The Nigerian Ports Authority (NPA) yesterday explained the main reasons the Federal Ministry of Marine and Blue Economy restored the service boat monitoring operation with INTELS Nigeria Limited.
In a statement made available to LEADERSHIP, titled, “Setting the Record Straight in Respect of Service Boat Monitoring Operation in Nigerian Ports Authority: Reinstatement of INTELS Nigeria Limited as Management Agent,” the NPA decried the misinterpretation in a section of the media citing a letter issued by the Port Manager, Lagos Port Complex, Apapa and addressed to Shipping Companies on the matter.
The authority stated that INTELS Nigeria Limited waived $193 million as part of efforts to resolve the stalemate on the pilotage contract with the federal government.
The NPA, in the statement, further stated that the federal government lost humongous revenue in the period the NPA took over the management of pilotage.
The NPA added that Nigeria will save $326.895 million from the agreement it reached with INTELS on the contentious pilotage contract.
According to the NPA, “After the expiration of the Service Boat Management Agreement, the authority took over the performance of the service through various Departments and Divisions. However, due to the constraint of not having the requisite technology to monitor the operations, the expected revenue dwindled and it resulted in the drastic reduction of revenue generation for the Authority.
“An analysis of its impact on the authority’s revenue showed a sharp decline from $216million and $209 million in 2014 and 2015 respectively under INTELS agency to $130 million and $99 million in 2020 and 2021 respectively after take over by NPA. The situation in 2023 is even worse as the collection up to June 2023 was only $55.3 million.”
The NPA insisted that the agreement reached with INTELS was done in national interest adding that revenue generation will increase as a result of the effort.
The NPA also praised the Minister of Transportation, Marine and Blue Economy, Adegbeyega Oyetola for working tirelessly to ensure that the crisis is resolved.
Oyetola, the NPA said, was disheartened by the needless loss of revenue as a result of the impasse adding that showed concern and patriotism in resolving the dispute.
The authority said the federal government will earn a benefit to the tune of over $500,000,000.00 – taking into consideration the interest waiver of $193,317,556, the reduction in interest rate on the outstanding debt from 6-months LIBOR rate + 6.5 per cent to 6-months SOFR rate + 3 per cent, the spread of the repayment of the debt over 15 years, with the first two years interest-free and the reduction in commission from 28 per cent to 24.5 per cent.
“It is has become necessary to put the record straight for the benefit of the public and the generality of stakeholders in the Port industry. This is also to avoid distortions and conjectures, which may arise by reason of wrong interpretation of the aforementioned letter, “the NPA said.
Giving a breakdown of the agreement, the NPA said it agreed a waiver of the sum of $100,000,000 being part of the accrued interest as at 31st July, 2023 on the indebtedness to Deep Offshore Services Limited under the Phase 4B agreement.
“A further waiver of the interest accruing on the outstanding debt under the Phase 4B Agreement for the period of two years commencing from 1st of July 2023 and ending on the 30th of July, 2023 which is estimated in the sum of $93,317,556.
“Reduction of the interest rate on the indebtedness to Deep Offshore Services Limited from 6-months LIBOR rate + 6.5% to 6-months SOFR rate + 3% effective from the date of execution of Supplemental Agreement. The Authority will be saving a total sum of US$ 326,895,226 as a result of waiver of part of accrued interest and reduction of interest rate from 6.5% to 3% on the debt over the next 15 years.
“Reduction of the agency commission on Pilotage collections from 28% to a lower commission of 24.5% as opposed to increasing it due to astronomical rise in cost of operations. The proposed spread of the debt of $522,433,453.25 to be paid back over a 15-year period will, of itself, earn for the Authority a huge benefit in terms of preservation of funds to meet its other operational needs over the period, “it stated.
The above facts, the NPA said, represent the true position on the matter adding that, “The interest of the authority is to ensure that services are provided in line with international best practices and to enhance the revenue profile of the federal government. In order to mitigate the attendant loss of revenue and surmount the legal impasse created by the dispute, the authority proposed a settlement initiative with INTELS, which was submitted to the federal government through the Ministry of Transportation.
“Intels also made a proposal for settlement on behalf of itself and Deep Offshore Services Nigeria Limited. Protracted negotiations followed and the parties eventually reached a settlement following remarkable concessions by Intels/Deep Offshore and verifiable gains by NPA/the federal government.
“The parties agreed to the following proposed Terms of Settlement; waiver of the sum of $100,000,000.00 on the outstanding indebtedness of the authority to Deep Offshore Services Limited, a further waiver of interest which may accrue on the outstanding debt to Deep Offshore Services Limited over a period of two years between 1st of July, 2023 to 30th June, 2025 which is estimated in the sum of $93,317,556, reduction of interest rate on the outstanding indebtedness to Deep Offshore Services Limited from Libor+6.5 per cent to SOFR+3 per cent, reduction of the agency commission on Service Boat Pilotage collections from 28 per cent to 24.5%. The agreement to be renewed for a further period of 15.”
The NPA added that the federal government considered the proposal and approved the same on the 18th of August, 2023.
“The federal government further directed that the withdrawal of the cases was to be carried out by filing Terms of Settlement by the parties and for the Court to adopt the same as Judgment of the Court. The authority was also to discontinue the un-concluded procurement process, which was in dis-obedience to the Orders of the Federal High Court, Lagos.
