With the aim of resolving issues of excessive overtime cargoes at Nigerian ports, the Nigerian Ports Authority (NPA) has announced plans to auction off these lingering shipments.

Investors King understands that this new development comes as part of the NPA’s ongoing efforts to streamline port operations, alleviate congestion, and improve overall efficiency.

The NPA’s determination to address the problem of overtime cargoes was underscored during an assessment tour led by Dr. Magdalene Ajani, the Permanent Secretary of the Federal Ministry of Transportation. The inter-agency team, consisting of representatives from the NPA, Nigerian Customs, and the Nigerian Shippers’ Council, conducted an extensive evaluation of the situation at the ports.

According to a statement issued by the NPA, the Lagos and Tincan Island Port complexes, along with their terminals such as the Ikorodu Lighter Terminal, have been burdened with a staggering number of overtime cargoes.

The statement revealed that over 3,200 units of overtime cars and approximately 3,295 units of overtime containers have accumulated in these areas. Additionally, the eastern ports have reported a combined total of 956 overtime containers.

The NPA emphasized the detrimental effects of this situation, stating that it not only hampers the smooth handling of cargo but also contributes to the deterioration of port infrastructure. These ports are designed to function as transit locations, rather than storage facilities for long-standing cargo. The accumulation of age-old overtime cargoes has put immense strain on the terminal spaces required for seamless operations.

The statement read in parts, “Following the inspection tour, which was held on Friday and Saturday, June 23rd and 24th, respectively, an all-stakeholders sensitisation involving shipping lines and associations of freight forwarders and clearing agents was convened on Monday, June 26th, 2023, where it was unanimously agreed that all cargoes and containers that have overstayed their required time at the ports should be auctioned “in-situ” (In their current locations) and removed immediately from the ports.”

To ensure transparency and inclusivity throughout the process, the NPA plans to collaborate with stakeholders to finalize the modalities governing the auction. A similar sensitization meeting will be held with stakeholders from the eastern ports, including Warri, Rivers, Onne, and Calabar, to ensure their active involvement and input.

Mohammed Bello-Koko, the Managing Director of the NPA, has been actively seeking the cooperation of the Nigerian Customs Service (NCS) to expedite the removal of overtime cargoes from the ports and terminal yards. This collaborative effort aims to free up valuable space and preserve the durability of the capital-intensive port infrastructure.

Efficient port operations play a crucial role in supporting trade, attracting investments, and driving economic growth in Nigeria. By taking proactive steps to address the issue of overtime cargoes, the NPA aims to enhance the capacity and effectiveness of Nigerian ports, facilitating smoother cargo handling processes and bolstering overall economic development.

The Manufacturers Association of Nigeria (MAN) has sounded a warning that the proposed hike in electricity tariff by power distribution companies could have dire consequences for the country’s business landscape.

MAN President, Francis Meshioye, expressed concerns that the implementation of increased electricity tariffs may force more multinational companies to relocate their factories outside Nigeria, exacerbating an already challenging operating environment.

Meshioye highlighted the existing power crisis as one of the major factors that have prompted some international manufacturing firms to exit the country.

He emphasized that any further escalation in tariff rates would inevitably lead to an exodus of companies. He called upon the government to reconsider its decision in order to safeguard the interests of both the manufacturing sector and the economy as a whole.

The move to raise electricity tariffs had been previously announced by various power distribution companies, known as DisCos. They had declared that selected categories of consumers would face an increase of approximately 30 to 40 percent, effective from July 1, 2023.

However, Investors King understands that the DisCos later rescinded their earlier statements, clarifying that the Nigerian Electricity Regulatory Commission (NERC) had not yet approved the tariff hike.

Meshioye explained, “In every system there’s always a core structure and this includes the elements that make up the total cost spent in generating your revenue. Now, what we experience as manufacturers is that energy cost is a major cost in processing our products.

“The downsizing of businesses in Nigeria, for instance, shows that businesses are not doing very well. So this power issue and other things have made some manufacturers, particularly international businessmen to relocate from Nigeria to other countries.

“Therefore anything to reduce this energy cost will be very beneficial both to manufacturers and the masses in general. So it (power) is a high cost to us, and a major driver in terms of cost. At the same time, it could lead to other things.

“It is one of the things that make some manufacturers to seek to move their business to another region and site their factories there. It is not the only reason, but, of course, it is one of the major ones.”

