Group Tasks Customs on Clearance of Overtime Cargoes After Payment of Penalty
WALE ADENIYI
• Estimates over N300bn as financial implications on overtime containers
By Francis Ugwoke
A group known as Sea Empowerment Research Institute has appealed to the management of the Nigeria Customs Service (NCS) to consider allowing clearance of overtime cargoes by imposing payment of penalty on such goods.
Head of Research of the Institute, Dr. Eugene Nweke in a statement said it was better to collect penalty on the goods instead of auctioning the items at a give-away prices.
Nweke said the Service will record no fewer than N300bn if it imposes penalty under a bench mark arrangement of the Customs than auction sales.
He said that in neighbouring countries, this was the practice, adding that “goods that fall under this category are referred to as ‘DEPO” – “a distress importation”.
He argued that this was because the approximate financial involvement in the affected overtime cargoes was well over ₦300b being at stake.
As part of this arrangement, Nweke said going forward, “in the same consideration, the economic Regulator has a duty to further consultation, and then issue an industry notice on the applicable treatment for such category of imports, especially deciding the percentage to be earned by the terminal operator and shipping lines”.
Nweke, former President of National Association of Government Approved Freight Forwarders (NAGAFF) also said that in addition “factors that encourage or promote abandonment of cargo in the port terminals or the use of port terminal as a storage warehouse on the part of the shippers should be investigated and identified”
He said after the investigation, government should be able to make pronouncement via an industry notice in respect of such practice.
Nweke gave his analysis as follows:
“Please treat strictly as face value estimation of the financial implications for the 7000 TUEs Over time Containers, and possible Implications to the economy.
*An Estimated Financial Implications For The 7000 Overtime Containers – (Being a Face Value Financial Estimation).*
a). Relying on the prevailing benchmark value of ₦2m per TEU, established by the former CGC, when you multiply that by 7,000TEUs it will give you ₦14b being a minimum payable Customs duty value only.
b). Minimum Estimated Value of Vat, Port levy, etc charges Per TEU = ₦1m × 7000 TEUs = ₦7b.
c). Estimated Minimum Import Value ( CIF) Per TEU = ₦15m × 7000 TEUs = ₦105b.
d) Estimated Minimum Terminal & Shipping Charges Per TEU ( excluding Storage and Demurrage charges) = ₦650t × 7000 TEUs = ₦4.5b.
e). Estimated Minimum Trucking Fees @ ₦250t × 7000 = ₦1.7b.
f). Estimated Minimum Estimated Professional Handling Fees @ ₦200t Per TEU × 7000 = ₦1.4b.
g). Estimated Minimum Regulatory Agency Revenue @₦250t × 7000 TEU’S = ₦1.7b.
Total Minimum Estimation Of Financial Implications For The 7000 TUEs = ₦135.3b.
*SUMMARY*
a).Estimated Minimum Revenue Due To The Government = ₦22.7b.
b). Estimated Minimum Shippers Investment Trapped= ₦105b.
c). Estimated Minimum Professional Fees Loss = ₦1.4b.
d). Estimated Minimum Shipping Companies & Terminal Operators Profit Trapped = 4.5b.
e). Estimated Minimum Truckers Earnings Trapped = 1.7b.
Total Minimum Estimation : ₦135.3.
*NOTES*
1).Findings show that, 40% of the 7000 TEUs are 40ft Containers as opposed to the 20ft Container equivalent units used for general estimation.
2. The implications being that the approximate financial involvement is as well over ₦300b being at stake.
3). It could be estimated that about ₦100b due to the Government is at stake. Half of this or less may be recovered via auction sales.
*FINANCIAL IMPLICATIONS TO THE ECONOMY:*
Where over ₦300b is trapped in the ports for years, it constitutes the following infractions:
a). Stippling currency circulation.
b). It disrupts the foreign exchange transactions.
c). It is an additional pressure to the public by way of inflation.
d). The imports are International trade requiring International business finance, wherefore Letter of credit related importations are trapped, as revalidation for subsequent trade transactions are denied or delayed.
e). By extension, it contributes to the overall performance of our balance of trade ( BOT) records.
f).It affects the production line, and as well limits the turnaround capital of the shippers.
g). It hampers on the fluidity of the nation’s yearly demand and supply for goods and services, thereby increasing scarcity and hunger level on the part of citizens.
h). It adds up port congestion thereby putting much pressure on the shipping lines and terminal operations, which constitutes cost additional to clearance costs,
h). It disrupts the nation’s trade data records, when cargo are sold as auctions.
i). It constitutes health challenges, as the life span of laden contents are shortened if not totally expired, though depending on the product type.
j. Etc”.
