NSC: Taking Ports Economic Regulation to High Heights By Francis Ugwoke
The job of economic regulation in the shipping industry is an enormous task. This is considering the peculiar nature of the industry with the contending interests that the regulator must address to achieve desired results. The shipping sector has faced a lot of challenges as shippers have to operate under an environment that has not been very friendly to business. While the Nigeria Customs Service (NCS) is doing well, it is not the same for shippers who are involved in importation. The federal government policy on 41-items list as much as it has helped in saving a lot of foreign exchange for the country is at the same time affecting many importers. As it affects shippers, so also it affects shipping service providers, including the terminal operators and the multinational shipping agencies. In all, the NSC as an economic regulator has to bring to bear its status of an umpire. It must dance to the left and also to the right, that is blowing hot and equally cold. While it wields its hammer on defaulting service providers, it must as well look for other ways to protect their business interest to be able to promote friendly industry development. The sector can only thrive in an environment that is business friendly. To the economic regulator, embarking on measures that will promote trade facilitation will open up a lot of opportunities for the sector and to a large extent the national economy. It is for this reason that the NSC has in the past few years introduced policy measures that will ensure efficiency in the ports system.
The policies that will lead to the attainment of efficiency and growth to the benefit of all, including providers and consumers of shipping services being championed by the Council are enormous.
Synergy with Relevant Stakeholders
For a more desired effect on ports efficiency, the NSC has been in the forefront of championing synergy with other agencies of government. This has been demonstrated with visits to the corporate head offices of the Nigerian Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA), Nigeria Customs Service (NCS), Standard Organisation of Nigeria (SON), the National Environmental Standards and Regulations Enforcement Agency , NESREA, the National Agency for Food and Drug Administration and Control (NAFDAC), among others. In these meetings, the idea has been in most cases for the agencies like Customs, NAFDAC and SON to abridge their procedures or introduce measures in such a way that will promote trade facilitation. This is considering complaints from shippers about the bottlenecks they face while clearing their goods at the ports. For instance, in the case of examination of goods, the Council had enjoined all the relevant security agencies of government to have a joint examination so that the importer does not suffer delay in the case of separate examinations. This has remained the practice in the ports. In the case of NPA, the Executive Secretary of the Council, Mr Hassan Bello, had commended the landlord for a number of measures the authority had introduced that brought about efficiency in ports operation. Among them is the automation of its payment services which before was handled manually. This has made things easier for shipping service providers who had to settle NPA charges. This is the same in the case of NIMASA. The collaboration has encouraged development. The agencies are all spearheading different development projects that will impact positively on the sector. The management of the NPA has been involved in improving infrastructures that will enhance port operations. The NSC has also been involved in the campaign of achieving efficiency, cost reduction in shipping services, among others. The regulator has particularly been spearheading automation among the agencies to bring the ports to what obtains in other advanced countries. Every stakeholder among the agencies has keyed into this project and the result is beginning to show in terms of efficiency in shipping services, including other service providers. As the ports economic regulator, the Council in a bid to ensure that shipping services are taken to high level, first launched the Standard Operating Procedures, SOPs and the Port Service Support Portal, PSSP about three years ago. As a project of the Transport Ministry, both SOPs and PSSP are seen as part of the reform agenda to promote trade in the nation’s ports. While SOPs are interpreted as instructions which clarify processes involving every stakeholder in port operation, PSSP is an online portal where users of port services can interact with providers of shipping services, including the NSC.
Cargo Equipment Audit
The NSC has not failed to acknowledge the efforts of the shipping services providers as partners in progress as far as shipping services are concerned. The Executive Secretary believes that the shipping service providers have contributed immensely in quicker clearance of goods out of the ports. To Bello, such trend has its multiplier effect on the national economy which will benefit both consumers and providers of shipping services. But having said this, the Council has not failed to beam its torch light on the service providers in the area of improving on their services, particularly in terms of providing modern and more cargo handling equipment for services at the ports. In the past three years, the Council has been carrying out equipment audit on service providers, particularly terminal operators to ensure that they have an efficient system for cargo handling operations. To achieve this, the executive team of the Council led by Bello had to tour the whole ports in Nigeria to meet all service providers. Bello had in an interview with newsmen explained, “We are concerned about the dwell time on cargo. We don’t want cargo to stay very long in the port. Port is not a place of storage. As soon as cargo comes in, it is cleared. We encourage terminal operators to take their cargo away from the port for examination. We are happy we are getting cooperation from Customs, the terminal operators and NPA. We commend NPA for introducing e-commerce which means that payment which used to take five days is now done in minutes. Many agencies are embracing this. It is our job to ensure that the ports are efficient”. Bello added, “If you look at turnaround time for ships, it used to be 21 days. But now, three to four days and ships have discharged their cargo and they are gone. This is because appropriate technology has been introduced at the terminals. We audited these terminals and supervised them, and we advised what they need to do to make Nigerian ports efficient so that many people will use Nigerian ports”.
When asked on whether the NSC was satisfied with the equipment profile of the terminal operators, Bello said, “Yes… we have seen with some of the terminal operators. You can see the result. The turnaround time for reception of vessels or and cargo has improved. We can see that in terms of the amount of cargo we have been able to gain from our competitors. Actually, if not for the recession and banning of some commodities, Nigeria would have been ahead in tonnage. It is actually because you could see efficiency entrenched. We call on the government to actually supplement the efforts of the private sector in making sure these go along, but we still need competition. That is why the ports were concessioned. Competition is the key. We need the intra-port competition, also competition between ports, our competitors in neighbouring countries”.
