The solution is that we need to improve our processes that are automated. If you reduce human interference in port processes and in customs processes, we believe it will reduce time.
In the maritime business whether importing or exporting, the more time you waste the higher the cost. If a vessel gets into the country and stays longer than it needs to, every hour the vessel is waiting to offload attracts a cost to the shipping company and the importer. We need to work on our automation. Then, we need to work on the physical infrastructure of the ports themselves. Some of the ports are over 40 years old.
There is a port that is over 100 years old and the lifespan of some of the quays and physical infrastructure of the port is 40–50 years. That means each of the ports is long overdue for either rehabilitation or complete reconstruction. And we have noticed that in the past what the NPA has been doing is a palliative reconstruction of the port and it is no more efficient. We are now working on total rehabilitation of the ports starting from Tin Can, and then some of the quays in Apapa, Calabar, and some of the jetties in Warri. We have identified the areas in Onne and Calabar that need to be reconstructed. What it simply means is that we are now trying to upgrade our ports to meet the new international standard.
Most of them were constructed over 50 years ago. We need to reconstruct them to ensure that the quays are safe for usage. In some locations, we are likely to deepen the channel, the existing channel draft in some places, like Lagos is about 13 metres. The question is do we go deeper? For us to do that, the quays must be reconstructed to be deeper. There is a need to also have a national single window. It is a platform that enables trade facilitation and speeds up the processes of documentation for importers and exporters and a lot of countries are doing that. I know the Federal Government is working on that.
This is something that has been in the pipeline for like 15-20 years now, but I know that this government has been a more serious commitment to the deployment of the national single window. A committee was set up, headed by the vice president. The minister of finance, the comptroller-general of customs, and the minister of transportation are also members of this committee. But what we are doing now is trying to deploy what is called the Ports Community System. The IMO is consulting for us. They offered to pay the fees to the consultant in the first and second phases. We are about to enter the third phase. And we believe that the PCS will serve as a catalyst for the national single window. What we did was to get all the stakeholders in the maritime industry, from the shipping lines to the freight forwarders, terminal operators, users of the ports, SON, NIS, among others to sit down and work with us. What the consultant did was to first study what each one of these agencies that I have mentioned has in place in terms of IT deployment and automation. The next phase is to do an analysis of what is needed to be able to deploy the PCS.
The Ports Act empowers the NPA to generate revenue and use it for this purpose. However, the Fiscal Responsibility Act and the Finance Act have created restrictions whereby the NPA is not allowed to spend more than 50 per cent of what it generates. Also, it sends 80 per cent of its surplus to the Federal Government. This year alone, we have transferred over N100bn to the Consolidated Revenue Fund. Now we are working on multiple options. We either allow the terminal operators to reconstruct these locations and then amortise over time and of course at a cost. Our worry is that not all the terminal operators have the financial capacity to do this at the same time and we don’t want disruptions.
If terminal operator A starts working on its own quay of the terminal, we expect that the next person will start at the same time. If not, the integrity of the quay walls will be affected. The other option is for the NPA to construct those quays and the port funds this from its revenue, which will reduce the amount of money sent to the CRF, or we could borrow from a multilateral lending agency. We are exploring the last two options and are in discussion with one of the lending agencies, AFREXIM. The idea is to get the Federal Government to allow the NPA to borrow money for a certain period, probably 10 years with three years moratorium.
If we are going to make provisions for payment of that loan, it will start in either 2024 or 2025. The Ministry of Transportation is supporting us on this. It has asked us to find ways to ensure that these infrastructures and facilities are reconstructed. We already have designs for it. The breakwaters in Warri, which collapsed about 10 years ago, are supposed to be reconstructed for Warri port to be viable. We have mapped out all the locations that need to be reconstructed in each of the ports and put them into a basket with a cost and we are now thinking of the funding options available to us.
The minister of transportation is leading the relevant government agencies in terms of approval. If it is Public-Private Partnership, we will go to Infrastructure Concession Regulatory Commission. If it is a loan, we are discussing it with the Ministry of Finance, and I think we will get to the end of this shortly.
Shipping is an international business, and I can assure you that all the transactions, negotiations, and whatever are initiated offshore and paid for even before the vessel comes. Why should the NPA start charging in naira on a transaction that has already started and been consummated in a foreign currency? There are some vessels that are coming into Nigeria for the first time.
If they are charged in naira, how will they pay that naira? When importers go to bring in their cargo, right from their country of origin, they pay for the goods, cost of shipment, insurance, and so on.
It is naturally expected that when you come to Nigeria you will pay that. And all the exporters from Nigeria also naturally pay in dollars for all goods exported to any country in the world, regardless of the currency of use in that country. So, why should our own be different? If you are exporting cargo to Asian countries, you will pay the shipping companies carrying your cargo in dollars from here. We have had this complaint over time and what we are saying is this is international best practice. You charge shipping companies in foreign currency.
This is not necessarily about the Lagos State government. There is a private equity investor who has an interest in Badagry, and the Lagos State government also has some equities, just the same way Lekki is coming up. The world has changed from a situation where the states build ports with their own funds and all that is no longer practicable.
PPP arrangements are better and cheaper for the government, and it brings efficiency, and so on. But the NPA will still be the agency of government that will be regulating the activities of the ports. For us, we are excited, if you have Lekki operational and then Badagry coming into operation in a few years, it will mean that we have two deep seaports in the western part of the country. This means that you have ports that are not river ports. All our ports are river ports.
Vessels need to travel for so long. Some of the channels are over 100 km long. From the time you get to the fairway buoy, you need to meander through rivers to get to the port. But these ones would be right on the high sea. Right on the ocean, which reduces the cost of doing business and improves efficiency.
Also, they are going to be modern ports. The ports of Tin Can and Apapa are probably going to become feeder ports. We don’t know but we are excited that it is happening. It means we can create competition. And the dream of making Nigeria a transhipment hub for cargo is gradually coming to reality.
Currently, I have not seen any plans for a request to build another deep seaport in Lagos State. I believe this might be the only deep seaport probably in the next five to 10 years. These two deep seaports are adequate in Lagos and in the western part of the country. Of course, in the south, you should expect that there could be one or two. For any emergency, you can have alternative ports also.
