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Port Dredging: FG Explores Cheaper Options After Spending N722bn

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  • Port Dredging: FG Explores Cheaper Options After Spending N722bn

The Federal Government has concluded plans to utilise more cost-effective options for the management of its seaport channels, after spending more than N700bn on dredging through a joint venture arrangement, ANNA OKON writes

The Nigerian Ports Authority has concluded plans to overhaul its 15-year Joint Venture arrangement with channel management companies in exchange for what it describes as “a more cost-effective option.”

Our correspondent gathered that although contracts were awarded to the JV companies towards the dredging of the ports, the job done did not justify the huge amount of money spent by the Federal Government.

The General Manager, Corporate and Strategic Communications, NPA, Mr Adams Jatto, disclosed in an exclusive interview with our correspondent that the process of securing a cheaper alternative to the current arrangement was ongoing.

He said, “Shortly after assuming duties, the current management of the NPA undertook a preliminary review of its channel management joint venture arrangements and the study highlighted the possibility of our channel management being undertaken in a more efficient and cost-effective manner by deploying other means.

“The process towards achieving the goal is already ongoing.”

Our correspondent gathered that consultants had been engaged to carry out detailed optimisation study of the channels and to proffer ways of managing them in cost-effective ways.

Request for Proposals were said to have been issued to shortlisted consultants and that once the procurement process was concluded with the consultants and their work was concluded, the government would adopt the most efficient method recommended by them.

The NPA was concerned that despite the $70m dredging contracts awarded to the JV companies annually, they declared minimal profits to shareholders.

Bonny Channel Management Company alone was reported to have secured N717bn worth of contracts without bidding for them.

In a 2017 letter to the Attorney General, the Managing Director, NPA, Hadiza Bala-Usman, stated that the arrangement with the JV companies as conceptualised was incapable of delivering optimum benefit to the government.

On the dredging of Calabar Channel alone, the government was reported to have spent over N5bn in two decades.

The NPA executes maintenance of the port channels through a 60/40 per cent Joint Venture arrangement with the Calabar Channel Management Company managed by Niger Global Engineering and Technical Company Limited; Lagos Channel Management Company managed by Depasa Marine International and Bonny Channel Management Company managed by the Channel Management Company.

The JV partners are responsible for the capital and maintenance dredging of the port channels, removal of wrecks along the channels, maintenance of aids to navigation, management and training of NPA officials in line with dredging operations and visual pollution monitoring and bathymetric survey of the channels.

In 2014, a $12.5m contract was awarded to Niger Global Engineering and Technical Company for the maintenance dredging of the Calabar Channel.

According to the agency, the dredging work was not carried out. The matter attracted investigation from the Economic and Financial Crimes Commission.

In 2017, Bala-Usman sought to terminate the JV arrangement, especially since a technical consultant hired by the NPA, Mobetek International, had advised against the establishment of a channel management company for Calabar.

Several experts had also warned that the dredging of Calabar Channel was too expensive and not profitable.

When asked why resources were not spent on dredging the port, the Governor of Cross River State, Prof. Ben Ayade, while receiving the Outline Business Case on Bakassi Deep Seaport on April 5, responded, “The existing Calabar Port is an inland port which is 97 kilometres away from the open sea with a draft oscillating between four to 10 metres and in some places two metres.

“For you to dredge 97 kilometres from two meters to 14.5 metres to allow for bigger vessels, you definitely need the whole money on earth which is between $200m and $300m just for dredging which must be done often, thereby making it prohibitive in terms of capital and maintenance.”

Also, a former MD, NPA, Omar Suleiman, who headed the authority between 2010 and 2012, said, “The Calabar Port has a big problem. Anyone in the maritime industry understands that in NPA archives, the Port of Calabar was not designed for Calabar; it was designed for Oron.

“Oron is on that paper until it went to the Military Council. It was the Military Council that cancelled Oron and put Calabar. It is 120 kilometres of high sea meandering channel. If you dredge it this month with $100m, in six months’ time you will need to dredge it again. That is the problem of Calabar Port.”

