NAGAFF expresses fears of increased charges at Nigeria’s ports

The National Association of Government Approved Freight Forwarders (NAGAFF) has expressed fears of increased service charges at the nation’s ports if the Nigerian Ports Authority(NPA) insists on Dollar payments from the port concessionaires.

The association made its concerns known in a letter addressed to the NPA Managing Director, signed by the NAGAFF Secretary General, Mr Arthur Igwillo, a copy of which was made available to newsmen in Lagos.  

The association said the major concerns are that the exchange rate of the Naira to the Dollar (N300 to $ 1) would skyrocket the taxes payable by the concessionaires, which would leave them to increase their service charges to meet up with their obligation.

It therefore recommended that if the NPA would not accept Naira payment, the concessionaires should be allowed to make payment deposits to the NPA in the prevailing CBN rate.

“In the opinion of NAGAFF, the Nigeria Government and NPA should not
pretend not to know what is happening in the exchange rate market. 

“Instead of coercing and threatening the concessionaires, it shall make a lot of business sense for NPA to invite the concessionaires to payment of bills with reference to the Dollar rate. 

“It is our view that operational money realized should be paid in Naira value rather than Dollar.  If Dollar must be used to effect payment, the concessionaires should be made to deposit the money in the prevailing exchange rate of the Central Bank.

“If Government refuses to do the needful, it means that the concessionaires
may not have any alternative than to increase their local charges to meet
up with their overhead, profit margin and fees payable to the Government
as investors.

“It is illogical to ask the concessionaires to pay their taxes in Dollars from the local content operations where payments for their services are paid in Naira. 

“The NPA should not have an omnibus template asking that dues from the concessionaires whether sourced locally or from international outfits that pay them in foreign exchange should be lumped together and expect them to pay in Dollars. It makes more sense if dues are paid from the currency that the concessionaires get paid for their services.

“If the NPA despite the variation in the exchange rate insists on
collecting dues in Dollars, it will be right for the concessionaires to ask
for an upward review of its charges.  This obviously will hurt the economy
because the multiplier effect of this will be huge.

“At the end of the day it is the common man that has continued to suffer
the whole essence of insensibility to humanity in Nigeria.  We in NAGAFF
may for the first time support the port concessionaires in any action they
take to stop unfairness to business relationship.

 “As we speak the case of uncommon charges is ongoing between Nigerian Shippers Council on one part and STOAN and Shipping Companies on the other part at the Federal High Court.  The frustration has gotten to a stage that it appear there are signs of illusions on the part of concessionaire.

“It is the opinion of NAGAFF that Government and Nigerian Ports Authority(NPA) should realize that the cash crunch is everywhere in the economy. We hope that the directive to the concessionaires should be negotiated to accommodate the economic meltdown in Nigeria at the moment,” it read in part. 

NAGAFF, in the letter, said that as a critical stakeholder, it was particularly concerned that the NPA had directed that ‘all holders of leases with NPA settle full rental obligations to it within four weeks.

It said that it spite of its disenfranchisement during the concession exercise of the port terminals to private operators, it hopes that in due course, the ports should be structured to accommodate local content.

It, however, said that the NPA may have as well become unconcerned with carrying out its oversight functions in port administration having been relieved from the financial burdens usually incurred on capital expenditures, overheads and patronages, adding that the system had enabled the NPA to maximize revenue collection through the effective port operators and improved efficiency.

NAGAFF said that since the concession was to increase port competitiveness, the enabling environment must be created to honestly achieve the set goal.

“The interesting part of the concessioned agreement of our port Terminals are the aspects of fees payable to NPA which are usually in US Dollars. These fees shall include but not limited to commencement fees, fixed annual payments of installments and throughput fees based on total volume of cargo handled on vessels that used the leased premises. 

“In the opinion of NAGAFF to have structured the payment of concession fees in US Dollars is most patriotic because the concessionaire charges shipping lines that use their facilities in US Dollars.  The idea of port concessioning policy of the Government is to increase competitiveness, efficiency and reduce cost of doing business in the Nigerian ports.

“It is also in the public glare that it is not the problem of the concessionairs who are struggling to meet up their payment of fees in Dollars to the Government.  The inflationary rates and decline in the
value of Naira is also considered a major factor. 

“For the avoidance of doubt the official rate of the CBN exchange rate of N197 – N199.50 to a Dollar is very difficult to get.  The mandate of the NPA to the concessionaires to pay up within two weeks or face sanction including revocation of contracts is unfriendly because the open market rate is well
over N300 to a US Dollar.

“It means that if the concessionaire is to pay US$2,000,000.00 which was N130 at the time of signing the contract, it will now pay at N300 per US Dollar.  The implication is that what would have cost the concessionaire N260,000,000 at N130 per US Dollar will now cost N600,000,000 at the rate of N300 to a Dollar,” it said.

It also requested to know what the NPA what been doing with concessioned marine duty including Pilotage, Towage and Dredging, being handled under a third party arrangement.

“We are yet to know what has been happening at the concessioned marine duty of the Nigerian Ports Authority which brought in a third party under NPA supervision, the formed special purpose vehicles under Lagos Channel Management, Bonny Channel Company and Calabar Channel Management Company to provide pilotage, towage and dredging services at the port.”

Copied in the letter are the President, Commander-In-Chief of the Armed Forces; the Senate President; the Speaker of House of Representatives;  Secretary to the Federation;  the Minister of Transportation;  Minister of Finance; the National Security Adviser.

Also copied are the Executive Secretary/CEO Nigerian Shippers Council; the Comptroller General of Customs; the Registrar of the Council for Registration of Freight Forwarding in Nigeria and other strategic heads of the Government connected to the ports and border activities of the Nigeria international trade.