Impact of Port Concession in Nigeria
CHAPTER ONE
OBJECTIVE OF STUDY
The specific objectives of the research are:-
(a) To determine the impact of Port concessions on the efficiency of Onne and Rivers ports.
(b) To identify the impact of concession on port productivity (Cargo throughput) in Onne and Rivers Ports
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Much of Nigeria trade is continental primarily between Nigeria and Europe, Asia and North America during the past decades, continental trade has grown in importance for Nigeria. The creation of the free trade agreement among the Economic Community of West African States (ECOWAS) and other bi-lateral and multi-lateral agreement with other countries, including globalization of world economics contributes to the continued integration of these national economies on a continental scale.
These trade agreements directly impacts Nigeria ports by encouraging overseas trade and cargo throughputs in our ports increased on a relative scale. Although Nigeria maintains both a multi-lateral (supporting the world trade organization and seeking trade partners abroad) and a bi-lateral trade policy (ECOWAS). Nigeria ports have benefited immensely from continental trade more than trade within her territory. As such, the marine sector with its focus on overseas trade is as important in the transportation policy as it is in other more maritime oriented nations.
CONCEPTUAL FRAMEWORK:
Ports are the gateway to Nations economy but Nigerian ports were performing poorly due to congestions, pilfering, insecurity, delays in cargo clearance, high tariffs, corruption etc; hence making most port users to patronize ports of Neighboring Countries leading to loss of revenue by Government. Reforms have brought about opening up of the ports operations to market forces. Reforming the Nigerian ports has brought about private partnership participation in the ports, leading to injection of funds for infrastructural and super structural developments of the ports.
This brought about efficiency and increased productivity, expansion of port operation, utilization of economy of scale, increased service quality, use of modern equipment, reduced fiscal burden of loss-making state enterprise etc.
PORT PRIVATIZATION
Defining “privatization” in today’s international ports system is fraught with frustration: the term is loosely used to refer to all manner of steps taken to enhance the commercial side of port operations. Part of the definition problem arises from the purpose of privatization ranging from the ideological belief in the superiority of market discipline to the pragmatic need to redress failed national economic development efforts (particularly in the developing world) (Ircha, 2001).
Wade (1992) argue that from an ideological perspective, privatization is a sub-field in neo-classical perspective economics known as neo-liberalism which, as a general rule tends to view short-run optimal resource allocation (as derived from market forces) as the key factor for maximizing the rate of long-term economic growth.
Bienen et al (1989) defined “privatization” as ranging from “government disengagement and deregulation to the sale of publicly- owned assets”.Savas (1990) suggests that some American writers use privatization to mean contracting for services, while non-American writers “restrict their use of the word to mean de-rationalization”. Savas goes on to suggest that privatization is a broad policy to improve the economic performance of governments and nations. It is a response to the recognized need for structural return of government agencies, state enterprise and national economics.
The United Nations Development Programme(UNDP) (1991) opines that privatization is a process of “marketization”, the opening of public enterprises to market forces. De Monie(1992) and Ndikom (2006) argue that privatization refers to the transfer of port property from government to the private sector, but they further acknowledge that privatization also relates to leasing facilities, licensing, operations and granting concessions.
CHAPTER THREE
RESEARCH METHODOLOGY
DATA COLLECTION
The method used in this study was sourcing of relevant information through primary and secondary sources.
RESEARCH DESIGN
The study involves the systematic process of collecting, analyzing and interpreting data with a view to finding solutions to the problem being investigated. The research design investigated the efficiencies and productivity of Onne and Rivers ports in the Eastern ports of Nigeria before and after the concession. This type of research design is chosen for this study since the events or activities had already happened from 2001 to 2010.
PRIMARY DATA
The study made use of an exploratory survey method involving observatory methods to obtain the data. Observatory method here came as a result of personal visits to the study locations during the research.
SECONDARY DATA
These include documents, and data such as published and newspaper articles. They include annual reports and company’s handbooks of the Nigerian Port Authority and those of the Ports considered in this report. Other sources of data included World Bank reports, academic Journals, Magazines, Worldwide web and so on.
METHODS OF DATA ANALYSIS
The study made use of various statistical tools and techniques in analyzing the data collected for the period 2001 to 2010 (10 years) which overlaps the pre and post concession era of the ports in the study. These statistical tool include descriptive tools such as the percentage, frequency, tables and charts; The two-sample ‘t’-test was also used to test the difference between the sample means for the pre reform era and the post reform era to validate if there exists any statistically significant contribution of the reform policy,Data Envelopment Analysis (DEA) which is a non-parametric efficiency evaluation model based on mathematical programming theory was utilized to check the relative efficiency levels of the seaports under study.
