Ripples over multi billion naira Apapa Port Terminals’ project

                                          

The redevelopment contract of Bullnose I,II and III terminals in Apapa, Port Complex by the Federal Ministry of Transportation and Nigerian Ports Authority (NPA) awarded to Eko Support Services (ESS) in 2008 at $124 million (about N40,920,000,000) is causing ripples in the maritime industry.

Maritime stakeholders said they were uncomfortable, not only with the cost of the contract, but also the process that led to the award of the project to ESS which they alleged was shrouded in secrecy.

The push for the redevelopment and the award of the contract which was through a letter from the Managing Director of NPA dated 3rd of June, 2008, to the then Minister of Water /Transportation, was said to have been done in response to Federal government’s initiative for private sector participation in ports development.

But maritime watchers opined that in line with due process and transparency, the initiative should have gone through a public tender to afford other interested private sector players the opportunity to bid. Officials of the Federal Ministry of Transportation last week declined comment on the issue. The NPA also refused to comment on the controversy over which some stakeholders are contemplating petitioning the Presidency, the ICPC, and the Bureau for Public Procurement which vets awards of contracts. They argued that since it was government’s idea that the private sector should be involved, then it was only fair that the contract award and pricing, should also have been subjected to private sector participation.

A maritime industry insider said it would be difficult not to assume that the beneficiary firm was handpicked by the awarding authority. ‘’Obviously, the NPA handpicked ESS and went ahead and recommended the company for this project,” the insider said, wondering why the supervising ministry did not raise any issue on the process leading  to submission of the proposal by only ESS.

It was learnt that in the proposal, ESS offered to handle the project at a cost of $127 million, but that following what the then NPA boss said was the approval of the proposal by a Technical Committee and vetting of the proposal by NPA’s Technical Channel Auditors, Messrs Coastal and Reclamation Engineering Services, (CARES), NPA recommended that the project be scaled down to $124 million, indicating a margin of just $3 million lower than what ESS proposed.

Said the insider: “Even by today’s standard, that redevelopment project could be achieved with a little over $50million,” stressing that a technical audit of what is on ground would tell you vividly that this is not a project that should cost what was allegedly approved.

Also being contested by ports observers is the fact that the project cost would be amortized through service boat charges in all the ports in Nigeria. “In simple term, said an investment analyst, NPA has awarded a Terminal redevelopment project to, as the insider put it, “ a so-called private player, with NPA providing the exorbitant and inflated cost of contract, through charges collected on behalf of NPA by the contractor,” adding, “yet NPA will not have control of the Terminal for 25 years.” What that means, the insider explained, is that the facility will be used exclusively by the same contractor for the quarter of a century.

Other stakeholders, in picking holes with the contract, pointed to loopholes with regards to the estimated cost of $124million recommended by CARES, with the proviso that it is accepted pending the determination of the actual cost from the final design; that the cost of financing of 16 per cent be applied to the cost of the project and hat the lease should be for an initial period of 25 years.

The stakeholders argued that the term which says $124million is accepted pending the determination of the actual cost from the final design is loose, What would then happen if the winners now make a detour, and insist from the final design analysis, that the cost has increased by 200 per cent, they queried?

They said on balance the development is quite troubling. “Since the money will be amortized from the service boat charges which belongs to NPA and is a sure stream of inflow, why should the cost be this high? they queried, saying the more crucial implication is that both the cost of the project plus the cost of financing put at 16 per cent would be borne by the Nigerian Ports Authority.

“Since that contract was signed the government may have incurred an interest charges equivalent to over 100 per cent of the $124 million price tag claimed by ESS. Ultimately this company could collect as much as $500 million for a project that its real cost should not be more than $50million. This is very saddening because there are even investors that are ready to acquire these terminals and redevelop them with their resources, not using government money and charging government interest on it,” another NPA insider said.

Another insider said it is because of alleged anomalies like this that experts have always called on Federal government to beam its searchlight on the running of the ports from 1999 to 2010.

They said past governments made efforts to bring sanity to the sector, but such efforts appear to have ended up being  frustrated by top government officials with more than professional interest in such questionable transactions.