FG Explores Cheaper Options After Spending N722 Billion On Port Dredging

FG Explores Cheaper Options After Spending N722 Billion On Port Dredging

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.

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.

FG Explores Cheaper Options After Spending N722 Billion On Port Dredging, “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.”

Source: Punch