Uncertainty over terminal licence renewal as port concessions near expiration

As port concession period reaches its 15th year, terminal operators that entered 15 years contract agreement with the Federal Government are now worried as to whether the government would renew their operating licence or takeover their terminals.

Some of these terminals whose operating licences are already due for renewal include ENL Consortium in Apapa Port, Tin-Can Island Container Port (TICT), Josephdam Port Services Limited, Five Star Logistics Limited and Port and Cargo Handling Services Limited in Tin-Can Island Port.

Most of these terminal operators, who started with 10-year contract period on Build, Operate and Transfer (BOT) basis, had their licences extended in 2016 for another five years each after reaching the first 10 years of handling cargo in the ports, and the five-year extension is expected to expire this year.

Mohammed Bello-Koko, acting managing director, Nigerian Ports Authority (NPA), said in Lagos recently that the NPA’s management had constituted a committee to review the terminal lease agreements in line with operational realities.

“NPA has secured approval for the renewal of expiring leases for five terminal operators and the process has commenced. We have constituted a committee to review the lease agreements in order to achieve the objectives of the port reforms,” Bello-Koko said.

He listed the terminals to include Ports & Cargo Terminal Limited, ENL Consortium Terminal C and D, Josephdam Terminal, and AMS Terminal in Delta Port.

“We understands that Rotimi Amaechi, the minister of transport, has given an approval to the NPA to renew the licence of most of these terminals that their agreements will expire this year,” says a source close to one of the terminals, who does not want his name in print.

According to the source, though the approval has not come but it is on good authority that it is presently being processed by the NPA.

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Giving insight into the agreement, the source however discloses that there is a clause in the concession agreement that states that government must give three years eviction notice to any terminal it wants to terminate its contract.

The source further adds that none of the terminals in question is given such eviction notice, which automatically means that the Federal Government must retain or extend their licences.

On his part, Adewale Adeyanju, president, Maritime Workers Union of Nigeria (MWUN), calls on the Federal Government to retain existing terminal operators at the ports due to the significant impact they have made over the past 15 years.

He says terminal operators have improved service delivery at the ports and enhanced the welfare of port workers, especially dockworkers.

“We are not saying that the government should not review the operations of terminal operators but we are saying that they should allow peace to reign in the industry. From 2006 till date, there is an element of improvement in terminal operations,” he explains.

Emma Nwabunwanne, a Lagos-based importer, says there is a need for the Federal Government to review the activities of terminal operators in line with plans of the immediate past management of the NPA to ensure strict sanction of non-performing operators.

He notes that some of these operators have invested in the acquisition of cargo handling equipment and have ensured seamless cargo clearing in their terminals while some have failed to make a serious impact in developing their terminals as required.

Recall that the Federal Government in 2006 entered into a concession agreement with private sector players to take over cargo handling operations in the nation’s seaports on a build, operate and transfer basis.

The aim, according to the government, is to improve service efficiency and reduce the cost of doing business through serious investment in cargo handling equipment and the development of terminal yards for stacking of imports.

In addition, the Bureau of Public Enterprise (BPE) says private sector fiscal contribution to the ports and 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 and tax payments by the concessionaires as well as revenue put into infrastructure development, and investment in equipment.