As the conflict between Nigerian Ports Authority (NPA) and INTELS Nigeria Limited lingers, some companies have been invited to bid for the pilotage service contract, thus heightening tension. BAYO AKOMOLAFE reports
In the last few weeks, the Federal Government through the Nigerian Ports Authority (NPA), has been at loggerheads with one of the foremost investors in the nation’s maritime sector, Intels Nigeria Limited.
Although observers have taken positions depending on their understanding and affiliation to the parties, developments in the crisis suggest that all has not been too well with the pilotage contract procedure.
This is, however, not strange considering the fact that a lot of contracts entered into with the government in the past had some elements of impunity.
In spite of this defect, Intels, over the years, had never been found wanting as it had discharged its obligations to the Federal Government and placed Nigeria’s maritime sector on the world map.
Founded in 1984 at Onne, Intels provides integrated logistics services for the Nigerian oil and gas industry.
It also offers agency services, cargo services, port management, specialised services, support services in shore bases, manages client operations, including pipe racks and stacking areas. The firm also warehouses, enclosed areas, jetties, offices, water tanks, fuel storages, generators, compressors, pilotage service and various other services.
Acting on behalf of the Federal Government, NPA and Intels entered into a profit sharing agreement with 72 per cent of the revenue going to NPA, while 28 per cent stays with INTELS as commission.
According to details, the pilotage contract entitles the company to monitor the movement of vessels that sail in and out of Nigeria. As vessels move in and out of the channels, they are expected to pay certain dues and levies.
Intels’ involvement in the project became very urgent and important for the country as the Federal Government had lost a lot of money when NPA was solely in charge of the business.
It was gathered that when the service was handed over to the company in 2010, NPA’s revenue grew to $200 million annually from $6.7 million.
However, trouble began in May 2016 and escalated two weeks ago, when NPA single highhandedly decided to adjust the terms of the contract with a directive that every revenue accruing to the company should go into the Treasury Single Account (TSA).
The conflict was further heightened when NPA invited some other companies to bid for the contract even when the original occupier (Intel), was still fully on the ground.
However, the firm said that such decision was a violation of the terms of the contract.
Besides, it noted that it had already used the pilotage contract to secure $1.4 billion loan facility from banks with the intention that the loan would be serviced by retaining its percentage of revenue collected.
Consequently, Intels said that it would only pay NPA’s dues into TSA after collecting the pilotage services subsequent to deductions of over N252 billion ($700 million) owed by NPA.
Bone of contention
According to Intels’ General Manager, Legal, Corporate, Contracts and Compliance, Mr Mike Epelle, the company’s reluctance to comply with the TSA arrangement was because its bankers had threatened to take back their N504 billion ($1.4 billion) loans if the company made any payment to the TSA on the ground that the decision was not part of the agreement in the pilotage contract.
He said: “We could pay into the TSA but not in the manner NPA wanted; we want to keep our commission and pay what is due to NPA.”
Despite the explanation and complaints by the company, the pilotage agreement was suddenly terminated at the instance of the Attorney General of the Federation, Justice Abubakar Malami, without recourse to negotiations, arbitration or adjudication between the two parties as enshrined in the binding agreement.
Malami had written to the Managing Director of NPA, Hadiza Bala-Usman, directing her to terminate the boat pilotage monitoring and supervision agreement, which allowed the company to receive revenue on behalf of government and retain a certain percentage of the revenue collected.
Following the directive, Usman insisted that all funds collected on its pilotage agency agreement must be remitted into the account, but Intels had argued that such directive was in violation of the terms of its contract.
The company, therefore, threatened that it would pull out its $2.6 billion investment in the Badagry deep seaport project.
A Legal Practitioner, Mr. Sunday Fiola, who spoke with New Telegraph, said that the Attorney-General of the Federation, Justice Abubakar Malami, had the power to terminate the contract since NPA belongs to government.
Epelle, however, said that only the court could give a verdict to terminate any contract, as AGF has no such power but could only advise on which direction to follow.
The Nigerian Importers Integrity Association (NIIA) and several other stakeholders and interest groups said that the cancellation of the contract would have a negative impact on foreign direct investment and the economy.
Also, an Economist, Dr. Austin Nweze and one of the leading financial analysts, Dr. Ken Igboanugo, said that the lingering face-off was a bad signal for Foreign Direct Investment (FDI) at a time the National Bureau of Statistics (NBS) reported that investment drive into the country had dropped by 41 per cent in the first quarter of 2017.
Also, Igboanugo said that NPA should take all necessary steps to resolve the dispute amicably in order to encourage investments in the country.
Similarly, the spokesman of the Intels, Mr. Bolaji Akinola, said that Intels was not the only private organisation that collects revenue on behalf of government and remits same into government’s coffers.
He said: “This is replicated in many other sectors of the economy. For instance, many companies deduct withholding tax from contractors and remit the same to government. I would like to believe that is a form of agency arrangement that allows the private entities to collect revenue on behalf of government.
Nevertheless, the Chairman of Intels, Mr. Gabriele Volpi, has called for calm, saying he would do everything possible to ensure amicable resolution of the crisis.
Volpi said: “We intend to comply with the directive of government and transfer all the revenue to the TSA because we are a law-abiding company.”
Giving his backing to the chairman’s position, the President, NIIA, Godwin Onyekachi, commended Volpi’s intervention as a mark of good leadership.
He said: “It will save a lot of jobs and restore investor confidence in Nigeria. Disputes are bound to arise in commercial transactions of this nature and it is the responsibility of concerned parties to shift grounds so as to arrive at an amicable resolution.”
As much as investors are expected to play by the rules and conduct their businesses fairly, government must also exercise restraint in dealing with perceived misdeed, especially if the organisation has contributed largely to boosting investor confidence and economic growth.
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