Why NPA should review its stand on Intels

by | October 26, 2017 12:41 am

The Nigerian Ports Authority’s recent termination of its pilotage monitoring and supervision agreement with Integrated Logistics Services Nigeria Limited (Intels) has continued to raise dust, and rightly so considering the huge negative impact the action may portend.

According to NPA, it terminated the agreement with the leading maritime logistics firm on the grounds that the company failed to comply with dictates of the Treasury Single Account (TSA) which has been in place since the coming onboard of the President Muhammadu Buhari administration.

But stakeholders are concerned that the termination of the agreement came even while meetings were ongoing between NPA and Intels aimed to reconcile figures. The NPA’s statement that it acted on the advice of the Attorney General of the Federation further fuelled speculation that a higher authority may have been interested in the matter.

It was therefore a relief when the House of Representatives waded into the matter and decided on a thorough investigation in order to find a lasting solution and in the interest of growing business in Nigeria. The abrupt manner of terminating the agreement particularly worried federal lawmakers.

It was Diri Douye (PDP, Bayelsa) who moved a motion of urgent public importance during a plenary session of the House of Representatives, urging the House to investigate the process of terminating the ports management agreement/contract entered into by the Federal Government with Intels Nigeria Limited. He was worried that NPA could suddenly wake up to terminate an existing agreement that was meant to run a course of 25 years, not minding that the company involved, Intels, has carried out logistics services in Apapa, Onne and Warri ports for 17 years without any issues.

“It’s known that Intels Nigeria has over 7,000 Nigerians in its employment and these Nigerians have other dependants. And if we allow these people to lose their jobs, the economy will suffer further blow and setbacks,” Douye had argued.

“Terminating contracts of this nature where the company had taken foreign loans to the tune of $900 million to build up the ports must be given serious and thorough consideration. And we must also, as a House, insist that in taking such decisions, the Nigerian Local Content Act must be followed, and that due process is also followed.”

Douye’s contention tallies with what experts in maritime economics have been saying since this development was announced – that the negative implication of the NPA’s action at a time the economy is struggling to stabilize, diversify and grow will be dire. They wonder how a government that is driving and promoting public-private partnership (PPP) and job creation could turn around to injure thriving private businesses knowing the implication of such.

For instance, since the boat pilotage agreement was made with Intels, it has generated thousands of jobs for Nigerians. Douye has put the number at 7,000. Assuming this figure is accurate, these 7,000 jobs are currently under threat. If NPA sticks to its gun and insists on terminating the agreement with Intels, several companies that service the agreement may close shop and these thousands of employees would be laid off, further swelling the already overpopulated labour market and compounding the woes of an already bleeding economy.

NPA as a shipping industry regulator has the responsibility to create favourable conditions to attract investors, both local and foreign, not scare them away or suppress thriving local operators. Unfortunately, the abrupt termination of the agreement with Intels may send wrong signals to potential investors and scare them away. Investors are very sensitive. That was how International Container Terminal Services Inc. (ICTSI) left Nigeria in anger following delays in documentations processing. And the ICTSI matter also had to do with NPA at the Lekki Free Trade Zone. ICTSI promptly took its millions of dollars to Kinshasa Port, where it has today created jobs and wealth for the Congo economy.

Douye was also right to have pointed out the fact that Intels took loans to facilitate the contract. Indeed, a cancellation of the agreement will hamper Intels debt service obligations at a time nonperforming loans are squeezing the banking sector.

Duoye’s motion was supported by Sergius Ogun (PDP, Edo), who informed the House that workers affected by the termination of the agreement were protesting.

“How can an agreement that has existed for years and showing the world that concessioning works in Nigeria be cancelled in one day? Intels is hiring Nigerians and if they must cancel that concession, they must follow due process. We want to keep taking oil in the Niger Delta and we are shutting down what gives the youths some level of livelihood, and when this happens, they go and start destroying installations,” Ogun said.

House Speaker Yakubu Dogara had ruled that even if some people felt that there were issues of monopoly in the Intels operation, even that is not an offence in law since “some businesses are better carried out in a monopolistic environment”. For him, the bigger question was whether the monopoly was being abused, a point that has as yet to be proved.

Meanwhile, it was good to hear Mohammed Sani Abdul (Bauchi) suggest that while the House investigates the issue on ground, Intels should be allowed to continue its operations based on the existing agreement. Fair enough, one would say. In the end, the House resolved to probe the controversy surrounding the FG’s withdrawal from the agreement while the company is allowed to go on with its operations.

But beyond these issues already mentioned, maritime economists have been calculating other losses. They argue, for instance, that the agreement termination will further generate crisis in the capacity of commercial banks to provide loans for business investments. They also say it will lead to loss of revenue to the Federal Government as vessels will patronize cheaper service providers and make fewer returns. Other developments that will be hampered, according to the experts, include the upcoming Badagry Seaport Project which will help the Ease of Doing Business initiative of the Federal Government. This singular act, they say, may discourage Intels from continuing with the project.

In all its years of operation at Onne, Intels has engendered the growth of Small and Medium Enterprises (SMEs). One clear example is the Women Empowerment Project Scheme Synergy (WEPSS), a company producing dresses, foot mats, bow ties, overalls, aprons, table clothes, personal protective equipment, etc and employing and empowering thousands of indigent local women. Analysts fear that if the agreement termination is not reversed, this initiative may well be considered already dead.

One therefore prays that the NPA and the Federal Government take a second look at this issue with a view to finding an amicable and lasting solution. Intels has contributed and is still contributing to the Nigerian economy. It does not deserve such a shabby treatment.

Ukaha Otisi

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