“The Parties executed Terms of Settlement on the 24th of August, 2023, and the same was adopted as the Judgment of the Federal High Court in Suit No. FHC/L/CS/1058/2020 on the 21st of September, 2023 by Honourable Justice A.M. Liman. Arising from the foregoing, the authority also filed a Notice of Withdrawal at the Court of Appeal, Lagos in respect of the appeal at the Court of Appeal, Lagos.
“Following the Judgment of the Federal High Court, Lagos, the Nigerian Ports Authority and Intels Nigeria Limited executed the managing agency agreement, while a Supplemental Agreement with Deep Offshore Services Limited for the Phase 4B Port Development was also executed in view of the fact that the initial Agreement was suspended.”
While admitting that errors were made by the past management of the NPA, it stated, “Prior to the expiration of the Service Boat Monitoring Agreement, the authority commenced the procurement process for the engagement of Service Boat Operations Monitoring Agents. Several companies submitted bids and the Parastatal Tenders Board of the authority considered the proposals and approved to forward the Four Nos. companies considered qualified for the next stage of the process, to the Ministerial Tenders Board for further procurement processes in line with the requirement of the Public Procurement Act. The Four companies are; Pacific Silverline Limited, Nexttee Oil and Gas Trading Company Nigeria Limited, ICA Logistics Limited and Ishasha Investments Limited.
“Shortly after the opening of the bids, Intels Nigeria Limited and Deep Offshore Services Limited instituted a suit no FHC/CS/L/1058/2020 at the Federal High Court, Lagos against the Authority seeking orders of the Court to restrain the authority from engaging new Service Providers to carry out the monitoring of Service Boat Operations in the Exclusive Economic Zone. Intels further claimed that the authority was in breach of the management agreement and sought reliefs including that the contractual status quo remains. Deep Offshore claimed that the termination of the Managing Agency Agreement will negatively affect process of recovery of the Project cost from the Authority.
“The Federal High Court, Lagos per Justice Oweibo by an Order of Interim Injunction dated 24th July, 2020 restrained the authority from giving effect to the Public Notice calling for Expression of Interest for the provision of the Service Boat Operation from interested entities in line with the Procurement Act.”
It added, “The authority notified Intels Nigeria Limited vide its letter dated 5th August, 2020 of the expiration of the Service Boat Management Agreement on the 8th of August, 2020 and of its intention to take over the provision of the said Service Boat Operation. A Public Notice was equally issued to all Service Boat Operators requesting them to deal with the various Port Management on all Service Boat issues. Intels Nigeria Limited again approached the Federal High Court, Lagos in suit no. FHC/L/CS/1058/2020 requesting for an Order of the Court to restrain the Authority from giving effect to the Notice of Expiration served on Intels. At the Federal High Court, Lagos Coram Hon. Justice Aikawa granted an Ex parte Order of Interim Injunction on the 28th August, 2020 restraining the authority from giving effect to the Notice of Expiration of the Agreement pending the determination of the arbitration between the parties.
“By another application dated the 18th of September, 2020, the Authority challenged the jurisdiction of the Court to entertain the suit without first issuing and serving on the authority the mandatory pre-action Notice as provided in the Nigerian Ports Authority Act. The Federal High Court, Lagos Coram Oweibo J., notwithstanding the above objection extended the lifespan of the Interim Injunction and thereafter referred the matter to Arbitration.”
The NPA added that the orders of the Federal High Court should have effectively stalled the Procurement process adding, “However, despite the orders of the Court, the authority continued with the procurement process and forwarded the names of the companies to the Federal Ministry of Transportation. The procurement process was subsequently put on hold based on the advice from the Federal Ministry of Transportation that the authority should comply with the orders of the Court.
“The authority was thereafter sued by Pacific Silverline Limited, Nexttee Oil and Gas Trading Company Nigeria Limited, ICA Logistics Limited and Ishasha Investments Limited at the Federal High Court, Lagos in suit No. FHC/L/CS/1772/2022 seeking declarative reliefs and an injunction restraining the Authority and the Honourable Attorney General of the Federation from awarding the contract for the Service Boat Operations Monitoring contract in the four pilotage districts to any other entity other than one which participated fully in the procurement process.
“The Federal High Court on the 11th of July, 2023 upheld the objection of the authority and struck out the suit. The claimants have since filed an appeal at the Court of Appeal against the ruling of the Federal High Court and also applied for an injunction to restrain the Authority from executing the ruling of the Court. The appeal is pending at the Court of Appeal, Lagos and no date has been fixed for the hearing of the same.
“Messrs Pacific Silverline Limited recently filed another suit at the Federal High Court, Kano in suit no. FHC/KN/CS/245/2023 against the Honourable Attorney General of the Federation challenging the approval granted the authority to settle the cases between the Authority and Intels Nigeria Limited. The Federal High Court wholly dismissed the said suit on the 30th of November, 2023.”
It added, “In order to mitigate the attendant loss of revenue and surmount the legal impasse created by the dispute, the authority proposed a settlement initiative with INTELS which was submitted to the federal government through the Ministry of Transportation. Intels also made a proposal for settlement on behalf of itself and Deep Offshore Services Nigeria Limited. Protracted negotiations followed and the parties eventually reached a settlement following remarkable concessions by Intels/Deep Offshore and verifiable gains by NPA/the federal government.”