By Ashton Dagana
It has become expedient to deconstruct some and outright falsehood being peddled in the media about the decision of the Federal Government to terminate a pilotage agreement between the Nigerian Ports Authority and Integrated Logistics Services Limited (Intels). When a lie goes unchallenged for too long, the mischievous man will brand it as the truth. Efforts by columnists-for-hire to label the termination of this illegal agreement as a political move is meant to achieve just that. The onus, therefore, is on all well-meaning intellectuals to rise in defense of the truth and furnish Nigerians with the facts of the matter.
The boat pilotage agreement between the NPA and INTELS was signed in 2010 for a validity period of 10 years. Under the agreement, INTELS collects pilotage payments made by ship owners on behalf of the NPA and takes 28 percent of all revenue collected as commission. The argument that INTELS has created thousands of jobs for Nigerians through the agreement is moot because that is exactly what is expected of any company that makes $353.066 million in just seven years from one contract. Creating jobs in the process of executing a contract that generates N100 billion in revenue for any company is not a groundbreaking achievement.
The fear that thousands of Nigerian workers will be laid off with the termination of the INTELS agreement is equally invalid. The NPA management has stated that a new consultant will be engaged for the pilotage contract within three months.
By implication, the new contractor will be required to employ thousands of workers with the requisite skills and experience in the logistics sector. The likelihood, therefore, is for a net increase in the number of jobs created as a result.
Will the termination of this agreement scare investors away from Nigeria? The answer is a resounding No. The Intels agreement that was terminated was not only illegal, it was also a monopoly. Therefore, this move by the Federal Government will open the oil and gas logistics sector of the economy up for more foreign direct investment.
Most importantly, investors that are already operating in the country and new entrants will be encouraged to follow all due process in their dealings with the government and minimize corruption.
The argument that INTELS is not the only company collecting revenue on behalf of the government is a futile attempt to distract people away from the crux of the issue, which is INTELS’ refusal to comply with the Treasury Single Account (TSA) policy.
Indeed, INTELS is not the only company collecting revenue for the government, but INTELS wants to be the only company collecting revenue into accounts that the government does not have access to or control over. This is the idea behind the TSA policy – INTELS cannot keep revenue that belongs to the government in its own account to make deductions as it wishes and only pay the government when it feels like.
Regarding the loans that INTELS claimed it took from commercial banks to facilitate the contract, the NPA management has stated repeatedly that it is not a party to any of such.
Between January 2010 and September 2016, INTELS collected about $1.295 billion under the agreement. Out of this amount, INTELS remitted only $343.35 million to the NPA. The rest of the revenue was kept in INTELS accounts which it earns interests from. Therefore, servicing its debt obligations should be the least of its worries.
Another point raised by forces loyal to INTELS cause to instil fear in the minds of Nigerians over this agreement termination is that it will generate crisis in the capacity of commercial banks to provide loans for business investments. This point is as baseless as the one used by some people to argue against the TSA policy. It is far from ideal that the ability of commercial banks to provide loans to businesses be dependent on harbouring government revenue within their coffers. Extending credit facilities to companies doing business in Nigeria will always be a profitable venture for commercial banks as long as due diligence is followed.
Another side to the debate is, what happens to the Badagry Seaport Project which is being handled by INTELS? This is clearly an attempt to conflate issues as the relationship between INTELS and NPA extends beyond the terminated pilotage agreement.
If INTELS decides to abandon the project, there are other companies, both indigenous and foreign, with the technical ability to continue it. The comprehensive efforts at improving the ease of doing business in Nigeria through the seaports is not limited to the potentials of the Badagry Seaport. This much has reflected in the NPA posting a revenue of N118 billion in the first quarter of 2017 alone when the same agency generated less than N12 billion in the whole of 2015.
The relationship of government with business entities under public-private partnerships are defined by the extant laws and regulations. Public-private partnerships are valid as drivers of economic growth only when such offer mutual benefits for both the private sector players involved and the people. In the case of this INTELS agreement, the government is being denied much-needed revenue needed to finance capital projects and provide social amenities that will benefit millions of citizens.
Holding the threat of laying off the acclaimed 10,000 (some even claim 50,000) employees in its workforce over the government’s head is cheap blackmail on INTELS’ part. The last time INTELS remitted any revenue from the pilotage agreement to the NPA was September 2016 – over a year ago.
You can imagine how much has been collected during that period. By holding government revenue hostage in its accounts, INTELS is already denying millions of Nigerians jobs. Most importantly, the Constitution of the Federal Republic is far more sacrosanct than such menial arguments. After all, Pablo Escobar was one of the largest employers of labour in Colombia in the 1980s.
Lastly, the first letter from the NPA management to INTELS over this agreement was in June 2016. This was after INTELS reduced monthly remittances to the NPA to $3.6 million out of the $12.5 million collected monthly. This issue, therefore, started before President Buhari appointed Hadiza Bala-Usman as Managing Director of NPA. Also note that the NPA management dialogued with INTELS over the non-compliance with TSA policy for 14 months before the agreement was terminated.
Should President Buhari have overlooked such immense revenue drain simply because his party man’s company is involved? That would have been a breach of the oath he took to always uphold the Constitution and serve the interests of the masses he was voted in to lead.
– Dagana, a Quantity Surveyor writes from Port Harcourt.