By Francis Ugwoke
A group known as Sea Empowerment Research Institute has appealed to the management of the Nigeria Customs Service (NCS) to consider allowing clearance of overtime cargoes by imposing payment of penalty on such goods.
Head of Research of the Institute, Dr. Eugene Nweke in a statement said it was better to collect penalty on the goods instead of auctioning the items at a give-away prices.
Nweke said the Service will record no fewer than N300bn if it imposes penalty under a bench mark arrangement of the Customs than auction sales.
He said that in neighbouring countries, this was the practice, adding that “goods that fall under this category are referred to as ‘DEPO” – “a distress importation”.
He argued that this was because the approximate financial involvement in the affected overtime cargoes was well over ₦300b being at stake.
As part of this arrangement, Nweke said going forward, “in the same consideration, the economic Regulator has a duty to further consultation, and then issue an industry notice on the applicable treatment for such category of imports, especially deciding the percentage to be earned by the terminal operator and shipping lines”.
Nweke, former President of National Association of Government Approved Freight Forwarders (NAGAFF) also said that in addition “factors that encourage or promote abandonment of cargo in the port terminals or the use of port terminal as a storage warehouse on the part of the shippers should be investigated and identified”
He said after the investigation, government should be able to make pronouncement via an industry notice in respect of such practice.
Nweke gave his analysis as follows:
“Please treat strictly as face value estimation of the financial implications for the 7000 TUEs Over time Containers, and possible Implications to the economy.
*An Estimated Financial Implications For The 7000 Overtime Containers – (Being a Face Value Financial Estimation).*
a). Relying on the prevailing benchmark value of ₦2m per TEU, established by the former CGC, when you multiply that by 7,000TEUs it will give you ₦14b being a minimum payable Customs duty value only.
b). Minimum Estimated Value of Vat, Port levy, etc charges Per TEU = ₦1m × 7000 TEUs = ₦7b.
c). Estimated Minimum Import Value ( CIF) Per TEU = ₦15m × 7000 TEUs = ₦105b.
d) Estimated Minimum Terminal & Shipping Charges Per TEU ( excluding Storage and Demurrage charges) = ₦650t × 7000 TEUs = ₦4.5b.
e). Estimated Minimum Trucking Fees @ ₦250t × 7000 = ₦1.7b.
f). Estimated Minimum Estimated Professional Handling Fees @ ₦200t Per TEU × 7000 = ₦1.4b.
g). Estimated Minimum Regulatory Agency Revenue @₦250t × 7000 TEU’S = ₦1.7b.
Total Minimum Estimation Of Financial Implications For The 7000 TUEs = ₦135.3b.
*SUMMARY*
a).Estimated Minimum Revenue Due To The Government = ₦22.7b.
b). Estimated Minimum Shippers Investment Trapped= ₦105b.
c). Estimated Minimum Professional Fees Loss = ₦1.4b.
d). Estimated Minimum Shipping Companies & Terminal Operators Profit Trapped = 4.5b.
e). Estimated Minimum Truckers Earnings Trapped = 1.7b.
Total Minimum Estimation : ₦135.3.
*NOTES*
1).Findings show that, 40% of the 7000 TEUs are 40ft Containers as opposed to the 20ft Container equivalent units used for general estimation.
2. The implications being that the approximate financial involvement is as well over ₦300b being at stake.
3). It could be estimated that about ₦100b due to the Government is at stake. Half of this or less may be recovered via auction sales.
*FINANCIAL IMPLICATIONS TO THE ECONOMY:*
Where over ₦300b is trapped in the ports for years, it constitutes the following infractions:
a). Stippling currency circulation.
b). It disrupts the foreign exchange transactions.
c). It is an additional pressure to the public by way of inflation.
d). The imports are International trade requiring International business finance, wherefore Letter of credit related importations are trapped, as revalidation for subsequent trade transactions are denied or delayed.
e). By extension, it contributes to the overall performance of our balance of trade ( BOT) records.
f).It affects the production line, and as well limits the turnaround capital of the shippers.
g). It hampers on the fluidity of the nation’s yearly demand and supply for goods and services, thereby increasing scarcity and hunger level on the part of citizens.
h). It adds up port congestion thereby putting much pressure on the shipping lines and terminal operations, which constitutes cost additional to clearance costs,
h). It disrupts the nation’s trade data records, when cargo are sold as auctions.
i). It constitutes health challenges, as the life span of laden contents are shortened if not totally expired, though depending on the product type.
j. Etc”.
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