The Federal Government’s indecision and reluctance to renew the seaport concession agreement with terminal operators has slowed down investment in the shipping logistics subsector.
The Nigerian Economy report that the terminal operators are currently engulfed by anxiety and uncertainty regarding the next move of the Federal Government. As a result, the port concessionaires are not making any new significant investments in their terminals.
The terminal operators whose lease terms expired since 2021 are even more worried as the concession agreement now falls in the hands of a new ministry, with a minister who is critical and not quick to take actions.
An executive of one of the big terminals in Lagos Port told The Nigerian Economy that despite surpassing investment targets given to them in the 2006 seaport concession agreement by over 500%, the Federal Government has shown no sign of renewing the contracts soon.
Minister of Marine and Blue Economy, Adegboyega Oyetola
The seaports were concessioned in 2006 by the National Council on Privatisation headed by the then Vice President Atiku Abubakar for an initial period of 15 to 25 years. The concession agreements were said to have several flaws which reports say the Federal Government is taking time to correct.
The source said: “We understand that the review and renewal of the lease agreements can take a long process and that is why we started the process two years before the expiration of the contract, but three years after the expiration of the lease contract, we have still not gotten a renewal. So, we have been on this for five years.
“We are now relying on six months roll-on period by the Nigerian Ports Authority (NPA). Some people say we operating illegally, but that is not true. Unfortunately, we can’t plan for long term investment under this situation. Most of us have surpassed the investment targets in the agreement. For instance, if a terminal has a target to acquire two cranes within the lease period, the terminal now has 10 cranes. And we have invested heavily in operation equipments in the last 15 years, but as it is now, we are worried and uncertain about what the Federal Government really wants to do.
“There is a new ministry of Marine and Blue Economy and a new minister too. Also, our agreement would need to be inputed by a number of agencies, such as the BPE, ICRC, NPA and even the Nigerian Shippers Council is also to make recommendations based on how the terminals have performed. The Senate and House of Representatives also have inputs through their committees on Privatisation and Commercialization. So, the involvement of all these agencies before the Federal Government makes the final decision through the Minister might be one of the reasons our lease renewal is delayed.
More information on port concession
Before Nigerian ports were leased to private operators in 2006, the port environment was chaotic due to inefficiency of Nigerian Ports Authority to adequately manage the terminals.
Corruption at the seaports was severe, with vessels waiting time reaching 60 days in very porous ports. Vandalisation of containers and imported vehicles, was endlessly perpetuated by “wharf rats” as containers literally flew out of the ports without the authorised Customs documents.
Concessioning of the ports in 2006 brought in sanity, efficiency and improved the ease of doing business at the ports and vessel turnaround time.
The review of terminal operators’ concession agreement has been ongoing for more than three years with several terminals operating with expired concession agreement.
One of the major terminals directly employs about 7,000 and estimated to indirectly provide employment and economic means for about 70,000 Nigerians.
“This is just one terminal caring for this number of people and probably educating their children,” said Mu’azu Sambo, then minister of Transportation during his visit to Lagos ports in August 2022.
Also, in 2022, the then Chairman, House Committee on Privatization and Commercialization, Ibrahim Makama, decried the Federal Government indecision to renew the seaport lease agreements, saying that federal government stood to “lose investments worth $400 million from the investor.”
The affected terminals include: ENL Consortium, $143 million; Port & Cargo Handling Services, $120 million; Josepdam Port Services, $100 million; and Associated Maritime Services, $2.4 million.
“Coincidentally, the lease tenures of four-terminal operators had expired in 2021 and it became expedient to tie the renewal of the terminals to their commitments for the development of the expired leases,” Makama said.
