Battles we fought to improve port efficiency – VickyHaastrup, Chairman, STOAN/EVC, ENL Consortium

When Princess (Dr.) Vicky Haastrup, Executive Vice Chairman/
Chief Executive Officer of ENL Consortium, took over as a
concessionaire in charge of terminals C and D of the Lagos
Port Complex (LPC) in April 2006, little did she know the
extent of rot that had almost drowned the terminal.
As she settled down to the task, she appreciated the fact that
she had to win several battles ranging from poor port
equipment to protracted labour issues.
Haastrup also knew she had to bravely take on entrenched
interests who feed fat on the rot if any meaningful
achievement is to be recorded.
According to her, the battle took several forms including
unabated campaign of calumny orchestrated by maritime
cabals against the operators in a bid to gain relevance and
perhaps return the ports to the old order.
The ENL boss, who also doubles as the Chairman of the
Seaport Terminal Operators Association of Nigeria (STOAN),
says the ports today are far more efficient than they were in
2006 when the concessionaires took over.
In this interview, she talks more about the company, the
Nigerian maritime industry and more.
Excerpts:
Port efficiency
The improvement in efficiency at the ports cannot be over-
emphasised. Eight years ago, we all can remember how things
were then. We remember how difficult it was then to do
business at the Nigerian seaports. The dwell time of ships has
reduced drastically from 10 days to about three days. I
remember the first rice ship we did in conjunction with the
Nigerian Ports Authority (NPA) because we had a one-month
handover period when we took over, it stayed 45 days at
berth. It was a rice ship and I will never forget that. There
was a particular one that stayed 60 days.W e can discharge
those ships for 12 days today. When a ship enters into
demurrage, it costs money. So, that we’re able to handle
ships efficiently and practically knock down the dwell time of
the vessels at berth is clear reduction in operations cost.
Since the terminals operators took over in 2006, there has
been tremendous improvement in the way operations are
conducted within the Nigerian seaport terminals. This is quite
evident in the volume of activities we have experienced in all
the terminals in Nigeria. For example, the volume of activities
was 13 per cent higher than the previous year. All the
terminals have done about 250 per cent increase in cargo
throughput from 2006 till now. There is no better way to
express this than to say something good is happening at the
seaports. Jobs are being created, there is significant
improvement in efficiency, there is better service delivery, there
is development going on here and there, among others. Just
go to the terminals and see how they have done in port
development. We may not be where we want to be, but we’re
making significant progress. We all know that when you have
an old and dilapidated building, it’s challenging to modernise
it. It’s not the case when you start from the scratch and input
all you want into the structures from the onset like a terminal
such as Greenview, for instance. The company built what it
wanted for its operations from the scratch. For us, we took
over run-down buildings. They were just completely run out,
to say the least. We saw some structures and wondered how
NPA managed to discharge ships when they don’t even have
equipment; where there were deep craters within the ports
that could swallow even a trailer. There were lots of pilferings,
no gears to handle the ships, there were labour issues and
many more anomalies. It was challenging to fix that because
a whole lot was required. We surmounted all these and got to
where we are today. That has brought in a lot of confidence in
our operations and that is why we are experiencing this jump
in ship traffic so to speak. Concessionaires in the seaports
have done very well and I’m very proud of that, no matter
what anybody says. We certainly know what we took over.
Investment
I think ENL has invested a lot. We have not updated in the
last six months but as at the middle of 2013, we had put in
invest ment worth about $28.5 million. That figure has
certainly risen significantly because there is a whole lot that
we have done between then and now.
Challenges
The access road is really congested. In fact, that is about the
greatest challenge facing us here. If you look at the whole
Apapa, you see a lot of containers occupying the roads,
causing horrific traffic snarl on a daily basis. They are at the
highway, they are also at the adjoining roads all overA papa.
It’s horrible. It shows the level of congestion. Port access is a
major problem. Those coming in to take delivery of cargo and
those going out face hell. It’s quite frustrating and that is
why we are not able to discharge as much as we should do
just because the trucks cannot easily access the terminal. A
lot of businesses situated in Apapa not supposed to be here.
Take for example, the tank farms, people don’t like it when I
talk about it but that is the truth.T he tank farms are just too
close to the Nigerian seaports where other cargoes are
discharged. They are just too close to themselves. Granted
that Apapa is an industrial area, it has tremendously increased
vehicular traffic. It’s a clog in the wheel of progress and quite
frustrating.
Again, we have the problem of power supply. The public power
supply is still zero. So, we generate our own power to handle
our operations. All the terminals (not ENL alone) still run 90
per cent of their operations on generators and this makes
business very expensive. That adds to the cost of doing
business in Nigerian seaports. You know what the cost of
diesel is today. All the terminals are generating their own
power.
Yes! NPA is supposed to provide us power as stated but the
issue of poor electricity supply is a national challenge and not
really NPA’s fault, though I’m not holding brief for them. The
power is simply not supplied by the Power Holding Company
of Nigeria (PHCN). So, that’s why I said I won’t blame them
and there is no way NPA would want to be operating
generators for us and so they leave that to us.
