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Economy

‘2016, The Worst Year For Port Operations’

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Container Shipping
  • Ship Owners Tagged 2016,  The Worst Year For Port Operations

With only a few days into 2017, maritime operators including seaport operators, clearing agents and all stakeholders are unanimous in their assessment that the outgoing year has been the most challenging and one that will linger in their mind for a long time to come.

They attributed these challenges to many of what they described as Federal Government’s unfavourable policies, a development that saw the seaports, which used to contribute a large chunk of Nigeria’s non-oil revenue becoming less active.

This left government almost financially stranded, with less capacity to invest in infrastructure, create more jobs, address security, including fighting insurgency, and funding other activities that define good governance.

Recent statistics from Nigerian Ports Authority (NPA), which governs and operates the nation’s ports showed that container traffic inward Nigerian ports (import) dropped to 6,831,348 tonnage as at September 2016, from 9,419,672 in 2015. Besides, the outward container (export) also dropped drastically from 2,263,594 tonnage in 2015 to 1,485,338 in September 2016.

Also, the number of vessels dropped to 11year lows and stood at 3,347 against 5,014 in 2015 and 5,333 in 2014.

The Guardian gathered that importation of raw materials has also dropped significantly, as importers argued that lack of access to foreign exchange and low patronage was killing their business.

Many of the terminal operators are groaning under poor handling of goods, while many of them are finding it difficult to meet their payment obligations to the Federal Government.

As such, opinions are varied regarding the effect of government’s policy pronouncements during this fiscal year, while hoping that 2017 will turn out to be much more fruitful, as captured below:

Reduce tariffs to bolster ports activities, urges STOAN

The Spokesperson for Seaport Terminal Operators Association of Nigeria (STOAN), Bolaji Akinola, while declaring that Year 2016 has been a very difficult year for port operations, told The Guardian that government needs to reduce tariffs to boost activities.

According to him, “The ports have dried up. Usually at this time of the year (December), it will be difficult to get into Apapa or come out of it. But go to Apapa now, the whole place is as free as ever. This is the peak season, yet there is no traffic. No cargo movement. Everywhere is dried up and the main reason like we have said severally is government’s unfavourable policies.”

Such unfavourable policy is also seen in the National Automotive Policy, which he said has wiped out vehicle cargo traffic at the ports completely and almost decimated the roll-on, roll-off, RORO terminals in the country.

Akinola said: “The hike in import duty of vehicles; hike in rice duty has take away the rice cargo traffic, that is why you have some terminals like ENL Terminal drying up overnight. It’s a terminal that used to be very boisterous and very active, providing jobs for many people.”

He argued that although the ban on importation of vehicles through the land borders will take effect from January 1, 2017, but it will not be effective, as it will lead to increase in smuggling.

He insisted, “The ban will not be effective without a corresponding slash in vehicles tariffs. I am not trying to scare anyone, but that is the truth of the matter. It will only lead to high rate of smuggling. The only way to check smuggling right now is to accompany that ban with a slash in tariff so that you bring it to the same level as what obtains in the ports of Cotonou and other countries in the sub-region. Otherwise smuggling will be heightened.

“I will give you a practical illustration. Look at rice, importation of rice through the land border has been banned, yet there is no scarcity of imported rice in Nigeria today. Those imported rice you see in the market did not come in through the ports. You can go to the ports and check; you will not see rice vessel there. So how do they come in? They are smuggled in. The same thing will happen to the vehicles, so that is why the only way out is to slash the tariff to 10 per cent that it was, so that it will be at par with other ports in the sub-region,” he said

For Akinola, the final nail on the coffin is the “ill-advised” Central Bank of Nigeria (CBN), the lender of last resort, restriction of 41 items from the official forex window.

As the New Year is ushered in, he urged the government to look into these policies and reverse them, especially the CBN’s policy and the hike in tariff of imported vehicles.
Ports upgrade is a necessity

For Master Mariner, Captain Adamu Audu Biu, the upgrade of the nation’s ports must take a centre stage in the coming year, saying that Nigeria must rise up and develop its ports facilities. He said this will enable the country to accommodate very large crude carriers (VLCCs) and ultra large crude carriers (ULCCs), which are the latest trend in the global market now, if its desire of becoming the maritime hub in West Africa would be realistic.

Biu said: “Our ports and their approaches were last upgraded in the late seventies and early eighties. One must commend the efforts of some of the terminal operators since the concessioning of the ports. The depth of water available in all our port approaches, jetties and berths need to be significantly improved. Same is the case with the structural integrity of our quay aprons,” he said.