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
DATA PRESENTATION
This chapter focuses on the presentation, analysis and discussion of the data for the study. It assesses the performance of the ports of Onne and Rivers using such parameters like the Cargo throughput as the output, Ship Traffic, Berth Occupancy, Ship Turn round time and Personnel strength are used as the inputs. This table answers research questions (a) and (b).
RESEARCH QUESTIONS
(a) How has the Port concession in Nigeria impacted on the efficiency of the ports?
(b) How has the concession in the Port sector impacted on the Port productivity (Cargo throughput)?
The research problem in this study is the evaluation of the concession programme as to know how efficient it has performed. The data are presented in Table 4.1 and Table 4.2, and analyzed with appropriate tittles, tables, graphs and charts to reflect the research. The data were collected from the Nigerian Ports Authority (NPA), the landlord operators of the ports in view.
DATA ENVELOPMENT ANALYSIS (DEA) OF THE ONNE AND RIVERS PORT EFFICIENCY LEVEL FROM (2001-2010).
As earlier stated in chapter three above, the DEA analytical tool measures the efficiency of an organization and clearly points out the areas of inefficiencies. The concept of DEA is developed around the basic idea that efficiency of a Decision Making Unit (DMU) which in this study stands as the Pre and the Post concession eras are determined by its ability to transform inputs into desired outputs which from the study the inputs are the Ships call, the Berth Occupancy rate, Turnaround time and the Personnel Strength. All these input contribute to form the output which can be likened to a dependent variable which in the study is the Cargo throughput within the stated year under study. This concept of efficiency was adopted from engineering which defines efficiency of a machine/process as output /input = 1. In this approach, efficiency is always less than or equal to unity as some energy loss will always occur during transformation process.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
INTRODUCTION
The research study tried to appraise the performance of the ports before and after the concessioning programme of the Federal Government of Nigeria (pre and post reform era).This was done within the period of ten years. Such indices used are the Ship Traffic, Vessel Turnaround time, Cargo Throughput, Berth Occupancy rate, Financial performance of the Ports and so on.
SUMMARY OF FINDINGS
- The resultant efficiency values from Data Envelopment analysis shows that Onne port has better performances over the past 10 years than Port Harcourt port. But for the regulation changes at 2005, Port Harcourt made giant strides that superseded the performances of Onne port.
- According to the results from the t-test the reforms that took effect from 2006 made positive improvements to the efficiency of both ports by improving the cargo throughputs at both ports. The improvement was most significant for Rivers ports.
- Before the Concessioning programme of the ports, Rivers ports had a higher cargo throughput in 2001 as a result of crude and petroleum products lifted at various terminals totaling about 27,344,449 m/t out of total cargo throughput of 30,862,678m/t. This implies a total of 3,518,229m/t of other cargoes at Rivers ports.
- Onne ports had in 2001, a total cargo throughput of 9,056,487m/t of which other cargoes excluding petroleum products totaled 1,901,522m/t. This shows that Onne ports had more general cargoes than Rivers ports while Rivers ports accounted for most of the crude and petroleum product cargoes.
- In 2006 after the concessioning of the ports, Onne ports cargo throughput dropped to 15,820,381m/t due to restructuring of the ports by the concessionaires while those of Rivers ports maintained its lead of crude products.
- In 2009 and 2010, Onne ports total cargo throughput was low while the Rivers ports were high. The drop in Onne ports total cargo throughput as shown in Table 4.14 figure 4.2 was as a result of Militancy effect which affected most of the oil exploration companies from kidnapping, pipeline destruction, and sabotage. The improvement that was noticed in total cargo throughput of Onne ports came as a result of the West African Container Terminal (WACT), Brawal Shipping (BACO Liners) coming into operation and utilizing Military convoy to escort Vessels in and out of the ports.
- Both ports are very close substitutes in both ship traffic and efficiency. This can be observed from the relationship shown in Table 4.1 and Table 4.2. A drop in Onne port results in an increase in the other (inverse relationship).
- There was a remarkable improvement on the Berth Occupancy rate (BOR) of Onne and Rivers ports as a result of the reforms. Prior to the reforms, BOR was as high as 88% in 2001 at Rivers ports with a Ship call of 3,178 Vessels. After the reforms in 2006, it dropped to 78.52% with a ship call of 829 vessels. This was equally as a result of some infrastructural and super structural development at the ports area, hence making way for more stacking and marshaling areas.
- Onne ports BOR has always been at an average level of 71% as result of its design as an Oil and Gas free zone, hence enough provision was made for stacking, marshaling, warehousing areas as well as more areas for expansion. In 2008, there was a sharp drop in BOR for Onne and Rivers ports to 34% and 65.86% respectively. This came as a result of the Niger Delta crisis which affected the companies operating in the region.
- The BOR is a function of ship traffic hence the crisis in the Niger Delta affected the ship traffic leading to a drop in Berth Occupancy rate.
