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Port Dredging: FG Explores Cheaper Options After Spending N722bn



  • 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, with over a decade experience in the global financial markets.


Electricity Consumers, Hoteliers, Others Kick Against Petrol Price, Power Tariff Hikes




Groups Kick Against Increase in Petrol Price, Power Tariff

The Network for Electricity Consumers Advocacy of Nigeria, the Nigerian Hotels Association, the Federation of Tourism Associations of Nigeria, Hotel Owners Forum, Abuja, and Power Up Nigeria have all kicked against the recent increases in power tariff and petrol price.

In a joint press conference held in Abuja on Friday, the groups rejected the increase and demanded an urgent reversal, saying the economic hardship imposed on Nigerians and businesses in the country by the COVID-19 pandemic would worsen if the increases in electricity tariff and petrol remains.

The speech jointly signed by presidents of NHA, FTAN, HOFA, Power Up Nigeria and read by the NECAN Secretary, Uket Obonga, the groups said it was sad that the Federal Government had chosen to compound the suffering of the Nigerian people at a time when the rest of the world are making efforts to ease the impacts of COVID-19 on their citizens.

They said, “It is sad to note that while other nations are enacting policies and taking measures to cushion the hardship imposed on their citizens by the COVID-19 pandemic, the Federal Government has chosen to place an unpardonable burden on Nigerians.

“This burden is not only the electricity tariff increase but also the hike in the pump price of petrol at a time that the people are suffocating under a distressed economy.”

They added, “It is very unfortunate that the Federal Government could allow itself to be misled into believing that tariff increase is the silver bullet that will shoot the sector revenues to Eldorado.”

The groups further stated that the cause of weak revenue in the power sector had not been addressed, neither is the nation’s low internally generated revenue addressed.

According to the groups, this was not the first time power distributors companies were pushing for a tariff increase, but the past Multi Year Tariff Order reviews that ended up increasing the price of electricity did not yield the desired result.

They said, “Recall that as soon as the MYTO 2015 order came into effect on February 1, 2016, the power distribution companies began another quest for further increase.

“They flagrantly disregarded the provisions of the MYTO path and energy charges contained therein, as the Discos went ahead to choose which tariff rate to use in determining bills given to the customers.

The groups argued that the incessant request for tariff increase had become a hypothetical exercise rather than the solution to the sector’s revenue problem.

We, therefore, wish to state categorically that we reject the September 1, 2020 tariff increase as ordered by the Nigerian Electricity Regulatory Commission,” they said.

They added, “We call on the Federal Government to rescind the increase because we note that there is nothing put on the ground to cushion the effect of the dual increase of the end user tariff and the pump price of petrol.”

Meanwhile, the Nigerian Electricity Regulatory Commission (NERC) has approved power distribution companies (DisCos) to start collecting 87.9 percent of the recently raised electricity tariff from consumers in the first half of 2021.

This was disclosed in the latest tariff review documents forwarded to the 11 power distribution companies in the country. Also, DisCos were approved to start collecting 100 percent of the new tariff from the second half of 2021.

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Nigeria’s Electricity Consumers to Start Paying Full Rates from H2 2020




Electricity Consumers to Pay Full Rates from July 2021

The Nigerian Electricity Regulatory Commission has approved power distribution companies to collect an average of 87.9 percent of the recently raised electricity tariff from consumers in the first half of 2021.

In the latest tariff review documents issued to the 11 power distribution companies, power distribution companies had been approved to collect 100 percent of the new tariff from July to December 2021.

The approved new collection rates for the Discos means that Nigeria’s electricity consumers would be required to pay higher tariffs starting from the second half of 2021.

This is coming despite Nigerians kicking against the increase implemented on September 1, 2020. Nigerians have declared the numerous increases by President Muhammadu Buhari as anti-people policy, saying the administration continues to compound the people’s burden despite COVID-19 negative impacts on them.

A few numbers of Nigerians have staged protests to compel the administration to revise increases on Value Added Tax, pump price and electricity tariff because of the ongoing economic uncertainties and weak macroeconomic data after the National Bureau of Statistics (NBS) reported that the inflation rate rose above 13 percent, unemployment rate hits 27.1 percent and general plunged in economic activities and earnings of the Nigerian people.

However, the approval means DisCos will collect an average of 88 percent tariff in the first half of 2021 and up it to 100 percent in the second half of 2021 as contained in the NERC’s directive.

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Shipping Companies Lost 1,382 Containers to Bad Weather Yearly – Report




World Shipping Council Says 1,382 Containers Lost Year

A recent report by the World Shipping Council has estimated that about 1,382 containers are lost at the sea yearly due to bad weather and other unforeseen circumstances.

In the report titled ‘Containers lost at sea – 2020 update’, the council attributed the disappearance of over 1,382 containers to severe weather, rough seas, ship groundings and structural failures as some of the problems which can result in containers being lost at sea.

The report said it used a survey-based system to calculate the losses made by shipping companies over a 12-year period.

It said, “Upon review of the results of the 12-year period (2008-2019) surveyed, the WSC estimates that there were on average a total of 1,382 containers lost at sea each year.

“With 12 years of data, it is particularly interesting to look at the trend of three-year averages, reported in each of the survey updates.

“In the first period (2008-2010), total losses averaged 675 per year and then quadrupled to an average of 2,683 per year in the next period (2011-2013).

“This was due in large part to the sinking of the MOL Comfort (2013) that resulted in a loss of 4,293 containers and further impacted by the grounding and loss of M/V Rena (2011) resulting in approximately 900 containers lost.

“Nevertheless, the next period (2014-2016) was marked by another vessel sinking with the tragic total loss of the SS El Faro (2015) with the loss of 33 crew members and 517 containers.

“Even with that, the three-year average annual loss for the period was 1,390, about half of the previous period. The downward trend continued into the most recent period (2017-2019) when the three-year average annual loss was almost halved again to 779.”

The WSC, therefore, encouraged governments and other stakeholders to improve container safety and reduce containers lost at sea.

This, it said could be achieved by making adjustments to the Safety of Life at Sea and revising the International Organisation for Standardisation standards for container lashing equipment and corner castings.

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