Ship owners upbeat about 2017

President of the Ship Owners Association of Nigeria (SOAN), Greg Ogbeifun, while agreeing that the industry did not do too well in the outgoing year, expressed the hope for better performance in 2017.

In a chart with The Guardian, he insisted that the industry recorded some achievements in 2016, without giving further details, noting that the stakeholders’ forum organised by the Ministry of Transport, further brightened the hope for a better industry in 2017.

“I must say some salient challenges are still there. It’s one thing to come with good policy it is another thing to be able to implement it. If you don’t have more knowledgeable people in the right positions to implement the policies then you cannot achieve what you set out to achieve,” he said.

He appreciated the minister’s determination to resuscitate Nigerian flag flying ships to ply the nation’s waters with the attendant benefits of job creation and training activities for cadet officers.

“In the area of regulation, there is a lot to be done. I don’t think the regulatory agencies are doing much. The fundamental reason for that is that apart from the fact that people that are being appointed to certain positions don’t seem to be knowledgeable enough, there hasn’t been enough stakeholders’ engagement,” he said.

In 2017, the SOAN president said the government should review some of the extant laws and policies including taxes so as to increase the emergence of Nigerian fleets; while issues of human capacity development should be taken serious.

“We must look inward now to grow our ability to build maritime capacity, making use of the maritime institutions that we have in-country. We should stop going out looking for places in Malaysia, India or Philippines. Let us develop our own institutions to meet these standards and it can be done.

“The Maritime Academy, Oron, has a very strong and basic infrastructure that can be built upon, the software can be improved, employ the right calibre of teaching staff. Nigeria has no reason to be sending cadets out of this country to look for schools or ships, when we have thousands of them here in Nigeria.

“Also, Institute of Oceanography has many potential that has not been tapped, so, government should also look into that too. Government should listen to the ship owners, because we have a lot of ideas and we are doing the job.

NPA promises facelift for Apapa roads in 2017

The Managing Director, NPA, Hadiza Bala Usman has promised that the dilapidated port access roads will be fixed in the coming year, as the Federal Ministry of Power, Works and Housing, has incorporated some of the projects in the 2017 budget.

Expressing commitment to make the port access road motorable again, Usman said: “On the ports access road, we have given timelines and deadlines to the respective agencies. On the Wharf Road, we have concluded discussion with Sanford and Flour Mills on mechanism to fixing the road, taking into consideration the need for drainage. The final draft will be submitted to the Ministry of Power, Works and Housing in four weeks, whereby the Ministry will conclude on the framework in which the road will be built. The Ministry will communicate the details to the public when they are ready.

“We have also discussed extensively and gotten the Creek Road and two other roads within Apapa into the 2017 budget by the Ministry of Power, Works and Housing, and they will be constructed within that period.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

FG Paying N1.1 Billion Per Day as Subsidy

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petrol Oil

FG Paying N1.1 Billion Per Day as Subsidy

The recent jumped in crude oil prices means landing cost of Premium Motor Spirit (PMS), popularly known as Petrol, has increased but the Federal Government has maintained the old pump price of N161 – N165 per litre.

In a series of reports, the Petroleum Products Pricing Regulatory Agency (PPPRA) open market price, the price fuel marketers are expected to sell, is N183 per litre as of yesterday. A break down showed N160 is the landing cost per litre while the additional N23 is the Petroleum Products Pricing Regulatory Agency (PPPRA) pricing template.

Therefore, with the payment of additional N23 as stipulated in the PPPRA pricing template and the national petrol per day consumption figure at 50 million litres, the Buhari led administration is offsetting about N1.1 billion on petrol consumption daily.

The Nigerian National Petroleum Corporation (NNPC) has been deducting the amount before remitting balance of oil sales to the Federation Account, according to a Businessday report.

An anonymous person in the oil marketing industry said: “We are back to the era of subsidy and Nigeria is bleeding badly because of this.

With deregulation, the current price of petrol should not be less than N181, so who is funding subsidy of the product for Nigeria to buy at the current fixed price?“.

Another oil marketers said, “the government does not have the boldness to allow full deregulation of petrol because of the spiral effects on Nigerians, and bearing in mind that Nigerians are in very hard times.

Alao Abiodun, the Head of Energy Research, New Nigeria Foundation, explained that “Because of the loans from the IMF and World Bank that they got with the condition that petrol should be deregulated, I believe the government is trying to manage the problem.”

