handed over documents containing a list of 29 items and details of individual Bills of Lading of consignments carried by different vessels to representatives of NPA for review.

Four days later, another set of ten volumes of items numbering 1-1252 were alleged to have been transported by vessels to the Authority through the Nigerian Shippers Council.

After reviewing the documents as requested, the Authority discovered that of the first set of 29 items handed over to NPA, only five vessels were identifiable while the other 24 items were repetitions of the five vessels that were identified.

Concerning the ten volumes of items numbering 1-1252 handed over to the NPA by the Nigerian Shippers Council, the NPA was unable to conduct a meaningful review as the documents did not provide the data that would enable verification. The documents provided no vessel names or dates of arrival of the vessels. This made establishing links with the manifest, bill of lading and consignee impossible.

In addition to this, no port of call and name of terminal where any vessel berthed were provided; finally, no rotation number of vessels was supplied. All we could do at the end of the day, was to forward a report with relevant supporting documents evidencing payment of all charges for the five vessels.

That was the last we heard of this concocted story meant to put the NPA and its management in the eye of the storm.

We, however, continued to insist on the return of the huge sum of money of which we believed Niger Global Engineering and Technical Company Limited received from NPA and the Federal Government of Nigeria. To date, the legal action subsists. I am, however, convinced that not only should the NPA not pay the claimed balance, it should also, in fact, recover the money that have already been paid to the company.

If Nigeria will become a country of which we can all be proud, we must confront every action that runs against the laws of the land and ethical standard. This was what we did in this instance, even though we didn’t realise that more intense battles with powerful forces and the intricate web of manipulation and corruption that they have created to the detriment of Nigeria, were in the offing.