The federal government is losing billions of naira in revenue over failure to engage service boat operations monitoring agents in four ports locations over the last one year.
Computation from previous accruals show that the government has lost over N58 billion as the average of what would have accrued to the federation account from the contract in four pilot districts in the last one year.
Boat operations service agents provide logistics support to docked ships, including supplies of fuel, food and other needs for the ship and its crew.
The stalemate follows the expiration of the contract of Integrated Logistics Services Limited (INTELS) and its subsidiary, Deep Offshore, in August 2020 and the failure of the federal government through the Ministry of Transport to conclude the bidding process to engage new contractors in the last 13 months leaving these districts unmanned.
Ahead of the expiration of the contract, the NPA advertised for the contracts in December 2019, and requested interested firms to submit Expression of Interest (EOI) for the provision of the services in Lagos Pilotage District, Warri Pilotage, Bonny/Port Harcourt Pilotage and Calabar Pilotage.
Companies, including INTELS, applied before the January 20, 2020 deadline. INTELS was however disqualified following multiple applications, a decision the logistics giant is challenging in court.
According to a Marine Notice 11 of 2020 published on September 1, 2020, after the expiration of the INTELS contract, the NPA directed all service boat owners and operators to do transactions directly in each of the port complexes of the authority.
“This is to inform our numerous stakeholders in Nigeria and abroad that the service boat operation hitherto handled by Third-Party Company, which is INTELS Nigeria Limited, has been terminated,” according to the notice signed by Daniel G. Hosea, Harbour Master of Lagos Ports Complex.
The notice directed that every service boat movement must be reported and booked at the office of the harbour master of the district, where the pilotage chits and master declaration forms will be issued and returned after every movement.
Malam Muhammad Bello-Koko Acting Managing Director of Nigerian Ports Authority (NPA)
With that announcement, the boat service operations previously handled by a third-party company, INTELS Nigeria Limited, would now be handled directly by the Nigerian Ports Authority, thereby raising concern over the ability of NPA to maintain the revenue standards and efficiency of services rendered by the third party.
The NPA had, in a memo to President Muhammadu Buhari in February this year, declared that no one was carrying out the activities hitherto undertaken by INTELS and the agency had no capacity to do it by itself.
The NPA in a letter to the Minister of Transportation in November 2020 stated that; “The Authority in its determination to streamline her operational activities for the actualisation of its mandate of efficient port services and to increase its revenue generation base…has considered it imperative to engage a competent and reputable monitoring agent in the Service Boat Operation (Logistics Support Base/Port to Offshore oil/Gas Platforms) with requisite experience in (1) Security/Surveillance on Water, (2) Towage services, (30 Pollution Monitoring, (40 Monitoring of service Boat, (5) Berge Operations/ Vessel Chartering and (5) Tracking systems-VIS/AIS through open competitive bidding process.
The process of engaging new contractors was stalled as those prequalified for the contracts were yet to be issued with letters of engagement.
A source attributed the stalemate to the court process challenging the shortlisting of four other bidders and the exclusion of INTELS.
However, the Bureau for Public Procurement in a letter to Chief of staff to the President, Prof. Ibrahim Gambari in March 2021 expressed concern by the assertion made by the NPA that INTEL’s initiated a judicial proceeding against the NPA to deliberately stall the on-going procurement process for the engagement of service boat operations monitoring agents, which is a critical service that is incidental to the operations of the NPA and its capacity to defray several contractual liabilities.
The situation showed that the NPA has been unable to engage service providers since the expiration of INTELS contract in August 2020, thereby losing all revenue due to the federation account from that source.
A detailed revenue datasheet sighted by Daily Trust indicates that the Calabar Port over a 5 year period (2015 to 2019) raked in a total of $1.5million which translates to N648m (at N412/$).
The average amount of the five-year revenue, which was used as estimated for the total amount lost from September 2020 to date amounted to $314,000 or N130m.
The document further revealed that the Warri Port saw five year revenue of $284m with the average being $57m per year, which was also taken as the estimated amount lost from September 2020 to date translating to N23bn.
Daily Trust was also privy to a three years revenue chart from the Onne Port, which amounted to N240m. The average amount came down to $80m for one year translating to N33bn
While Daily Trust could not lay its hands on the revenue chat sheet for Lagos, a source who is familiar with the numbers said Lagos brings in over $500,000 a month, which is about $6 million annually.
When converted to Naira, it translates to N2.5billion annually.
Based on the record sighted and the amount of information available on Lagos, the total amount lost by the Federation from uncollected revenue from service boat operations amounts to N58bn for the last one year.
Recall that in 2017, the NPA had served INTELS with a notice of termination for its refusal to comply with the Treasury Single Account (TSA) policy.
The NPA insisted that 100% of the revenue generated by INTELS should be paid into TSA while the NPA would be the one to pay INTELS its 28% instead of deducting the 28% at source.
The company was said to have refused NPA’s offer on the basis of the loan agreement it had with several Nigerian banks at the beginning of the contract.
Following government intervention, a supplementary agreement was signed to comply with the TSA policy and the termination was accordingly withdrawn and the agreement reached the end of its contractual period in August 2020.
In compliance with the public procurement Act, the NPA initiated a public tender in December 2019.
INTELS and others submitted their bids to qualify for the tender. But in a letter to the president, NPA noted that INTELS violated one of the criteria advertised and was disqualified.
The tender process continued and the company’s with the highest scores pre-qualified.
The suspended Managing Director of NPA, Hadiza Bala in a letter to the Minister of Transportation, Chibuike Amaechi on the 9th of November, 2020 sort the endorsement of the minister for the consideration of Ministerial Tenders Board (MTB) to process to the Bureau of Public Procurement (BPP) for a “no objection” and the Federal Executive Council for approval.
After three months of waiting for the approval, the Managing Director then wrote to the President, Muhammadu Buhari on the 26th of February, 2021, seeking expedited approval to conclude the procurement process.
Hadiza Bala noted that: “Federal government is losing millions of dollars as revenue due to the absence of revenue agents arising from the delay in the conclusion of the tender process.
“Currently, no one is providing the service and the authority is not equipped to do that.” She added.
The General Manager, Corporate and Strategic Communication of NPA, Olaseni Alakija, when contacted on phone said the case between the Authority and INTELS was still in court and that he cannot comment on it.
“The matter between NPA and INTELS in respect of the boat pilotage contract is in court and I cannot comment on it” he said.
Alakija did not address the issue of revenue losses for the government.