Nigeria saves N320bn yearly from shipping surcharge –Report

Port concession has saved importers and exporters $800 million (N320 billion) paid annually to shipping companies as congestion surcharge in Nigeria, New Telegraph has learnt. The amount was paid every year to shipping companies before the ports were concessioned to 25 terminal operators at the seaports in 2006.

A study by an accounting firm, Akintola Williams Deloitte, revealed this in its industry report titled: “Public Private Partnership (PPP) as an anchor for diversifying the Nigeria economy: Lagos Container Terminals Concession as a Case Study.

The firm blamed high cost of doing business at seaports on Nigeria Customs Service (NCS). It noted NCS was responsible for 82.1 per cent of the charges incurred by consignees at the port terminals. The firm explained in its value chain analysis of a 20- foot container laden with cargo worth N44.42 million ($100,000) imported into Nigeria from China that about N6.5 million would be required to clear and transport the container out of the port.

The firm added that shipping companies were responsible for 13.8 per cent of the port cost (N897,000); terminal operators 1.8 per cent (N117,000); transporters 1.1 per cent (N71,500) and clearing agents (N78,000).

Of this amount, it noted that about N5.3 million, representing 82.1 per cent was paid to NCS as import duty, Comprehensive Import Supervision Scheme (CISS), ECOWAS Trade Liberalisation Scheme (ETLS), Port Development Surcharge and Value Added Tax (VAT).

According to the report, “the consignee pays the freight charges for shipping as well as container deposit fees. Demurrage charges may apply where the consignee fails to return the containers on time.

“Upon arrival of the container at the Nigeria port, the consignees pay terminal handling charges, storage charges, delivery charges and customs examination charges to the terminal operators.

In addition, the consignees also pay the relevant customs import duty. Consignees pay for logistics services to get the goods out of the terminal,” the firm stated. It noted that the terminal operators faced huge challenges in the area of storage as the terminals were used as cheap storage warehouse alternatives by cargo owners.

It added that the current policy provides for a free three days storage, after which a charge of N900 is applied per day and regulated by NPA.

“Importers take advantage of the low storage charges offered by the terminal operators to store their imported goods at the terminal as opposed to site warehousing facilities that charge as much as N60,000 per day,” the firm stated.

The report explained that before the port reform and concession of 2006, the Nigerian port system faced major challenges, which made it highly inefficient.

It stressed that the average ship waiting time before berthing was 21 days, while vessel turnaround time was five days and dwell time for cargo was as high as over 30 days due to poor roads, rail, quay, buildings, equipment, and yard, leading to insecurity and pilferage, delays in cargo clearance and inefficiencies in cargo handling largely due to manual processes.

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