Reps summon Amaechi over delay in approval of $400m port concession investment

The Minister of Transportation, Hon Rotimi Amaechi, will on Tuesday appear before the House of Representatives to respond to questions bothering on the delay in the approval of the $400 million port concession investment.

Chairman, House Committee on Privatisation and Commercialisation, Hon Ibrahim Makama, who frowned at the development, observed that Federal Government may lose investments worth $400 million from the investor.

According to him, the Committee is worried that without a substantive Supplemental Agreement, renewing the tenure of expired leases the Infrastructure Concessions Regulatory Commission (ICRC) concluded negotiations by parties to the concession agreements which will usher in $10 million in revenue to the Federal Government upon execution and investments of about $400 million in infrastructure, plants and equipment will remain elusive.

The Committee had in a meeting chaired by the Deputy Chairman, House Committee on Privatisation & Commercialization, Hon Victor Kolade, met to discuss the delay in the renewal of the leases and the possible losses the Federal Government may incur.

“In its response to the Committee’s inquiry, Nigerian Ports Authority (NPA), in a letter with Reference No: MD/17/MF/Vol.XX/215 dated March 2,  2022, titled: ‘Re-Update on renewal process of the expiring leases’, explained that five terminals whose leases were at various expiration dates in the year 2021 indicated their desire in writing to renew their leases (before the expiration).

“The Inter-Agency Committee has in its efforts to finalise the renewal process, prepared a template lease agreement with a comprehensive report.

“These have been submitted to the Honorable Minister of Transportation for approval. It is also pertinent to state that in view of the delay encountered by the Committee in concluding the renewal process, a request had been sent to the Honourable Minister to grant an additional six (6) months extension on to the expired leases vide memo ref: MD/10/FMT/VOL.XX/057 dated 9th February 2022… to enable the Committee to complete the renewal process.

“One of the major observations noted during the on-the-spot assessment of the terminals was the gross decay in the quay infrastructure. The quay walls of the Lagos Port Complex and the Tin Can Island Port have reached the end of their structural lifetime.

“However, due to the paucity of funds, NPA had been unable to embark on total rehabilitation of the quay infrastructure over the years and had been offering repair works as remedial palliatives. The danger of this is the possible collapse of the quay walls with loss of properties and human lives

“To address this, a port modernisation programme has been embarked upon by the FMOT in collaboration with NPA and the various terminal operators. A proposal was received from TICT for the Tincan plan and APMT for the Port Complex plan, valued at about $1.5 – $2.0 billion.

“Coincidentally, the lease tenures of four-terminal operators had expired in 2021 and it became expedient to tie the renewal of the terminals to their commitments for the development of the expired leases. Based on the negotiations held with them, the following terminals committed to make the following investments in their development plans over a period of 10 – 20 years.”

The four-terminal operators are; ENL Consortium – $143 million; Port & Cargo Handling Services $120 million; Josepdam Port Services $100 million; and Associated Maritime Services $2.4 million.

Meanwhile, the Federal Ministry of Transportation, via a letter titled: ‘Status of renewal of expiring leases’ with Reference No: MT.2120/S.30/C4/TFK dated March 3, 2022, disclosed that the Inter-Ministerial Committee set up by the Minister of Transport has completed its assignment and submitted its report.

“The Honourable Minister approved the renewal process to be driven by an Inter-Ministerial Committee comprising the Federal Ministry of Transportation, Federal Ministry of Finance, Federal Ministry of Justice, Nigerian Ports Authority, Nigerian Shippers’ Council, Bureau of Public Enterprise and Infrastructure Concession Regulatory Commission.

“The Honourable Minister in granting the approval also mandated the Permanent Secretary to chair a Committee with Director Maritime Services, Director Legal Services, Nigerian Ports Authority, Nigerian Shippers’ Council and Nigerian Maritime Administration and Safety Agency as members to verify and confirm the Terminal Operator’s/NPA’s compliance with the Agreement before the renewal process commenced.

“The Committee chaired by the Permanent Secretary visited the affected terminals in Lagos and Warri on 4th — 5th February 2021 and 4 March 2021 respectively. The decisions/issues observed during the inspection that needed rectification by the parties (Nigerian Ports Authority and Terminal Operators) were communicated to the Authority for immediate implementation.

“The Inter-Ministerial Committee has concluded its assignment and produced a generic template for the Lease Agreement. The relevant appendices including the development plan, lease fees, etc that are terminal-specific are being finalized by the Nigerian Ports Authority and respective 2 terminal operators, which is expected to align with the Ministry’s aspiration for a modernised port.

“The report of the Inter-Ministerial Committee on Renewal of Expiring Leases and the tem late produced for the Lease Agreement is receiving the attention of the Honourable Minister of Trans ortation. Meanwhile, the Honourable Minister has approved an additional six (6) months extension sought by the Nigerian Ports Authority for the expired leases to give legal backing to the continued operations of the affected terminal operators, pending the conclusion of the renewal process,” the letter signed by Umaru Hassan on behalf of the Permanent Secretary read. (Nigerian Tribune)