Train services
It’s completely skeletal. The percentage is low. It’s about one
per cent. So poor. To me, the rail service is not working. In
fact , to me, there is no rail service at the seaports . If APM
Terminal transports only 40 containers a week, then the rail
service is simply non-existent. That is not what happens in
other parts of the world. That is why all our roads spoil
quickly because of the pressure from these trucks when some
of the cargoes should have gone by rail to various parts of the
country. That is also why Lagos imposed wharf landing fee
because the surface of their roads are constantly damaged. I
don’t think the roads were built to withstand such pressure.
You can’t blame the Lagos State government because they
are spending so much to fix the roads. That is why we have
container-laden trucks falling over themselves and that is also
why the roads are constantly congested. So, we simply don’t
have rail transport yet.
Arbitrary charges
It’s more expensive to run Nigerian seaports than ports in
other countries. Republic of Benin, for example, has electricity
supplied by the government. Nigerian government was
providing them electricity before. But what is happening
today? They are simply self-sufficient. Look at Ghana, they
barely experience power failure there. Nigeria is still dependent
on self-power generation and not the government. You know
how much diesel is sold per litre here. Even as an individual,
you know how much you spend on petrol or diesel almost
everyday because the power is not there and you provide 90
per cent of the power you need. That is what terminal opera­
tors are facing here in Nigeria. We spend so much on power
alone. So, how do we recoup that? But having said that, I
want to tell you that the concessionaires are not increasing
costs. In fact, it’s very difficult for us to recoup what we have
invested in running the ports because the truth of the matter
is that, it’s more expensive to operate here. There are several
anomalies here that actually build into higher operational cost
for us. There is the issue of double taxation slammed on us;
there is also all manner of levies heaped on us. Ask any
industrialist too. The cost of production in Nigeria is high and
at the market, the imported goods may be cheaper. That’s
just to tell you it’s not easy to do business here.
Again, there are other factors that make doing business at the
ports costly. Let’s start from the Customs duty on rice, which
is 110 per cent today. In Republic of Benin, it’s 7 per cent, in
Cameroon, it’s 0 per cent tariff. Look at steel and all
categories of cargo in Nigeria; the duties are high compared to
other climes. I’m not blaming the Customs but I’m just
highlighting the fact that cost of doing business in Nigeria is
generally high. Also, you have the shipping agents, clearing
agents; who’s looking at what these stakeholders are
charging? When you keep the container longer than necessary,
you have to pay for that. It’s not the concessionaire that
collects levies or fees on empty containers. It’s not us. It’s
the shipping agents. As terminal operators, we are only
collecting our statutory charges as contained in our
concession agreement. Since we took over in 2006, what has
been our increase or what percentage of increase have we
imposed? It’s not commensurate with the increase in the cost
of doing the business. When we took over, diesel from
Otedola’s tank farm was N65 a litre. Today, it’s N155. That’s
300 per cent increase. In the area of plants and equipment,
gears have increased by at least, 150 per cent since we took
over. In fact, it increases every year due to inflation. The
environment is there, you have to maintain it. You also have
to develop the ports. What of cement cost? How much did it
cost in 2006 and how much is it today? It’s gone up by more
200 per cent. So, if we have all these inflationary costs, how
do you recoup it because you’ve got to? But then, we’ve not
really increased to make it commensurate with realities of
today. Simply put, terminal operators are the ones bearing the
brunt of it. We’re the ones running the seaport terminals. It’s
not shipping agents or clearing agents. In fact, you can be a
clearing agent without having an office. The overhead is
carried by us. After carrying all these, who pays for it? But
we’re bearing the pain because if we are to charge what we
should charge to cushion our challenges, it’ll kill the Nigerian
people. Why are people screaming that terminal operators are
responsible for high cost of doing business at the ports? It is
because they made more money when we were not there than
now. We have come and blocked all the loopholes. People,
hitherto, benefited from a completely run-down system. So, we
are the enemies of such people because it’s not business as
usual at the Nigerian seaports. They were part of the battles
we fought to enthrone efficiency at the ports. You can no
longer bring in ship without being detected and without
paying. That’s no longer possible. It’ll be captured in the
system and you have to pay accordingly. Again, the era of
under-declaration of cargo is over. Today, we get the right
tonnage of cargo. If you under declare, I’ll find you out and
impose charges three times the cost you ought to have paid if
you were honest. It’s like a penalty. Today, the labour issues
have been addressed. If we really want to be objective here,
we the terminal operators have tried. To address the issues at
the ports, we have to be holistic. We have to look at
government up till the least person in the chain.
Security
We’ve been providing security for our waterfront since 2006.
As a terminal operator, if you don’t protect your waterfront,
you’re done for. How many times did pirates come into ENL
and enter ships at berth and attack them? In fact, there were
instances where ships’ crews were almost killed. All these
happened a long time ago, they don’t happen anymore. It
happened mainly in 2008 and 2009. It actually stopped a long
time ago. But attacks on ships and vessels at sea or at
anchorage rarely happen. That’s why those ships always go
very far like 200 nautical miles. If they don’t, they’ll attack
them. That still happens. So, if you do this call up of vessel, it
may probably not be able to come as you want her to come
in. This is because they are far away. Attack at seafront has
stopped. We have done what we needed to do. We put
adequate security to man our waterfronts.
