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N538bn ports revenue shows private sector can generate more for govt

The Nigerian government is in dire need of money, and while it remains uncomfortable with letting the private sector run its business interests, evidence points to the need to let go.

Allowing private capital to stimulate the economy as seen in recent developments from concessioned ports can generate more money for the government than it can do on its own.

Last week, the Bureau of Public Enterprise (BPE) said that private sector fiscal contribution to the port and the Federal Government increased to over N538 billion within 11 years of port concession from 2006 to 2017.

These were monies collected from commencement fees, lease fees, throughput fees, tax payments by the concessionaires as well as revenue put into infrastructure development, and investment on equipment.

A breakdown of the revenue shows that the Federal Government collected N5.68 billion as commencement fees, N196.48 billion as lease fees, N61.45 billion as throughput fees, N67.77 billion as tax payment while the private entities investment in infrastructure and equipment stood at N66.6 billion and N139.9 billion, respectively.

Jonathan Nicol, president of the Shippers Association of Lagos State, reiterated the need for the private sector to take the lead in various sectors of the economy. He called on the government to take advantage of private sector financing in building infrastructure, especially at this time when the financial capability of the government is dwindling due to unstable prices of crude oil, Nigeria’s mainstay.

Read Also: Businesses to lose over N55bn as Nigerian ports halt non-oil exports

Using the port as an example, Nicol said since the concessioning of the ports in 2006, significant progress has been made in the area of service delivery, quick turnaround time of vessels and improved welfare of dockworkers, among others.

“Nigeria just exited recession and the government does not have the financial muscle to undertake huge capital investment required for infrastructural development across many aspects of the economy. Just like port concession has yielded great results and turned the maritime sector around, concessioning of other port services will also help in improving efficiency at the port,” he said.

Alex Oko, director-general of the BPE, who disclosed the revenue figures during a virtual event last week, also said there was a remarkable increase in the revenue generated by the Nigerian Ports Authority (NPA) from N56.4 billion in 2003 prior to concession to N87 billion in 2008.

Represented by Amaechi Aloke, Oko, however, said despite the increase in revenue collected from the NPA since the concessions, port users and operators have continued to complain of high charges, high dwell time, poor infrastructure, and an unfriendly business environment.

He noted Nigerian ports have the highest shipping, terminal and local transportation charges compared to other ports in the African region such as Port of Tema and Port of Durban, blaming failing infrastructure within the Nigerian port environment for the increase in overall cost. According to him, more investment is required to improve services and infrastructure in and around the port.

“There is a need for the port system to operate efficiently in order to benefit from the potential inherent in the port sector,” Oko said.

The session tagged ‘Public-Private Partnership as Alternative Financing Model in the Maritime Sector,’ and organised by SIFAX Group in partnership with the Nigeria-South Africa Chamber of Commerce, had a consensus that government needs to allow the private sector bridge the infrastructural gaps limiting the country’s economic potentials.

Osayaba Giwa Osagie, chairman of the Nigeria-South Africa Chamber of Commerce, buttressed the point that the maritime sector in Nigeria has challenges attributable to inadequate infrastructure.

“To enhance effectiveness and efficiency in the maritime sector, strategic thinking is required using a model that can create a more competitive and enabling infrastructure to improve international trade as well as global economy,” Osagie said.

He, however, pointed out that Public-Private Partnership has become an alternative financing model in the maritime sector, which starts with the government giving concession to private entities to build infrastructure through models such as Build, Operate and Transfer (BOT).

This, he said, will help the government to provide infrastructure at a lower cost by signing a contractual agreement with private entities and this has a cost recovery and compensation plan that enable both parties to earn returns on their investment.

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