16 Nov 2016

Making Nigerian Ports A Hub Through Competitive Pricing

As far as the Nigerian Shippers’ Council is concerned the only way to make the nation’s ports competitive is through pricing, YUSUF BABALOLA writes.

Since the federal government pronounced the Nigerian Shippers’ Council (NSC) as the port economic regulator, and followed it up with an order titled the ‘Ports Economic Regulator Order 2015’ published in the Federal Republic of Nigeria official gazette No 34 Vol 102 of March 27, 2015, as government Notice No 40, the council had been at the forefront of making Nigeria a hub in West and Central Africa through competitive tariff template.

The shippers’ council was appointed with the basic responsibilities of improving the regulatory regime of Nigerian ports for the control of tariffs, rates, charges, and other related economic charges, and is also expected to enforce fair trade practices to protect rights and balance the interest of providers and users of port services.

The Act also allows the NSC to mediate and establish modern dispute resolution mechanism and to minimise high costs of doing business in Nigerian ports; however, these responsibilities to control pricing in Nigerian ports was met with stiff opposition from terminal operators who want status quo to remain.

Prior to the shippers’ council appointment, terminal operators had succeeded in carrying out their trade with impunity – with arbitrary increment in tariffs, rates, charges, and other related economic charges – done without consultation with stakeholders. But, the appointment of the council has led to the curbing of these excesses. For instance, the chief executive officer and executive secretary, NSC, Mr Hassan Bello, said that there can never be increment in charges without the operators first consulting the council.

“For over one year, there has been no increment in charges because terminal operators can no longer do that unilaterally. No one is asking terminal operators not to increase charges but before they can do that they have to come to the shippers’ council to discuss. No more unilateral increment in charges from terminal operators and government agencies anymore.

“Port charges are things that relate to services rendered and should be comparative to what your neighbour is charging. We always forget that we are in competition with other ports; if you make your charges high, shippers will take their cargo to neighbouring countries. What we are saying is that this tariff should be scientifically arrived at void of any emotion. There is no way you can fix charges because sometime they go up and sometime they come down,” he said.

Commenting further on the review prices, Bello said, “Concessionaires could review prices but not unilaterally or arbitrarily. Even the Nigerian Shippers’ Council Local Shipping Charges Act says that nobody can increase prices without consultation or negotiation with the Nigerian Shippers’ Council, neither will the Nigerian Ports Authority nor any terminal operator do that. The reason is obvious, if you allow anybody to raise charges as they will everybody (shippers/importers) will just leave.

“Does it make sense for an operator to raise his cost just like that? What I want to say is that the tariff and their cost can never be fixed. There are many reasons in favour reviewing these tariffs upward, but there is need to bring these for consideration and approval, this is what is done in civilised countries. Nobody is saying that one naira should be like that for 20 years. No. But there are processes, there are mechanisms for bringing about such a review.”

According to Bello, the measures put in place have, however, made Nigerian ports competitive, attractive, and destination for cargoes. We want the ports to be attractive. What we are trying to do is to make Nigeria the destination for cargoes. The more cargo we get, the more it is profitable for terminal operators, shipping lines, freight forwarders, the NPA, NIMASA and economy in general. That means that the transportation and warehouse sector will have a boost, translating to more employment and contributions to the gross domestic product. What people do not know is that we are in competition.

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