An investment and business consultant, Dr Vincent Nwani, spoke in support of the termination of the JV arrangement.

He noted that Nigeria was notorious with regard to JV relationships.

“Nigeria is not good when it comes to JV arrangement. I think the contracts should be put through open bidding and awarded directly instead of the joint venture arrangement,” he said.

In 2017, the Federal Executive Council approved $44.861m (N16.150bn) for the dredging of Escravos Bar, Warri Port. Silt had built up at the seven-kilometre entrance of the channel, making it difficult for navigation. The government chose to award the contract to another JV firm, Dredging International Services Nigeria.

DISN was earlier awarded a N5.4bn contract by NIWA for the dredging of the lower River Niger in 2011, according to data from BPP.

A maritime and logistics expert, Mr Tunji Olaosun, who is the Chief Executive Officer of Hermonfield Limited, pointed out that the NPA could not do without JV arrangement as far as dredging of the channels was concerned.

He said, “The NPA owns the channels. It is their responsibility to dredge them but it is not their job to do so since they don’t have the expertise. The partners bring in the expertise and the NPA owns the channel; so they share.

“Also, dredging work takes time and the payment is not also done at once but spread over a period. So the NPA has to be a part of the project from inception to the final stage. What they need to do is to find more effective and efficient partners.”

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

Electricity Consumers Get 611,231 Meters Under MAP Scheme

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power project

Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

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Economy

Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

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Banana Island

Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Nigeria is moving in the right direction economically but its movement is not fast, the United Nations stated on Thursday.

Deputy Secretary-General of the United Nations, Amina Mohammed, said this during a meeting at the headquarters of the Federal Ministry of Industry, Trade and Investment in Abuja.

She said the challenges in Nigeria were huge, its population large but described the country’s economy as great with lots of opportunities.

The UN scribe stated that after traveling by train and through various roads in the Northern parts of Nigeria, she discovered that the roads were motorable, although there were ongoing repairs on some of them.

Mohammed said, “This is a country that is diverse in nature, ethnicity, religious backgrounds and opportunities. But these are its strengths, not weaknesses.

“And I think the narrative for Nigeria has to change to one that is very much the reality.”

Speaking on her trips across parts of Nigeria, she said, “What I saw along the way is really a country that is growing, that is moving in the right direction economically. Is it fast enough? No. Is it in the right direction? Yes it is.

“And the challenges still remain with security, our social cohesion and social contract between government and the people. But I know that people are working on these issues.”

She said the UN recognised the reforms in Nigeria and other nations, adding that the common global agenda was the Sustainable Development Goals.

Mohammad commended Nigeria’s quick response to the COVID-19 pandemic, as she expressed hope that the arrival of vaccines would be the beginning of the end of COVID-19.

On his part, the Minister of Industry, Trade and Investment, Adeniyi Adebayo, told his guest that the Federal Government was working hard to make Nigeria the entrepreneurial hub of Africa.

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

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petrol Oil

N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Nigeria spent a total of N10.7tn on fuel subsidy in the last 10 years, the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, has said.

Oyebanji, who was the guest speaker at the 18th Aret Adams Lecture on Thursday, said N750bn was spent on subsidy in 2019.

He highlighted the need for a transition to a market-driven environment through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.

“Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.

The managing director of 11 Plc (formerly Mobil Oil Nigeria Plc) said steps had been taken, “but larger and faster leaps are now required.”

According to him, deregulation requires the creation of a competitive market environment, and will guarantee the supply of products at commercial and market prices.

“It requires unrestricted and profitable investments in infrastructure, earning reasonable returns to investors. It requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices,” Oyebanji said.

He noted that MOMAN had recently called for a national debate by stakeholders to share pragmatic and realistic initiatives to ease the impact of the subsidy removal on society – especially on the most vulnerable.

He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.

“Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019. If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.”

Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space, according to Oyebanji.

He said, “As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.

“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”

He said the philosophy should be for the government to put the legislative and commercial framework in place and let the market develop by itself.

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