Apart from the electricity tariff issue, Meshioye also highlighted other factors that might drive manufacturers away from Nigeria. He pointed to the unpredictability of the foreign exchange rate and the availability of foreign exchange as additional challenges faced by businesses. He stressed the importance of a predictable and accessible forex market, as these factors greatly impact the viability and profitability of manufacturing operations.

Meshioye said: “We have the unpredictability of the foreign exchange rate. In a business model, the more predictable the forex, the better you are. But the availability of the forex itself is another thing. All these are problems that border manufacturers.”

In a surprising turn of events, the Federal Government of Nigeria has reportedly saved a staggering N400 billion within a span of just four weeks since the removal of subsidy on Premium Motor Spirit (PMS), commonly known as petrol, Investors King gathered. 

This revelation was made by oil marketers on Thursday, highlighting the significant financial gains resulting from the initiative, which was officially implemented on May 31, 2023.

Additionally, these oil dealers have raised concerns about a potential rise in the cost of petrol in the coming month of July. Their apprehension is based on the recent decision by the Federal Government to allow the naira to float against the United States dollar, which could lead to market forces determining the exchange rate.

On June 14, 2023, the Central Bank of Nigeria unified the country’s exchange rates into the Investors and Exporters window, effectively relinquishing control over the exchange rate. This move marks a shift towards a more market-oriented approach, potentially impacting the prices of essential commodities such as petrol.

Various operators in the downstream oil sector have indicated that Nigeria has now saved hundreds of billions of naira by halting the subsidy regime. The Nigerian National Petroleum Company Limited (NNPCL) previously disclosed the exorbitant amount spent on subsidy each month. This newfound financial stability is a stark contrast to the losses incurred during the subsidy era.

The National President of the Independent Petroleum Marketers Association of Nigeria, Chinedu Okonkwo, commented on the government’s revenue surge, stating, “Right now they (the government) are making money. At least with this removal of subsidy, the government has raked in hundreds of billions, whether in naira or dollar. This is because every month we know how much they lose before.” Okonkwo’s statement underscores the financial burden previously shouldered by the government due to subsidy payments.

Oil sector operators were informed of the substantial monthly expenditure on subsidy by the NNPCL’s Group Chief Executive Officer, Mele Kyari, during a meeting held in February. These revelations have shed light on the dire financial situation the government faced and have justified the controversial decision to remove the subsidy.

At the meeting, Kyari had said, “Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly PMS imports into our country. In current data terms, three days ago, the landing cost was around N315/litre.

“Our customers are here; we are transferring to each of them at N113/litre. That means there is a difference of close to N202 for every litre of PMS we import into this country. In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N400bn of subsidy every month.”

Commenting on petrol imports by independent marketers, Okonkwo stated that the oil dealers were holding meetings about this.

“We are holding meetings with a lot of people who are interested in commencing PMS imports. We are not resting on our oars about this,” the IPMAN president stated.

Although Okonkwo admitted that petrol price would rise in response to forex rates, he argued that the removal of subsidy would not only lead to a continuous increase in PMS cost.

“When there is deregulation and no subsidy, the price of petrol would either go up or come down. If you want to profiteer, those who bring in and sell at cheaper rates would put you out of business.

“So the market fundamentals will determine the pricing and capping. Therefore the floating of the naira at this time that Nigeria is beginning to make savings is not going to be a fixed thing,” he stated.

The IPMAN president added, “The exchange rate will also move up or down depending on how we manage our crude oil, which is our foreign exchange earner. By the time we begin to meet our OPEC quota and other areas of generating foreign exchange, the naira will begin to firm up.

“And this will result in cheaper fuel. So we should not be thinking that the cost of fuel will continue to rise. The floating of the naira is good because, at the previous level, you only access the dollar at the official rate based on who you know.”

As the Federal Government celebrates its significant savings, concerns continue to mount over the potential rise in petrol prices. The removal of subsidy, coupled with the floating of the naira, may lead to an upward trajectory in the cost of petrol, posing challenges for consumers already burdened by rising living costs.

It remains to be seen how the government will navigate these delicate circumstances. While the savings garnered from the subsidy removal are undoubtedly impressive, the impact on the general population and the overall economy must also be considered.

As Nigerians brace themselves for potential price increases, discussions surrounding alternative measures to support the populace amidst these changes are expected to gain momentum in the coming weeks.