I read in some quarters that because of 2019 politics, Buhari has directed NPA to cancel Atiku’s INTELS agreement. To be very clear on this, the first letter challenging this agreement was initiated by past administration with a letter dated June 2016 written by former Executive Director of Finance to INTELS for a review of the Service Boats Pilotage Revenue. This present management came into office in July, 2017. In essence, this is administration is only following up on the initial call for review.
I will take you through the contract agreement between the Nigerian Ports Authority, NPA and INTELS Logistics which is in two folds for you to judge the party that is being short-changed. The NPA engaged the services of INTELS basically;
1. As Managing Agent for monitoring and collections of revenue from Service Boats Operations in the pilotage districts.
2. Development of Port infrastructure at Onne Ports Complex.
Summarily, the first fold is a 10year contract agreement to manage, especially, logistics of vessels of Oil and Gas related activities amongst others (and over the years, INTELS have monopolized logistics of Oil and Gas related activities). To also collect all money invoiced for service boats operations and other relevant dues invoiced against vessels owners.
In view of the above, the NPA pays INTELS a commission of 28% of total revenue generated. Withholding tax, inclusive. This pricing is outrageous but quite surprising, the NPA hasn’t made it a major issue of contention. For a better perspective, commercial Banks also collect tax on behalf of the government and charge between 0.25% to 1% as commission.
NB: the 28% is deducted at source as dictated in the terms of the contract.
The second fold which is development of Ports Infrastructure at Onne Ports where in August 2013, the Authority, through the Federal Executive Council (FEC) engaged Deep Offshore Services Nig Limited, a sister agency of INTELS, to construct Port infrastructure at Onne Ports Phase 4B for the sum of $2.7bn for a 6years period. Term of this contract is that, recovery of project cost is through amortization process from port charges and Service Boats Operations revenue.
This means, NPA will also remit 60% balance of the 72% left (100% – 28%) for this port development.
Meanwhile, capacity of Phase 3 and 4A earlier constructed by INTELS is evaluated at less than 60% but at a cost 20% higher than initial contract sum because NPA pays cost of funds of Libor + 6 percent.
Important to note, the Maritime and Port Authority of Singapore and Dredging International Asia Pacific – Daelim Joint Venture signed a contract for $1.8bn for a new port wharf terminal Phase 1. This entails the construction of a new port terminal with 20 deep-water berths having a total capacity of 20million twenty-foot equivalent units (TEUS) per annum.
On the flip side, Deep Offshore Services are constructing only 8 deep-water berths for the Phase 4B at $2.7bn. This is almost a billion dollar extra for less number of deep-water berths. Ridiculous!
Perhaps deliberate, there is no clause mandating INTELS to remit any percentage of the Service Boats Operations revenue collections to NPA and on a stipulated date. Hence remittances are based on mutual understanding between both parties.
So from 2013, INTELS remitted an average of $3m monthly which represents only about 18% of average revenue collected. Remittance went all-time high in 2014 to an average of $5.6m monthly. It is a cause of worry to NPA that this remittance dropped to an average of $3.6m monthly in 2016. This called for a review by the former management which was followed through until recent approval to terminate the contract.
After reconciliation, Service Boats Operations revenue collected by INTELS from January 2014 when execution of Phase 4B commenced to September 2016 was $510m while sum of $162m which represents about 29% of the total revenue was remitted to NPA within the period.
Worthy of note also, the LAST remittance made by INTELS to NPA was in October of 2016 ?—? one year ago.
However, INTELS is owed $674.8m as at December 2016 for executed project cost not yet amortized. The Managing Agent, INTELS is as well holding on to the sum of $128.3m being jointly reconciled revenue as at December 31st, 2016.
Since the Managing Agents, INTELS control the revenue, they went ahead to execute a project at the Onne Ports Complex worth $109m without any recourse to their principal, the NPA. Another thing is, the Managing Agent keep the balance at their disposal for, sometimes, months, with no interest element paid to the principal.
What is it in the reviewed agreement that INTELS is declining to affirm to? The following Standard Operating Procedures were drafted and reviewed for adoption;
1. The NPA is suggesting the balance of 72% be shared between NPA and INTELS in the ratio of 30:70.
2. Two transit accounts be opened with two commercial banks where individual boat operators pay their charges and funds be swept into the TSA account with CBN daily. INTELS get their 28% Commission within 7 days. In the event that NPA fails to pay the commission within the stipulated time, it shall pay INTELS a 0.15% for the outstanding.
3. Since capacity utilization of the completed phase 4B is very low, that further execution be formally stopped and the completed section be put to commercial use to generate revenue for the Authority.
Nothing spurs us to action, else the Civil Society Organizations and other pressure groups would be at the fore front demanding a repeal of this agreement and perhaps, demand a downright payment of outstanding balances.
Abdullahi K. Abubakar is on twitter as @abubakar47i