Slow activities characterise Nigeria’s maritime industry in Q1
A container terminal in Apapa, Lagos
By FRANCIS EZEM
Activities in Nigeria’s maritime industry have continued to experience lull in the first quarter of the year, 2018, which experts believe is a reflection of the general economic down turn. Recall that Nigeria reportedly exited recession in the last quarter of 2017, with recent marginal improvement in inflation rates and other Economic Performance Indicators.
The maritime industry had also in the last couple of years been experiencing sharp decline in the volume of imports. This has been attributed to the foreign exchange problems in the country, which saw a decline in the value of the naira to an all-time low of N366 to the dollar. Some policies introduced by the Central Bank of Nigeria CBN, to curtail the free fall of the naira further worsened the decline in import volumes.
For instance, apex bank placed a restriction on a total of 41 import items, some of which included raw materials from accessing foreign exchange from the official window, which is lower. Though many items were removed from this list, especially given the insistence of the Manufacturers Association of Nigeria MAN, the effect is still being felt in terms of low cargo volumes.
The industry in the last quarter of 2017 also had to grapple with a new shipping charge, Port Additional Destination (PAD), imposed on importers by shipping companies in Nigeria, championed by CMA CGM Shipping Nigeria Limited without the approval of the Nigerian Shippers Council. The payment of the new freight charges took effect Tuesday, October 10, 2017. Under the new regime, a 20-feet container attracts a charge of N38, 000 while that of a 40-feet container is N76, 000.
Meanwhile there were some events that shaped the industry in the out gone first quarter, one of which was yet another court case instituted by the Seaport Terminal Operators Association of Nigeria STOAN, umbrella body of the private terminal operators and Shippers Association of Lagos State SALS at the Court of Appeal, urging the appellate court to vacate its earlier ruling, which upheld the powers of the Nigerian Shippers Council to act as economic regulator for the port industry in Nigeria.
The appellate court had earlier upheld a judgment by a Federal High Court sitting in Ikoyi, Lagos, which declared some charges illegal imposed by the appellants illegal and ordering them terminal operators to revert to status quo on storage and port charges as at 2009.
This time, the crux of the appellants’ case is the definition clause of one of the exhibits of the council that the Lease Agreement for the port concession dated June 3, 2003 in respect of Break Bulk Terminal ‘D’ at Apapa Port made between ENL Consortium Ltd, and representatives of the Federal Government comprising the Nigerian Ports Authority and Bureau of Public Enterprises, which defined the functions of a regulator. The appellants therefore challenged the validity of the council, which was the first respondent to act as economic regulator for Nigeria’s seaports to reduce costs of doing business at the ports and making it more user-friendly.
They also challenged the second exhibit by the council, which was the letter of the Minister of Transport dated February 20, 2014 which conveyed the approval of the council as the economic regulator of Nigeria’s seaports by the President of Nigeria. The appellate court however held that a regulator was defined as “Any Government Authority of Nigeria established, assigned, chartered or commissioned to regulate and control the development and/or conduct of Nigeria’s maritime industry, including without limitation, the lessor and the port”. It also held that the implication of the above definition of “Regulator” as contained in the first exhibit of the council as agent or authority appointed to regulate the activities at the port qualifies it as a regulator.
Another issue for the appellate court to determine the nature of the notice served on the appellants to revert to the status quo in relation to its powers under the Nigerian Shippers Council Act, in which its role was advisory. The court held again that: “A look at “the Notice,” it is clear that it is not a “review or modification or increase of charges or introduction of new charges” as alleged but, it is a directive urging the appellants to revert to the approved rates contained in the Minister of Transport’s letter of May 15, 2009. As rightly argued by the learned counsel to the 1st Respondent, it is not subject to the statutory requirement of prior negotiation and agreement with the Appellants within the context of section three (f) of the NSC Act and Regulations 1 and 2(1) of the 1997 Regulations.
