Concession As A Strategic Tool For Ports Efficiency; An Assessment Of The Nigerian Ports

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Concession As A Strategic Tool For Ports Efficiency; An Assessment Of The Nigerian Ports


This paper examined the problems bedeviling the operations of the Nigerian ports before the concession programme of 2006 and how well the concession has improved the performance of the Ports system. Data were collected through secondary methods such as annual reports, as well as interview and media reports. The content analysis method was adopted in analyzing the data. The findings of the study showed that the concession may for all its worth have been able to earn more income for the government but the Authority has failed to keep its part of the contract agreement especially as it concerns the provision of the enabling environment for port operations; infrastructures were still lacking, dwell time has not substantially reduced and corruption still soared high. The paper submits that the regulators of the maritime system need to do more to ensure that it is not paying lip service to its vision of being the leading port in Africa.

Keywords: Nigerian ports, concession, strategic tool, maritime, ports efficiency, reform, restructuring.

Chapter One


1.1 Background of the Study

In today’s global commerce, seaports or maritime transport play an important role of being many nations’ major gateway for international trade and are a good instrument for measuring the economic health of a nation (Ogunsiji & Ogunsiji, 2010, UNCTAD, 2008). The ports have considerable influence on the volume and conditions of trade as well as the capacity for economic development of nations still developing. In Nigeria, greater percentage of international trade is routed through the sea, and given its huge population, it is believed that the Nigerian economy may account for about 70% of all seaborne trade in the West African sub-region (Fivestar Logistics, 2008).

Hence, the country’s ports are increasingly challenged to meet the pressure mounted from movement of ships and cargo in and out of the ports. The Nigerian Ports Authority established as an autonomous public corporation with the enactment of the Ports Act of 1954, assumed responsibility as a regulator and an operator entirely owned by the federal government (Mohammed, 2008). The Technical Committee for Privatization and Commercialization (TCPC) was established in 1988 as a result of the need among others for a private sector driven port, and was charged with the responsibility of transforming NPA into a commercial organization. In 1992, the Nigerian Ports Authority was commercialized and it changed itsname to the Nigerian Ports Plc. though the ownership remained that of government. Four years after, it reverted to its former name as a parastatal under the Federal Ministry of Transport.

The reversion however, did not affect its commercialization efforts (NPA Brand Manual, 2005). With globalization, government realized it lacked the resources and managerial ability to drive a modern seaport successfully (Razak, 2005). Around the world, governments and port authorities have withdrawn from port operations knowing that enterprise-based port services and operations would allow for greater flexibility, efficiency, and better services to port consumers (Notteboom, 2007). This made the disengagement of government from the activities that could be more efficiently provided by the private sector inevitable. The process of involving greater private sector participation and expertise in the Nigerian seaports began in 2003 by the National Council on Privatization (NCP), the apex policy body on sector reforms in the country, in conjunction with the Bureau of Public Enterprises (BPE) (Razak, 2005). The Nigerian government initiated one of the most ambitious infrastructure concessioning programmes ever attempted in September 2004 (Leigland & Palsson, 2007). The programme gained global credibility with the involvement of the World Bank, CPCS Transcom of Canada and Royal Haskoning of Holland as project monitors, concession bid managers and consultantsrespectively (Fivestar Logistics, 2008). The Haskoning study as it is referred to identified some of the bottlenecks to the port operations and recommended the “landlord” model approach. By July 2006, twenty long term port concessions were awarded with some more in progress (Leigland & Palsson, 2007).

1.2 Statement Of Problem

It is believed that the Nigerian Ports by the 1990s demonstrated very low levels of efficiency which resulted in long turnaround times for ships and increased container dwell time (Leigland and Palsson, 2007). Instead of the forty-eight hours international standard to unload and reload a ship, it took weeks. The workforce was overbloated, there were excessive port-related charges, and massive levels of cargo theft. The most unfortunate was that the port infrastructure required considerable rebuilding and restoration. This entailed massive external financial support which the federal government was unwilling to provide due to the existing corruption and operating inefficiencies. Hence, port operators and users were left dissatisfied (Leigland & Palsson, 2007). The Nigerian Ports as is the case in many other public corporations were also believed to have complex institutional management structure with stiff bureaucratic bottlenecks. In a bid to address some of the clear and immediate problems such as congestion and delays, the NPA introduced port concession to some of the ports in the country to bring in needed expertise in the area of operations. Concession is a process whereby the concession grantor gives the right to operate a facility and/or deliver a service of public interest to a merchant concessionaire, against the commitment assumed by the concessionaire to build and manage the subject of the concession or to manage the delivery of service at the concessionaire’s own risk (Tsvetkov, 2010). Studies on the circumstances necessitating the Nigerian Ports concession and the initial outcomes have been carried out (Akinwale & Aremo, 2010); others have looked at logistics and physical distribution at the ports (Ogunsiji & Ogunsiji, 2010). However, no known study have examined if some of the basic objectives of the concession were achieved five years after the concession, hence the need for this study.