- There was an improvement in vessel turn round time in 2006 and 2007 at Onne ports when compared with 2001 and 2002 that forms the pre-reform era. The average turn round time (ATRT) of vessel was equally affected in 2008 due to the militancy crisis; it rose to 2.80 days from 1.80days. Similarly, ATRT improved at Rivers ports from 16.88 days before the reforms to 9.57 days in 2008, and later 10.50 days in 2010. All the improvement in ATRT came as a result of modern and fast cargo handling equipment presently in the ports; more cargo handling space were provided by the port operators.
- Port related employment in the region has increased since the reform operation of 2006. There is also an increase in the number of companies operating in the region hence increase in employment rate. Oil and Gas, Logistics and Transportation, Financial institution, Shipping, Hospitality industries forms greater part of these new companies.
- In today’s port operation, there is a greater use of Information and communication Technology (ICT) and modern Technology, this has reflected in the ports of Onne and Rivers. The ports have utilized internet access in the form of Electronic Data Interchange (EDI), cargo tracking and so on.
CONCLUSION
The study found that reforms have been beneficial to the ports and the economy as follows:
- Improved port efficiency;
- An improved cargo throughput at Onne and Rivers ports;
- Berth Occupancy rate dropped at Onne and Rivers Ports;
- Fast vessel and cargo turn round time due to more and modern cargo handling equipment;
- Increase in ship traffic and ship size too: Economy of scale;
- Complete stoppage of incessant labour strikes;
- Enhanced port security and safety;
- Enhanced revenue by Government from the ports;
- Delineation of Nigerian ports Authority (NPA) and Terminal Operators responsibilities to avoid conflict;
- Creation of job opportunities and a better remuneration for dock workers;
- Injection of Private investment into port development;
- Commencement of Olokola Deep Seawater project (Ogun and Ondo State), Bonny NLNG, Brass NLNG, Deep sea ports for Oil and Gas at Lagos, Warri, and Onne ports and so on.
RECOMMENDATIONS
The impacts of reforms on port operation in Nigeria have contributed positively to the economy but the following recommendation will equally increase the productivity, operational efficiency and competitiveness of the ports.
- Provision of Integrated Intermodal Transport System: There is an urgent need for an integrated Intermodal transport system, since a port is also a link in the transport chain and of course, similar requirements apply as regards capacity, performance and quality of connections with short sea and feeder shipping lines and with inland transportation networks, road, rail, barges, pipelines etc; hence swift transfer of cargoes to and from the hinterland.
- Full utilization of Management Information System (MIS): It is difficult to achieve real success in operation and increased port performance without proper implementation of Management Information System (MIS). The benefit of MIS tool like cargo tracking network (CTN), Electronic Data Interchange (EDI), enables fast transfer of information between terminal operators, port management and statutory agencies like customs and stakeholders, hence increased efficiency. The use of paper medium for most information transfer or retrieval can adversely hamper or distort information.
- There is a need for a Regulator: The concession agreement made provision for an appraisal for the reform operation but there is non-implementation of such as contained in the agreement.
- There is also the problem of arbitrary increase in charges by the shipping companies hence there is an urgent need for a regulator to check the excesses of the shipping companies. The terminal operators ought to always publish its rates, charges and the conditions.
- Reduction in Government Agencies: The too many government agencies in our ports have resulted to high cost of doing business at Nigerian ports hence loss of revenue to both Government and Concessionaires.
- Full Utilization of e-payment system: The use of e-payment will go a long way in reducing cash gratification and delays thereby realizing the 48hours cargo clearance.
- Stoppage of siting of Oil Depots (Tank Farms) in the port Areas:
The siting of oil depots (Tank Farms) in the port areas is not in line with World standard. It occupies most land spaces for port expansion, creates vehicular traffic to the ports and its fire attendant risk is better not experienced because of the volatility of the oil products stored in the tanks. The Department of Petroleum Resources (DPR) and the Federal Government of Nigeria should reverse this trend in our ports for safety reasons.
REFERENCES
- Adebayo, O. (2005).Nigerian economy needs functional port system. Daily Champion, Friday October 14, 2005.
- Akinwale,A.A. and Aremo, M.O. (2010).Concession as a catalyst for crisis management in Nigerian ports. The African Symposium: An online Journal of the African Educational Research Network 10(2).
- Amit, S.R. (2004). Managing port reform in Indiacase study of Jawaharlal Nehru port trust (JNPT), Mumbai, New Delhi.
- Baird, A.J. (1995).Privatization of trust ports in the United Kingdom: review and analysis of the first sales. Journal of Transport Policy, 2(2) 135-143
- Baird, A.J. (1999).Privatization defined; is it the universal panacea?Mimeo. Napier University. Banister, D. (1995). Transport and urban development. Alexandria Press, Oxford.
- Chioma, O.A. (2011). Freight traffic at Nigerian seaports; problem and Prospect.Medwell Journals. Vol. 6 (1), 250-258, 2012.