It therefore ruled that the notice was not issued under the council’s powers under the NSC Act and Regulations but, pursuant to its appointment as economic regulator, and so there was no wrong exercise of statutory powers as alleged by the appellants.
Another event that took the industry by storm was the proposed introduction of palletisation policy for all import goods into the country by the Federal Ministry of Finance and Nigeria Customs Service. Palletisation primarily is a method of storing and transporting goods stacked on a pallet and shipped as a unit load. It permits standardised ways of handling loads with equipment like forklift trucks. Many experts however argued that the proposed policy was a ploy by Customs to subject all imports to physical examination as against the use of scanners, which is more efficient that globally acceptable.
All the freight forwarding and Customs brokerage associations including the Association of Nigerian Licensed Customs Agents ANLCA and National Association of Government Approved Freight Forwarders NAGAFF could not hide their resentment for the policy.
The National Council of Managing Directors of Licensed Customs Agents NCMDLCA petitioned the Federal Government over the introduction of the controversial cargo palletisation policy, insisting that the government should fix all the scanners to make cargo examination more efficient instead of reverting to physical examination that promotes corruption.
According to the group in the letter signed by its president, Lucky Amiwero, pallets, crates and loose dunnage constitute extra cost to shipper that does not require pallet adding that crates and loose dunnage in their shipment, will attract additional cost, delays and discourage shipment into Nigeria’s seaports due to cost, long procedures with attendant delays.
But in what appeared a major relief for the importers and their agents, the Federal Government announced that it has relaxed the new cargo import policy and therefore urged all stakeholders including all importers to strictly comply with international standards and stacking prescription by the original manufacturers of products imported into the country.
The suspension was contained in a statement issued by the Federal Ministry of Finance, saying that this followed a series of complaints, petitions and requests received from the trading public in respect of the palletisation policy contained in the 2017 revised import guidelines and in order to further strengthen the ease of doing business drive.
The statement signed by the Director in charge of Home Finance, Olubunmi Siyanbola, on behalf of the Minister for Finance, Kemi Adeosun, reads in part: “All container cargoes coming into Nigeria should comply with international standards for packing/stuffing and loading into containers; and specific packing and stacking standards prescribed by the original manufacturer of the product”.
“Dead-pile loading, or loading without pallets of containerised cargoes, is acceptable provided it conforms to the criteria outlined above.
“With the exception of used automobiles and heavy machinery, any loose packed new or used items without manufacturers’ loading and packing prescriptions should be packed in crates or cartons atop pallets accordingly.”
The reviewed guidelines had directed that all containerised cargoes should be loaded neatly in a manner that will promote safety in handling and facilitate speedy examination and clearance at the ports by Customs.
The minister however warned importers and other members of the trading public that failure to comply with the provisions designed for seamless implementation of the palletisation policy, the Nigeria Customs Service will not hesitate to invoke sanctions as prescribed in the Addendum to the 2017 revised import guidelines issued by the Federal Ministry of Finance.
The statement exempted a total of 49 items, also gave a grace period of March 31, 2018 for exemption from palletisation policy of goods for which Form “M” had already been established prior to the effective date of January 1,2018 for full implementation of the policy, remained in force.
In the course of the quarter, the Nigerian Maritime Administration and Safety Agency NIMASA, made a forecast for the industry, which is first of its kind in the history of the industry, projecting a five per cent growth rate.
The agency, according to a maritime industry forecast for 2018/2019 unveiled in Lagos, by its Director General, Dr. Dakuku Peterside projected that the country’s maritime industry would record a growth rate of between 2.5 – 5 per cent in 2018 and the post- election era 2019. The industry is also projected to experience increase in demand for maritime services in the country.
Details of the forecast also show that the total fleet size would grow by 4.08 per cent in 2018 and 4.41 per cent in 2019, even as oil tanker fleet size will decrease by 2.23 per cent in 2018 and grow by 1.7 per cent in 2019. The non-oil tanker fleet size is projected to increase by 8.15 per cent and 8.72 per cent in 2018 and 2019, respectively while the oil rig count is projected to increase by 27.67 per cent in 2018 and 0% in 2019.
