The Nigerian maritime sector has a number of regulatory agencies under it. For any of the regulatory agencies to be on top of its role and responsibilities, the issue of adequate funding is critical. TOLA ADENUBI looks at the funding issues confronting the Nigerian Shippers Council.
For any regulatory agency to function well and discharge its regulatory powers, funding is critical. It is no longer news that the Nigerian Shippers Council (NSC) has depended on the 2 percent port development levy for years while being unable to implement its statutory 1 percent Freight Fee which is embedded in its Act.
With the Federal Government set to implement the Oronsaye Report, the nation’s port economic regulator is set to lose the 2 percent Port Development Levy following the dictates of that report which mandates the Nigerian Shippers Council to generate its revenue and be self-funded.
Obsolete Act
With port users facing harsh economic realities at Nigerian ports with no agency of government clearly mandated to protect shippers’ and importers’ interest, the Federal Government, in a Presidential decree in 2015, announced the Nigerian Shippers Council as the Port Economic Regulator for the nation’s ports.
However, the Presidential fiat, which lacked legislative backing, has been challenged in court severally, with terminal operators and shipping companies dragging the NSC to court in recent years over matters that affected the interest of shippers and importers.
To make matters worse, the NSC has been hampered by an Act that is no longer in tune with what is prevalent in the nations maritime industry. The 1978 NSC Act has lost touch with current realities in the nation’s ports system like the 2006 Port Reform system, legislative laws protecting shippers and importers in the nation’s maritime space amongst others.
For example, when the law setting up the NSC Council was enacted in 1978, the nation’s ports were being run and managed by the Federal Government through the Nigerian Ports Authority (NPA). There was no private sector participation in the nation’s ports system in 1978 until 2006 when President Olusegun Obasanjo’s administration midwifed the 2006 Port Reform which brought about private investors taking over port terminal operations while the NPA supervised in a landlord capacity.
With the NSC staring at a difficult situation as regards funding, there is need for the Presidency to accent to the Nigerian Shipping, Port Economic Regulatory Agency Bill 2023, which has passed through the House of Representatives and is currently at the Senate for concurrence.
If the NSC must truly have powers to function effectively as the nation’s port economic regulator, there must be a legislation backing up that Presidential decree of 2015.
Speaking recently at the Council headquarters when the Nigerian Maritime Law Association (NMLA) paid the Council a courtesy visit, the Executive Secretary/CEO of the NSC, Pius Akutah, affirmed that the Act setting up the council is obsolete.
According to Akutah, “Today, we have the Ministry of Marine and Blue Economy, which is dedicated to the maritime sector. This is, in effect, the first step that has been taken by Mr. President in recent time to diversify the economy of Nigeria from the oil dependency to the non-oil sectors of the economy, as you are aware.
“With this kind of approach, it is important for us to collaborate with very critical stakeholders like yours to be able to move not only the ministry forward, but also to promote the development of the maritime sector and the blue economy in Nigeria.
“I know that the Nigerian Shippers Council, which you know has a mandate to take care of the interests of shippers over the years, is operating under a 1978 law which set it up.
“You will agree with me that by 2024, we should all know that the law is obsolete and it’s not going to adequately provide for what the sector stands for at the moment. So, there is a need for us to look into that law and see what we can do to change the law and empower the agency to do more of what is required of it in this 21st century.
“Now, the Nigerian Shippers Council has a bill before the National Assembly seeking to transmute into a regulatory agency by law. You are also aware that the agency at the moment is empowered by a presidential directive and a regulation for it to assume the duties of the Port Economic Regulator, which the agency has been carrying out.
“But the nitty-gritty of what the Port Economic Regulator would do is not provided in that presidential order and the guidelines. So, there is a need for us to have a legislation.
“We have that legislation. It’s ongoing for some time now. Luckily for us, the National Assembly, the House of Reps has passed it. It’s before the Senate now.
“So many areas of collaboration with the Nigerian Maritime Law Association will be very necessary and needed as soon as that law is passed into law and assented to by Mr. President.”
Lack of funding implications
The NSC currently intervenes in many economic disputes between terminal operators and the shipping companies on one side, and the shippers and importers on the other side.
Economic disputes bordering on container deposits, shipping and terminal charges, extortion, among others often arise in the ports with the NSC always getting complaints from shippers and importers to mediate in.
Without adequate funding, mediation in port-related disputes will suffer because the NSC will lack the required resources to enforce sanctions in cases where operators flagrantly disobey directives.
The case of CMA CGM, a French shipping company and ASPA POP Investment Limited, a Lagos-based importer, readily comes to mind, where N23.7 million worth of imported bags of POP were damaged due to an unapproved barge operation.
When the compensation demanded by ASPA POP Investment Limited differed from what CMA CGM was willing to pay, the importer ran to the Nigerian Shippers Council for help, and the agency ordered CMA CGM to pay the importer the sum of $5,316 instead of the $2,500 that the shipping company had offered to pay.
Like the CMA CGM versus ASPA POP Investment Limited case, many economic disputes come up between shipping companies/terminal operators on one side and the importers and shippers on the other side, and there is need for the nation’s maritime industry to have an economic regulator that is well funded and backed by the required legislation to enforce directive during dispute resolution and mediation cases.
The Nigerian Shipping, Port Economic Regulatory Agency Bill 2023 offers the NSC the legislative backing to function unchallenged as the nation’s Port Economic Regulator while also affording the Council the required funding to carry out its responsibilities in a well-regulated port environment.
The NSC has urged the House of Representatives Committee on Shipping Services to assist the agency in getting approval for the 1 percent freight stabilisation fee, which is statutorily embedded in the Act setting up the agency.
Recently, when the House of Representatives Committee on Shipping Services paid the Shippers Council an oversight visit, Akutah explained that with the implementation of the Oronsaye Report, it is very important that the NSC gets its funding priorities right.
He said, “Chairman sir, there is a directive from Mr President and the Federal Executive Council (FEC) to implement the Oronsaye Report, and as this concerns the Nigerian Shippers Council, the report says we should be self-funded.
“Therefore, there is a need for us to implement our statutory funding, which is the 1 percent freight stabilisation fee. I think this is very pivotal at this moment that the Oronsaye Report is being implemented.
“Once the Oronsaye Report is implemented, the 7 percent Port Development Levy, which the Shippers Council gets 2 percent from, may no longer be available. So, I think we need to work very hard to ensure that the Nigerian Shippers Council funding position is secured.”
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