1.3 Objective of the Study

The general aim of this study is to examine concession as a strategic tool for port efficiency an assessment of the Nigerian Port. Specifically, the study will examine if;

  1. The cost of port services has decreased.
  2. The turnaround time has improved.
  3. The percentage of berth occupancy rate has improved.
  4. The infrastructural facilities have improved significantly.
  5. The security around the seaports has improved.

1.5 Research Questions

Based on the objectives of the study, the following research questions deserve answers.

  1. Is there significant decrease in the cost of port services?
  2. Is there relative improvement in the turnaround time?
  3. Is there improvement in the percentage of berth occupancy rate?
  4. Is there significant improvement in infrastructural facilities?
  5. Has security around the seaports improved?

1.6 Significance of the Study

The study as anticipated by the research will be useful to the stakeholders in the Nigerian port sector. Precisely, the Nigerian Ports Authority (NPA) will find this study useful as it will enlighten them on challenges of the port sector.

The study will help them determine the extent to which the objective for creating port concession has been accomplished.

Additionally, subsequent researchers will use it as literature review. This means that, other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regards to the impact of alternative sources of funding on Nigeria public libraries.

1.6 Scope of the Study

The study is set to examine concession as a strategic tool for port efficiency an assessment of the Nigerian Port.. Further the study will cover but limited to ascertaining if the cost of port services has decreased, the turnaround time has improved, the percentage of berth occupancy rate has improved, the infrastructural facilities have improved significantly, and the security around the seaports has improved.

1.7 Limitation of the Study

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.8 Definition of Technical Terms (Port Terminologies)

Gross Registered Tonnage (GRT):

Ship internal space measured in unit of 100 cubic feet.

Ship Turnaround Time (TRT):

Time taken by a ship on the process of entering Port, Discharging Cargo, Re-loading and leaving the port. Cargo Throughput: The sum of foreign imports, exports and domestic cargoes discharged and loaded.

Waiting Time:

Time between arrival at road of vessel and berth excluding preventing delay.

Berth Occupancy:

A period in which a Berth is occupied by a vessel.

Revenue Earned:

Amount accruable to the company for services rendered.

Revenue Collected:

Physical money collected for services rendered. Inward Traffic: The addition of import and domestic cargo discharged in a port

Outward Traffic:

The addition of Export and Domestic outgoing cargo ship from the port.

Vessel Entered:

This refers to the vessels that enter the Nigerian territorial water and is recorded at the signal station by the harbour master.

Vessels Cleared:

A vessel having called at the signal station and or gains berthing facilities and eventually steams out of the territorial waters.

Chapter Five

Conclusions and Implication

5.1 Conclusion

The findings of the study are indicative of the fact that either the government or the concessionaires or both may not be working in consonance with the terms of the concession so as to bring about the necessary changes in ports operation.

From the findings, the cost of Port services to users is on the increase; turn-around time has not improved on the average relatively; berth occupancy rate has not improved on the average; no significant improvement on infrastructural facilities, and security around the seaports. The Ports concession programme may not have solved the existing problems at the ports even though it was able to earn more revenue for government. The increased earning is yet to be reflected in the infrastructural development of the ports as revealed in the findings. Most of the peculiar problems which led to the concession were still prevalent. For instance, there are still complaints of high charges, corruption, bad link roads, unimproved average berth occupancy rate, lack of infrastructure, and logistics generally. Thus, the imperativeness of improved information, communication and technological facilities within the ports should not be ignored, as that will help to reduce handling costs, corruption and possibly crime within the seaports.

5.2 Implication of the Study

The findings have some important implications for government and the concessionaires. It signifies the need for government and the concessionaires to imbibe the culture of modern customs practices and procedures to reduce the delays and bottlenecks, and corruption within the ports. It provides the awareness that Government needs to respect contract agreement with the concessionaires by providing the needed infrastructures within the Ports to ease doing business.

The study can also help researchers and management executives particularly in developing economies to better understand the relevance of ‘concession’ as a strategic tool for Ports efficiency. However, further studies need to thoroughly assess and compare the activities and performances of all the concessioner terminals so as to bring about the competition necessary for achieving efficiency.

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