While noting that the maritime industry plays a major role in the exploitation, distribution and export of Nigeria’s ocean resources, with a total annual freight cost estimated at between $5billion and $6 billion annually, the maritime component of the Nigeria’s oil and gas industry is worth an estimated $8 billion, further reflecting the prominence of the industry to the Nigerian economy.
He said: “Nigeria’s maritime industry forecast for 2018 and 2019, which is the first of its kind, is intended to serve as a compass for local and international stakeholders willing to do business in the Nigeria maritime domain. It is part of the initiatives of the Dakuku Peterside- led management aimed at realising a robust and virile maritime industry in Nigeria. The forecast period 2018-2019 covers a time of continuous recovery from recession, to the 2019 general elections and finally culminates in the post-election era.
“As a regulator, we are driven by values and commitments, as these are the only ways that investors can be attracted to harness the great potential in our maritime industry. On our part, we will continue to work out incentives and maritime industry specific interventions to attract investments”, the DG said.
He however expressed delight at the maritime forecast release which coincided with the release of the country’s Gross Domestic Product GDP, figures by the National Bureau of Statistics NBS, confirming Nigeria’s exit from recession.
Also, many commands of Customs made several seizures as well as collecting huge revenue figures within the review period. For instance, The Apapa Command intercepted four pieces of 40-foot containers of banned and regulated pharmaceutical products including Tramadol Hydrochloride tablets, Collstop Chlorpheniramine, Dobumol Analgestic, Ibramol, Chest and Lung tablets, Col-caps capsules and Rally Extra illegally imported from India.
The seizure of the four containers with registration numbers MRSU 3637149, MRKU 6196764, MRSU 3516384 and MRKU 6058282 imported by one Villa Gold Pharmacy from India, followed credible intelligence report of the Customs Intelligent Unit CIU, of the command.
The Customs Area Controller in charge of the Apapa Command, Comptroller Jibrin Musa, who briefed news men on the seizures, in Lagos, also said that one suspect has been arrested in connection with the illegal importation and granted administrative bail while investigations are on. Meanwhile the command collected a total of N31.015billion revenue for the month of January, 2018.This represents an increase of over N5.1billion compared to the N25.95billion collected in the corresponding period of last year. There was also change of guard at the Tin Can Island Command of the service with the deployment of Comptroller Bashar Yusuf to the Customs headquarters, Abuja while Comptroller Musa Abdullahi takes over.
The new controller, who held an interactive session with journalists, disclosed that the command under his watch has stepped up the automation process to enhance efficiency and checkmate revenue leakages.
“To ensure that all revenue leakages are blocked, for efficient revenue collection, a module of the Nigeria Integrated Customs Information System NICIS, which is in line with the World Customs Organisation’s standards with a view enhancing efficiency in cargo processing at the command has been upgraded to the second version, to boost revenue collection at the command”, the CAC said.
Another significant event within the review period was the change of guard at the Association of Nigerian Licensed Customs Agents, ANLCA, with the emergence of Iju Tony Nwabunike as the National President-elect to replace the outgoing Prince Olayiwola Shittu.
Nwabuike defeated Emenike Nwokedi 38-35 votes in a keenly contested election held in Enugu, Enugu State capital. Kayode Farinto also emerged vice president -elect, having polled 38 votes.
Other elected officers include Alhaji Mukaila Abdulazeez, National Secretary, having polled 70 votes, Denis Okwu emerged Assist National Secretary with 41 votes, Hajia Bola Muse, National Financial Secretary by polling 43 votes while Dada Livinus Agubuzo became the National Treasurer, having scored 39 votes, even as Joe Sanni, immediate past Senior Special Assistant to the outgoing president emerged National Publicity Secretary, while Alhaji Liasu Oyekangu emerged the Zonal Secretary, West.