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NPA, Intels agree to new terms, commission on pilotage reduced to 24.5%

Caleb Obiowo by Caleb Obiowo
December 4, 2023
in Sectors
NPA, Intels agree to new terms, commission on pilotage reduced to 24.5%
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Following an interim injunction by the Federal High Court in Lagos to prevent the termination of Intel’s role as a managing agent in various pilotage districts and a presidential directive to extend the boat operation contract of Intels, the Nigerian Ports Authority (NPA) and Intels have agreed to new terms.

The new terms which include the reduction of the agency commission on pilotage collections from 28% to a lower commission of 24.5%, among others are contained in a statement by NPA titled, “Setting the Record Straight in Respect of Service Boat Monitoring Operation in Nigerian Ports Authority: Reinstatement of INTELS Nigeria Limited as Management Agent.”

Aside from the reduction of the agency commission on pilotage collections from 28% to a lower commission of 24.5%, both parties also agreed that all revenues collected by the logistic company must be paid into the designated Treasury Single Account (TSA) of the NPA at the Central Bank of Nigeria.

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Furthermore, both parties agreed to a waiver of the sum of $100, 000,000 part of the accrued interest as of 31 July 2023 on the indebtedness to Deep Offshore Services Limited under the Phase 4B Agreement.

In addition, there’s an agreement to a further waiver of the interest which shall accrue on the outstanding debt under the Phase 4B Agreement for two years commencing on 1 July 2023, and ending on 30 June 2025, which is currently estimated in the sum of US$93,317,556.

  • “There is a reduction of the interest rate on the indebtedness to Deep Offshore Services Limited from six-month LIBOR rate + 6.5% to 6-months SOFR rate + 3% effective from the date of execution of the supplemental agreement.
  • “The Authority will be saving a total sum of $ 326,895,226 as a result of a waiver of a part of accrued interest and reduction of interest rate from 6.5 percent to 3 percent on the debt over the next 15 years,” a part of the reinstatement statement read.

NPA further said that

  • “The proposed spread of the debt of $522,433,453.25 to be paid back over 15 years 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.“

More Insights

NPA, however, admitted that the legal impasse created by the dispute with Intels and Deep Offshore Services Nigeria Limited caused the federal government to lose enormous revenue in the period it took over the management of pilotage.

  • “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 $216 million and $209 million in 2014 and 2015 respectively under INTELS agency to $130 million and $99 million in 2020 and 2021, respectively, after taking over by NPA. The situation in 2023 is even worse as the collection up to June 2023 was only $55.3 million,” the statement revealed.

What you should know

The Federal Government, through the NPA, in September 2020, announced the termination of Intels’ boar contract before the expiration of the Service Boat Monitoring Agreement.

The NPA then commenced the procurement process for the engagement of service boat operations monitoring agents. Four companies, comprising Pacific Silverline Limited, Nexttee Oil and Gas Trading Company Nigeria Limited, ICA Logistics Limited, and Ishasha Investments Limited submitted bids for consideration by the Parastatal Tenders Board of the authority.

However, 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.

Shortly after the opening of the bids, Intels and Deep Offshore Services Limited instituted a suit no FHC/CS/L/1058/2020 at the Federal High Court, Lagos preventing the termination of Intels’ role as a managing agent in various Pilotage Districts, pending the resolution of arbitration proceedings.

The Federal High Court, Lagos on 24th July 2020, granted an Interim Injunction that restricted NPA from giving effect to the Public Notice calling for Expression of Interest for the provision of the Service Boat Operation from interested entities.

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.


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Caleb Obiowo

Caleb Obiowo

Caleb Obiowo is a graduate of Urban and Regional Planning from the University of Uyo. At Nairametrics, he covers transport and logistics in Nigeria, along with real estate, construction, and aviation. He focuses on delivering clear, easy-to-understand stories and often digs deeper into industry issues through conversations with key players.

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