FG Breached Agreement, Calabar Is More Like A River Port – Terminal Operator Cries Out

By Jonathan Ugbal

The Terminal Operator of the Calabar Port, Ecomarine Terminals limited (ECM) have accused the federal government of not keeping to their end of the bargain when the won the concessioning agreement to oversee the Calabar channel whose draft depth makes it more of a river port.

The Managing Director and Chief Executive Officer of ECM, Balogun Moruf Adedayo disclosed this in an exclusive interview with The Guardian‘s SULAIMON SALAU where he lamented that the draft depth of the Calabar channel was at 5.4 meters at low tide and 6.4 meters at high tide thereby resulting in a higher cost of moving goods with the Calabar port strategically located to serve 16 northern states and about 4 neighboring countries.

Adedayo said Nigeria was only aspiring to become a regional maritime hub with no preparedness as the Lome port which has a natural depth with a draft of 14 meters has since overtaken the country’s ports as a favorite destination.

He said the way forward is to chart a program to do maintenance dredging of Lagos ports and capital dredging of the Calabar port which according to him is of strategic importance. He noted that the government had promised to deliver on the dredging in December 2017 4 months after they took over but that has not been done till date.

“Looking at the strategic importance of Calabar port to this country in terms of its proximity to the 16 Northern states; accessibility to the neighboring countries of Cameroon and Equatorial Guinea and its potential of also becoming a trans-shipment hub for the land-locked countries such as Chad and Niger.

“Looking at those potential, it is only natural that such a port should be provided with the required infrastructure including dredging to be able to realize such enormous potential. It will also go along way to reduce over dependence on Lagos ports.

“For example, a lot of cocoa is taken from Ikom in Cross Rivers State, which is a major producer of cocoa in this country, but because of the limitation of the draft of Calabar port channel, there is no regular container vessel that calls Calabar port as we speak. So, it imposes a constraint on both the producer and exporter as they now have to truck the consignment to Lagos before they could take them out of the country.

“That is an added cost of logistics and it is wrong. Today, Vietnam buys as much as $500 million worth of cashew nut from Nigeria. The major producer of cashew is Benue and the nearest port to Benue is Calabar port, you can also see the challenge imposed by that logistic inconvenience of trying to truck the cashew nuts to Lagos before being exported to Vietnam.

“A government that is serious about diversification, particularly agriculture and solid minerals, must also develop its port infrastructure to be able to complement the logistic challenge that is required to be able to realize their objectives. By implication, it also adds to the cost of doing business because most of the businesses especially in Calabar are looking for shipping solutions.

“Most of the companies in Calabar Free Trade zone will appreciate the convenience of having to import direct into Calabar from any part of the world rather than having to take the consignment either through Lagos or Port Hacourt and face the the difficulty of trucking the consignment with the attendance risk of vehicle break down, accident and even community problems. These are avoidable challenges t that the government ordinarily could have provided as an incentive to encourage imports.

“Most importantly, why Nigeria really needs to look at dredging of its ports very sincerely is that the dynamics in the shipping world today is in the direction of bigger tonnages. The global shipping industry is now in an era where we can do 7,000 – 14, 000 TEU capacity vessels and look at the correlation between the size of the vessel and the depth of the channel, it implies that Nigeria will need to have deeper channels to be able to accommodate these bigger vessels (bigger tonnages) because shipping is about economics of scale of size. Most of the shipping lines today are acquiring bigger tonnages in other to maximize the benefits that comes from the economics of scale of size.

“So, for us to continue to enjoy their patronage and make it more competitive it is important that we should have right depth of channel that can be able to also accommodate these modern vessels. Besides, it is also noteworthy to mention that the commitment of the government towards diversification into agriculture be complemented if the ports infrastructure support that aspiration and for them to be able to support that, they must also have the right parameter to be able to also compete with other ports in the region. This is quite a very big challenge.”

On the concessioning agreement and the dredging of the channel reputed to be about 90 Kilometers long, Adedayo said that; “The agreement we signed when we took over the concession, which is entrenched in chapter 9.6 of the agreement, said that the lessor has the responsibility to maintain the draft of the channel at 9.4 meters. This year, precisely on August 1, 2017, will make 10 years that we took over the concession and we have had to live with this limitation. It is a material breach of the constitutional agreement, even beyond that, the economic benefits that would have accrued to this country if the dredging had been done as promised is enormous.

“Today, Calabar would naturally serve as a hub for Niger and Chad, so look at the imports that will come with that and how much revenue would have accrued to the government by way of duty. Even in terms of employment and the multiplier effect it will have on the economy of the Cross River State itself. It is unfortunate that even the companies in Calabar are operating at extremely high cost. Take Dangote for example, they have to lighter first in Lagos before coming to Calabar. Imagine they are bringing in a 30,000 tones capacity vessel but because the channel cannot take 30,000 tones vessel, they must first discharge about 15,000 tones here in Lagos before taking the balance of 15,000 tones to Calabar.

“This comes with its attendant cost implications and at the end, the consumers bears the overall cost. So it is a great pain that government has not fulfilled a material obligation not only in terms of the concession agreement but also in terms of driving the economy of the country itself.”

When asked who was responsible for the delay, Adedayo said; “That question can be answered by government alone, because it is their obligation. It is their commitment. It is a promise they made. I think government’s promise should be sacrosanct, especially when it is embellished in a document, a contractual obligation that was supervised by the World Bank. The sanctity of the concession agreement must be protected and maintained, especially by the parties involved. As at the time we were taking over the concession, the assurance we had was that by December 2007 the dredging would have been completed. But till date it has become a mirage, we are still living with 6.4 meters.”

Furthermore, Adedayo lamented the suspension of the 30 percent rebate given by the NPA for “unjustifiable reasons” when they took over in 2007 and said that the current call for the review of concessioning agreements will not in anyway really impact on the sector as much as getting the right infrastructure in place will.

“It is not a bad idea, but I always maintain that reviewing the concession agreement is not a substitute to proving the right infrastructure to make the port functional. It will not be a substitute for creating access roads that will ease the evacuation of goods from the ports. It will not be a substitute for putting Calabar on the national rail line to create greater access and mobility for goods, but it is desirable, because it is time we take stock and look at the areas that we need to improve upon for enhanced performance and better service delivery” he said.

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