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Economy

Nigeria’s Big Oil-Refining Revamp Gets Off To A Slow Start

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refineries

Nigeria’s Big Oil-Refining Revamp Gets Off To A Slow Start

A year after shutting down all of its dilapidated refineries to figure out how to fix them, Nigeria still can’t say how much it will cost to do the work or where the money will come from.

Nigerian National Petroleum Corp. said it has finished the appraisal of its largest facility, but hasn’t completed the process at two others. Refining experts said the extended halt means the plants are at risk of rotting away and unlikely to restart on time.

“Things haven’t been looking good lately,” with Nigeria’s plants probably “completely out of action for some 18 months,” said Elitsa Georgieva, Executive Director at Citac, a consultant that specializes in African refining.

The dysfunction of its domestic refineries has long put Africa’s biggest oil producer in an ironic situation. It exports large volumes of crude to plants overseas, then pays a premium to import the fuels its customers produce.

Failed Attempts

Pledges to fix the facilities have been made and broken again and again over the years. For at least a decade, NNPC’s 445,000 barrels a day of refining capacity barely processed 20% of that amount.

The latest effort to fix the refineries was supposed to be different to the failed attempts that came before. The company had totally shut all three plants down by January 2020 to do a comprehensive appraisal, and set the ambitious target of having them all back up and running at 90% of capacity by 2023.

“The refineries have been deliberately shut down to allow for a thorough diagnosis,” said Kennie Obateru, an Abuja-based NNPC spokesman. “They can be fixed based on what the diagnosis reveals.”

The appraisal of the 210,000-barrel-a day Port Harcourt refinery has been completed and NNPC has called for bids for the necessary repairs, Obateru said. The company hasn’t determined how much the work will cost.

“It is when we close the bids, everything is analyzed and presented that we will know how much we need,” he said.

The diagnosis is underway at the 125,000-barrel-a-day Warri facility and should be complete before the end of the year, he said. After that, the study of the 110,000-barrel-a-day Kaduna plant will commence.

Major Challenge

One year into the process, refining analysts are skeptical that all this work can be done by 2023.

“I don’t think anyone has a good understanding technically of what’s wrong with those refineries,” said Alan Gelder, vice president of refining, chemicals and oil markets at Wood Mackenzie Ltd. “They’re probably corroding, which makes it a very difficult proposition.”

NNPC reaffirmed its deadline and said there’s no reason the refineries, which are at least 40 years old, can’t be restored to full operation.

“There are refineries that are over a hundred years old still running, so age is not necessarily an impediment,” Obateru said.

There are parallel efforts backed by private companies to add to Nigeria’s capacity. Aliko Dangote, Africa’s richest person, is building a state-of-the-art 650,000 barrel-a-day refinery, which Citac estimates will start production in 2023.

Bringing NNPC’s Port Harcourt refinery to the same clean-fuel standards as Dangote’s modern plant would cost about $1.3 billion for the equipment, on top of whatever other repairs are required to get the facility running, Georgieva said.

NNPC is talking to oil-trading firms about $1 billion of prepayment deals that could finance the repairs at Port Harcourt, Reuters reported last week. Obateru declined to comment on the report, but said “I don’t envisage that we will have a problem getting people to invest.”

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Economy

Food Inflation Hits Record High of 19.56 Percent in December 2020

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Inflation

Food Inflation Hits Record High of 19.56 Percent in December 2020

Food Index, which measures prices of food items, grew by 19.56 percent in the month of December 2020 amid herdsmen attacks and flooding.

In the latest report from the National Bureau of Statistics (NBS), increases were recorded on Bread and cereals, Potatoes, Yam and other
tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.

On month on monthly basis, the food sub-index rose by 2.05 percent in December 2020, 0.01 percent from 2.04 percent recorded in November 2020.

The average annual rate of change of the Food sub-index for the twelve-month period ending December 2020 over the previous twelve-month average was 16.17 percent, 0.42 percent points from the average annual rate of change recorded in November 2020 (15.75) percent” the report stated.

Headline inflation number increased by 15.75 percent in the month of December 2020, up from 14.89 percent.

The report noted that increases were recorded in all COICOP divisions that yielded the Headline index.

On a month-on-month basis, “the urban index rose by 1.65 percent in December 2020, same as the rate recorded in November 2020, while the rural index also rose by 1.58 percent in December 2020, up by 0.02 percent above the rate that was recorded in November 2020 (1.56 percent).

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