• Friday, July 19, 2024
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BusinessDay

‘Delay in PAAR issuance is taking Nigerian ports back to square one’

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PAAR generation

The Nigerian Customs is not coordinated as far as PAAR implementation is concerned. As a result, importers spend over one month to generate PAAR as against the six hours earlier proposed by the Service. Sometimes delays come from banks, Customs or the importer because most of the importers are not conversant with the intricacies guiding the policy. According to the import guideline, the process of generating PAAR depends largely on the importer, whose responsibility it is to provide the purchasing documents, but the actual processing lies between the importer and the transacting banks that send the documents to the customs for approval.

To obtain PAAR, the importer has to provide the purchasing invoice and other three documents from the manufacturer before he or she would be allowed to open a ‘Form M’, after which the person would be given approval to import the goods. The manufacturer would give the importer the original bill of lading, certificate of value, packing list and the others which the importer would also send to the Customs through the bank to prepare PAAR and send back to the bank. This process is prone to delay because before the importer would be able to collect all the required documents, the goods would have been in Nigeria after which it takes another one month to obtain the PAAR.

Regularly, banks end up returning the documents to the importer for amendment before they would be approved by Customs, which might also for some reasons return the documents to the bank for another process of amendment. The process of returning documents that are rejected by Customs to the bank takes another two to three days before the bank would be able to make the necessary corrections and return to the importer. These are the challenges importers are facing in the process of clearing consignment from the port. Unfortunately, Customs went further to cancel the use of provisional release to clear cargoes that are facing PAAR delay.

Effects on the economy

As the delay continues, the Nigerian economy would be forced to pay for delaying the ships that are anchored for days on the high sea. This would be transferred to the importer, who is mandated to pay demurrage and storage charges to both shipping company and terminal operator for cargo clearance delay. Currently, there is congestion in port because no clearing agent is working. This is why the port environment appears to be deserted with very few activities taking place. The agents are the most hit because most of the documents needed for them to work are not ready, but ships are berthing almost every day.

Importers who spend more to clear their goods would definitely recoup their spending by increasing the market price of goods, which the end users will be forced to pay. The monthly revenue generation of Customs would likely drop due to the low level of activities in the port. Also, there is heavy port congestion and a lot of importers have diverted their goods to Cotonou port due to the delays.

Petition to the presidency

The Nigerian port today is witnessing very low business activities. We appreciate the importance of reform in the system, but there is need for such reforms to come with clear implementation guidelines that people can follow up. The problem is not with the policy but the inability of Customs to allow the port users to adapt to the new policy before commencing the full implementation. It is a welcome development that Customs took over destination inspection services from the service providers, but there is need for Customs to carry out serious enlightenment campaign for a period of six months to one year for people to understand the basis of PAAR before starting the implementation. Nigerians have to be educated on how to prepare the necessary documentation needed for the issuing of PAAR. There is problem in Nigerian port now because activities have reduced drastically.

The current problem in Nigerian port needs a holistic approach because if we leave it unhandled, it will not be in the favour of investors like terminal operators, the consignees and the government in terms of revenue generation. I suggest that Customs should restore the use of provisional release procedure to clear cargo so as to enable more people to clear their cargoes for the next six months and to reduce congestion.

Customs’ capacity

I believe that Customs has the needed capacity to implement PAAR, but enlightenment campaign for stakeholders including the banks is lacking. Customs needs to put its house in order as well as all the transacting banks that are involved in document processing to enable the process move accordingly. Customs can do better than it is doing if all the necessary things are put in place.

Way forward

In order not to accumulate more problems in the port, the provisional release should be restored as a way to decongest the port until the problem of PAAR is resolved. There is also need for Customs to inform the stakeholders about causes of the delays in generating the PAAR.