Tuesday, 1 September 2015

Wanted: An Unbiased Ports Regulator

By Bolaji Akinola
The need for a permanent economic regulator at the nation's seaport is important for the consolidation of the nation's port reforms carried out in 2006.
Before the reforms, Nigerian ports were bedeviled by a high level of inefficiency including unnecessary delays in the turnaround time for ships and high cargo dwell time. Most of us remember how vessels had to wait for almost 40 days before they were able to berth at the port. The dearth of cargo handling equipment made operations at the various ports hellish. But with the concession of 2006, the story has changed.
Vessels now sail straight to berth without delays. The stronghold of the 'mafia' that held the port by the jugular has since been broken. The various congestion surcharges imposed on the ports by shipping lines have since been removed.
One cannot forget the congestion surcharge slammed on the ports by a liner conference known as the Europe-West Africa Trade Agreement (EWATA). That surcharge varied from USD1,000 to as much as USD2,500 per TEU or FEU as the case may be. The private terminal operators or concessionaries were able to eliminate this surcharge less than six months after they took over operations at the port thereby saving the economy over N100 billion annually.
Despite the success of the port reform, the need to appoint a permanent port economic regulator remains paramount.
It must be noted that the concession agreement recognizes the Nigerian Ports Authority, which is the lessor, as interim regulator of the port "until there is a change in the law by the National Assembly".
Some stakeholders in the maritime industry have therefore expressed concerns over the suitability of Nigerian Shippers' Council as the economic regulator in the shipping industry.
This anxiety stems from the fact that the traditional role of the Council has placed a moral burden on the agency to act as an impartial and unbiased umpire in the process of dispute resolution between the service providers and the consumers of their service.
In February 2014 and after much horse- trading, the former presidency of Goodluck Ebele Jonathan, through a presidential fiat, directed the Nigerian Shippers' Council to assume the interim role of commercial regulator in the port industry.
The new status confers on the Council the responsibility of regulating the commercial activities of shipping service providers and the consumers.
However, prior to this ad-hoc arrangement, the Nigerian Shippers' Council was primarily established to protect the interests of the consumers of the shipping services provided by terminal operators and shipping companies.
These consumers include shippers, importers and exporters.
The formation of Shippers' Council worldwide, especially in the developing countries, followed the general agitation against shipping service providers whose activities the shippers often complained about.
However, the agitations crystalized into what later became known as a new World Maritime Order in 1965 which encapsulated in the UN Liner Code for Liner Conferences document that strongly recommended the formation of National Shippers' Councils in developing countries also referred to as Group of 77.
UNCTAD confirmed this new order by endorsing the formation of Shippers' Councils in its 1968 meeting in New Delhi, India. Thereafter, Shippers' Councils sprang up in various parts of the world, including the developed countries. The first Shippers' Council in Africa was set up in 1968 in Cote d'Ivoire while the Nigerian Shippers' Council was established in 1978.
Therefore, to all intents and purposes, the formation of national shippers' organisations in the developing countries was to act as a countervailing force against the operational activities of ship owners and other service providers.
It is however instructive to note that the traditional functions of Shippers' Council all over the world remains the protection of the cargo interests – importers and exporters.
One is not aware of any other part of the world where the Shippers' Council combines this role of siding with the consumers of shipping services with the responsibility of regulating the commercial activities of service providers.
Some discerning critics therefore noted that the development in Nigeria is akin to standing logic on its head.
How could government ensure the neutrality and impartiality of Nigerian Shippers' Council in a dispute arising from a transaction between a shipper whose interest the Council was statutorily created to protect and a service provider, of which it is likely to have a biased mind towards?
Simply put: the Shippers' Council is an interested party at the port. What the port need is an unbiased umpire.
As a result of this perception (and reality), service providers have already expressed a lack of confidence in the ability of the NSC to act as unbiased umpire at the ports because it will naturally always side with one party – the shippers. And this is clearly seen in the alliance between the NSC and the Shippers Association of Lagos State, who operate more as Siamese twins.
Some legal experts have explained that the import of the declaration of the service providers suggest that one of the parties in the process has already passed a vote of no confidence on the umpire.
Just like in a law court in the process of dispute resolution, if one of the parties in the dispute raises a doubt, no matter how remote, on the impartiality of the umpire, it is incumbent on such person or body to disqualify himself or be disqualified.
In the case of the NSC, the terminal operators and shipping companies have raised serious concerns over what they regarded as unwarranted and unguided statements of the NSC, which tend to undermine the successes and achievements recorded under the port concession programme of the Federal Government.
According to them, the statements, which often most of the time painted the services at the ports in bad light, are capable of scaring away genuine investors, thus greatly hampering the sure-footed stride towards efficiency at the port.
The operators also believe that the way and manner the Council has chosen to act as a commercial regulator has clearly compromised the discharge of such onerous duty.
The service providers have strongly shown their disapproval to the ways and manners at which the Council was carrying out this new role through law court.
I believe that the traditional role of the NSC, which was set up "to protect the interests of shippers" has established an intrinsic link between the shippers and the Council.
The service providers are therefore justified and have reasonable grounds on which they predicated their doubt about the impartiality and unbiased stance of the Shippers' Council as a commercial regulator.
This lack of trust and cordiality between the NSC and the terminal operators may not only hamper the capacity of the agency to discharge the role of a regulator, but it is capable of giving the consumers of shipping services the short end of the stick.
This will not create the mutual trust needed in the discharge of such vital role as being commercial regulator which is meant to get the confidence and respect of all the parties involved in the resolution of any dispute that may eventually arise.
The port needs an umpire that will not only check operators but also have temerity to curtail the excesses of port users and government agencies.
One is therefore wont to side with the call by some stakeholders that government should strip the NSC of the economic regulator toga while a completely neutral agency should be set up – with no affiliation to any of the interests – to regulate the port.
The NSC should therefore concentrate on advocating for cargo interests.
So while the Nigerian Ports Authority fulfills the concession agreement by acting as interim port regulator, it is imperative for the National Assembly to expedite action on the passage of the National Transport Commission (NTC) bill which will create the legal body specifically charged with carrying out the functions of a commercial port regulator.
President Mohammed Buhari has promised to reverse all the actions and inactions of the previous administration that are likely to hamper the development of the economy. The designation of the NSC as the economic regulator in the port should be seen as one of such actions created through presidential fiat but which has since put the maritime industry on the boil.

– Akinola is the CEO of Ships and  Ports.
http://www.thisdaylive.com/articles/wanted-an-unbiased-ports-regulator/218829/

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