Server breakdown
I won’t sit here to judge Customs. The Pre-Arrival Assessment
Report (PAAR) is good but it’s new. Every new thing has its
teething problems. Don’t forget the Customs is just replacing
the RAR with PAAR. Probably, they need some time to settle
down and things will be fine. It’s just like when terminal
operators took over, there were teething problems as well. I
believe they are doing everything possible to give stakeholders
the best. I’m not speaking for them but only being objective.
Yes, the delays will be borne by importers like storage and all
that. They will pay. Terminal operators are doing the best we
can to help the importers, Customs and other stakeholders.
Rice smuggling
Don’t believe what you see in some maritime media that
shiploads of rice now come in at the seaports. Those saying
rice-laden vessels have been calling at our terminal are not
getting their facts right. There’s no iota of truth in it. I’ll tell
you one thing. In 2013, the Republic of Benin handled 2.2 mil­
lion tonnes of cargo in rice. Out of that 2.2 million tonnes, 1.6
million tonnes was parboiled rice. It’s only Nigeria that eats
parboiled rice in the sub-region. I just can’t recollect how
many ships berthed in the Republic of Benin and Cameroon.
We at ENL do like 1.6 million tonnes yearly and those figures
recorded in other ports find their way back into the Nigerian
market where they are sold. This is because it is far cheaper
for rice ships to be discharged in Republic of Benin and
Cameroon than in Nigeria. Like I said, it’s 7 per cent in Benin
Republic and 0 per cent duty in Cameroon. But the unfortunate
thing is that those shiploads of rice are still coming in. I’m
not afraid to say it. The trailers are coming every night. So,
what government was trying to do is penny wise pound
foolish. Government is talking about increasing the capacity of
local rice producers, but we’re not doing it well because those
rice are still coming in on a daily basis and the Nigerian
government is losing huge amount in revenue because of that.
It runs into several billions of naira annually. The Nigeria
Customs Service (NCS) can actually attest to that. They know
how much they have lost in terms of Customs duty on rice.
So, to me, it doesn’t really make sense. The approach of gov­
ernment on the matter should have been gradual where we get
to a level where we are fully self-sufficient in production of
rice locally.
Right now, the volume of rice, which local farmers are
producing in Nigeria cannot feed 170 million people. So, if that
is the case, rice will always come, whether you allow it to
discharge at the Nigerian ports or not. It’ll always come in
and by extension, the Nigerian government will be losing a lot
of money in revenue. Customs has lost over N100 billion and
far more in a year due to this policy of 110 per cent levy and
duty on rice. That income is going to our neighbouring
countries. I think the Republic of Benin is the happiest country
right now. We have ships that have been declared to us in the
last two months that cannot berth because they still cannot
afford to pay that 110 per cent Customs duty. The importers
have incurred a lot of demurrage on the ships running into
several millions of dollars. We’ve not handled any rice
shipment since January last year.
This policy just gave some people opportunity to make money
because it is tempting and hard to resist the bribe to allow
trailer load of rice to enter into the country. We know how
much the importers pay, but I’m not going to tell you here.
The policy should come up once our local capacity meets our
demands. Then, it would be no more attractive importing rice
since people would be eating our own rice. It should be a
gradual thing. I’m not against supporting local content but it
should be done gradually. The quality and quantity has to be
superb. It’s not rice that you’ll buy and still winnow to remove
the stones and all that. With parboiled, I don’t have to and
until our local rice meets that standard, imported rice will
remain in high demand.
Port operations
The government ordered all ports to operate round the clock.
But I can tell you that there are certain factors like security,
the environment militating against achieving that. In fact,
there are certain ships you can’t just discharge at night. Even
if you discharge, the truck will not leave the terminal. Let me
give you an example of what is obtainable in my terminal. For
instance, rice cargo, because of security issues, when you
discharge such cargo, what the trucks do is just park within
the terminal. They can’t move because of security challenges.
If they attempt to move at night, they’ll be attacked on the
road, that much I can tell you. So, government needs to
address the issue of security. Again, the environment is not
conducive.
Terminal operators are doing 24 hours really and some
agencies like Customs are there working 24 hours, but I can
still tell you that the 24 hours is not really 24 hours. If you
discharge a ship and it cannot move out of the terminal, it
remains there. So, what we do is that when we come in the
morning, the first thing we do is clear the backlogs, including
those trucks that have been loaded. So, we discharge the
ships, but they won’t want to move out of the terminal. So,
it’s not really complete 24 hours until the security challenges
are addressed.
Clearance of goods
The 48-hour clearance of goods at the ports is feasible but
certain things have to be put in place. The operating
environment plays a major role here. How easy is it for trucks
to come in and move out of the ports? That’s a major
problem. Apapa is always jam-packed. Traffic is another
nightmare. So, when the owner of the cargo tells you I’m
coming to load, we sit there, we don’t see them. Perhaps
they’ve been held up at Mile 2 or Tin Can or some place.