Shipping Charges
From the onset, the Council has always checked the service providers from introducing arbitrary shipping charges. This is to ensure cost effectiveness for consumers of shipping services. This was the reason why the service providers, among them terminal operators and shipping companies, decided to take the Council to court about four years ago. But the table was turned against them and they lost. The ports economic regulator had in 2014 reduced the amount collected on Shipping Lines Agency Charges, SLAC, an order which the shipping companies refused to obey. The Association of Shipping Line Agencies (ASLA) had gone to court to stop the NSC, but lost the case in December 2014. Not satisfied with the judgment, the service providers with the Seaport Terminal Operators Association of Nigeria, STOAN, had gone to the Appeal Court. STOAN went to court to challenge the decision of the Council reversing storage charges collected by the terminal operators and the increase of the free storage period at the ports from three to seven days. The increase was after the Council had carried out a survey of what happens in neighbouring ports and to make Nigerian ports efficient and competitive. Both STOAN and ASLA had secured the order of stay of execution after the Federal High Court in Lagos dismissed their suits against the NSC as they proceeded to the Appeal Court.
In her judgment, Justice C.N Uwa while upholding the counter claim of the second respondent, the Shippers Association Lagos State (SALS) affirmed the powers of the NSC to regulate and negotiate tariff, insisting that no tariff should be collected illegally without the approval of the Council.
The court had declared, “The unilateral introduction and imposition of the SLACs, by the appellant and collection of same from shippers or users shipping/port services from 2006 to date is illegal, ultra vires and, therefore, null and void.”
The Court had ordered the two service providers to refund what they collected over the years with an interest of 21 percent. Again, not satisfied, the service providers have all headed to the Supreme Court.
When asked on how far the Council has gone in terms of getting refund from the shipping companies who were based on Appeal Court judgment ordered to refund illegal charges they had collected over the years on SLAC, Bello said this is being addressed.
The NSC CEO disclosed that the shipping companies have decided to withdraw their case against the Council on the issue of shipping line charges before the Supreme Court..
This, he said, will lead to 25 percent reduction in tariff by the shipping companies as being negotiated by the ports economic regulator.
He explained, ”Recall that the Council had written to the terminals and shipping companies on the need to reduce the terminal and shipping line charges, and now the shipping companies have agreed to reduce their charges in line with the notice. They said they would abide by it and withdraw the case in Supreme Court. So it is the penalty for the charges that we are talking about that is the 25 percent of the total monetary worth. So with this we are talking about 25 per cent decrease in port charges. It is remaining the terminals. We need to get the terminals to comply with this. Because if we go to the Supreme Court and win there will be trouble. The terminals will be shut down because they can’t pay over a trillion naira and remain in business or not suffer.”
However, Bello said the Council was more interested in obedience to law than punitive measure. We in NSC are more interested in establishing a machinery for objective tariff structure rather than some punitive issues actually. It is important that our tariffs are considerably competitive with tariffs in other neighbouring ports especially those ports we are competing with. All NSC is saying is, we are not adverse to raising tariffs or lowering them for that matter, but there are procedures. So we urge everybody, including the truckers, to come and say, we want to raise tariff or we want to lower them as the case may be. Because there are times when you need to do that. All we are saying is that you are operating in a clime of laws. Nigeria is a country of laws, so please, come and abide with the laws of this country”.
Bello added that what the NSC has always done is to make the tariff scientific. According to him, “the issue of tariff is very important. We need to have a modern tariff system and we are working towards that, at least with the shipping companies. Now, tariff must be scientifically decided. We have to look at many factors. NSC has competence, well trained staff on tariff structure of the ports. We need to see that the shipper has option. The shippers has the choice to take his goods where he has economic advantage. So, it is a question of efficiency. It is an economic decision by the shipper to say, let my goods come to terminal A rather than Terminal B because I get the goods faster, I pay less, I have efficiency, I have many other advantages”.
Erring Shipping Companies
In apparent move to stop shipping companies from taking undue advantage of shippers, the NSC has been in the forefront of bringing to book service providers that chose to impose illegal charges on importers. The NSC early in the year started a major clampdown on such shipping companies by physically using its Enforcement Unit to seal off such companies. That is after all efforts to get the shipping companies refund such illegal charges collected from shippers failed. The Council usually adopts peaceful approach by calling the parties to discussion during which it investigates the truth of the allegations raised against such shipping companies. Where the shipping companies are found liable on the allegation, sometimes involving over-billing of shippers, the NSC directs the service provider to make refund. But where this fails, the option of sealing off the offices is deployed. While many of the affected shipping companies had accepted to make refund, some who were recalcitrant had their offices sealed forcing them to refund what is against them. Among the companies that have so far been hit by the hammer of the NSC include Cosco Shipping Line at Apapa and GAC Shipping Nigeria Limited. While the case of Cosco Shipping Line had to do with over-billing charges on demurrage of $23,000 imposed on Sunflag Steel Limited, GAC was accused of seizing 50 containers of raw materials for production said to be owned by Nestle Nigeria Limited. The claim was that JOF Nigeria Limited which is a logistics company clearing goods for Nestle had an outstanding demurrage of N37million to pay. NSC did not see any justification for withholding production materials owned by a manufacturing firm which has been consistent in doing business with the shipping line just because of demurrage claims.
In his reaction to the case of over-billing of shippers on demurrage charges, among other issues, Bello said this was not good for trade facilitation. He explained that while the Council was always out to create an enduring peace among service providers, it would not tolerate a situation in which shipping companies or terminal operators decide to cunningly defraud shippers through some forms of over-billing.
According to him, this was not good for the national economy. Bello described over-billing as a serious trade crime that should not be encouraged for the interest of the national economy and individual companies affected. NSC, he further warned will not spare any company found to be involved in such economic crime.
…Culled from SHIPPING DAY MAGAZINE in circulation
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