The ongoing dispute between the Nigerian Ports Authority (NPA) and BUA Ports and Terminals Limited (a subsidiary of BUA Group) is gradually having a negative impact on the Nigerian economy. The contract disagreement, which has gone through a handful of courts, will affect 1000 jobs as it continues to linger, and BUA Group is losing more than $500,000 monthly revenue.
The conflict resulted from the BUA Group’s Concession in the Port Harcourt Ports area. The port authority had decommissioned the whole concession arrangement which BUA Group got in 2006.
Why NPA decommissioned: NPA had decommissioned the concession, claiming that the unsafe operational environment of the jetty (BUA concession area) needed urgent repairs and reconstruction. But the General Manager, BUA Ports and Terminals Limited, Mohammed Ibrahim, said the withdrawal of license by the Managing Director of NPA, Hadiza Bala-Usman was against the requirement of global judicial/dispute resolution and undermined the NPA concession agreements.
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BUA’s defence against NPA: The concession is expected to last for 20-years before the need for renewal but the company has only been in charge for 13-years, and according to Ibrahim, BUA had on several occasions sought approval from NPA to perform remedial works on the terminal. However, the NPA didn’t grant the approval, yet it shut down the terminal or decommissioned the concession.
Also, in his reaction to the dispute, Ibrahim said NPA’s delay to attend to the request for cost variation arising from the expanded scope of work and this forced Julius Berger to stop work. BUA had contracted Julius Berger for the Engineering, Procurement and Commissioning (EPC) of the area in accordance with the concession agreement. Julius Berger only worked for about 12 months from March 2014 to July 2015.
NPA breaching court order? According to a report, the NPA’s decision is against the ruling of the Federal High Court and will affect the pending case at the Court of Arbitration of the International Chamber of Commerce in Paris.
Ibrahim said a Federal High Court in Lagos had ordered NPA not to terminate or effect the Notice of Termination pending the referral of the issues in dispute to arbitration as provided under the lease Agreement, but NPA disregarded the ruling, the report disclosed.
NPA’s decision affecting FG and BUA: It was learnt that the decision to decommission the concession or close the BUA terminal came at a loss to both BUA Group and the Federal Government. If the concession is still operating, NPA is supposed to charge from $85,000 to $105,000 monthly, depending on the volume of cargoes discharged at the terminal on behalf of FG.
Also, the closed terminal, which is supported by a $400 million investment from BUA, will also affect the 1000 direct jobs the concession is expected to provide. It was also revealed that thousands of indirect jobs in haulage, loading, stacking, sales, among others, in the Group’s manufacturing value chain will be affected as well.
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Meanwhile, Ibrahim disclosed that BUA also loses between $500,000 and $600,000 monthly revenue, adding that, “This is affecting the economy because when you keep a vessel out for one month without a berth, money is going, somebody is losing. The tank farm that is close to us is losing.
“Crown Flour Mills take their product from BUA Terminal, we have so many customers that bring in fish through our terminal, all of them now are in big problem because the four berths available can only take four ships at a time and when one berthes cargo vessel, the one you saw has been at the port terminal for more than 10 days, which means that that berth cannot take any other ship until this one leaves.”