EXCLUSIVE: Nigerian govt to end shady $70 million yearly ports contracts

The Nigerian Ports Authority says it is ready to end joint venture agreements with two companies that managed and dredged the Lagos and Bonny access channels, after a PREMIUM TIMES investigation showed both firms sidestepped the nation’s procurement laws to win multibillion naira contracts, yet failed to deliver due benefits to government.

The firms, Lagos Channel Management and Bonny Channel Management, were formed in 2006, after NPA entered into joint venture partnerships with some “technical partners”, including Dredging International, Vinci, IPEM and Dapesa Maritime International.

The partnership, according to official sources, was for capital and maintenance dredging of the Lagos and Bonny channels, the provision of navigational aids and removal of wrecks. NPA holds 60 percent stakes in the companies.

But for more than a decade, NPA officials fraudulently bypassed federal public procurement laws to award multibillion naira contracts to the private companies, an investigation by PREMIUM TIMES showed in 2016.

Bonny Channel Management got at least N717 billion worth of contracts without openly bidding for them. No competitive procedure was followed in the awards, as required by law.

Each year, NPA said, the two companies got contracts worth $70 million without competition.

The ports authority’s new managing director, Hadiza Bala-Usman, who was appointed last year, has now initiated a process of terminating the joint venture agreements.

In an April 2017 letter, obtained by PREMIUM TIMES, Mrs. Bala-Usman requested legal advice from the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, after intimating him of the NPA’s decision to terminate the agreements.

She said while the broad objectives for setting up the joint venture companies remain laudable, the new management was concerned about the structure of the agreements based on the following:

“I. The effect of the Procurement Act 2007 and the seeming circumvention of same in joint venture agreements – Whilst noting that two of the agreements (Bonny and Lagos Channel Management Companies) pre-dated the Procurement Act, the mode of execution of yearly budget and expenditure needs to be clarified in line with the objective of open competitive bidding as enshrined in Public Procurement Act 2007.

“II. Profit – Despite the volume of uncompetitive dredging works being awarded to the joint venture companies annually, which is in the range of $70,000,000 (Seventy Million United States Dollars), they declare minimal profit to shareholders (including NPA with 60 per cent ownership).

“III Audit – The present arrangement where the technical auditor is paid by the joint venture company allows for conflict of interest and may affect the quality of the evaluation reports provided by the auditor.”

Mrs. Usman said the arrangement with the companies “as conceptualized is incapable of delivering optimum benefit to the government.”

She continued that a review of the operations and the returns on capital invested by the government, indicated that in the face of dwindling revenues of government, “a more cost effective approach” could be adopted.

She then said the NPA would have to opt for other methods of carrying its dredging activities, instead of the abused joint venture deals.

“It has become apparent that other options or models of carrying out the dredging activities of the authority should be identified and explored, including but not limited to migrating from the present model of joint venture arrangement to management contracts,” she said.

The NPA managing director could not be reached to comment for this story. Multiple telephone calls to her failed to go through. Some of our sources in the agency later said she was travelling in Indonesia.

A review of the NPA’s joint venture agreements suggests a system whereby its officials, in collaboration with private sector partners, steal revenues from the government through fraudulent procurement process, and sometimes needless contracts.

For instance, while a technical consultant hired by NPA, Mobetek International Ltd., “clearly advised” against the establishment of a channel management company for the Calabar navigation channel, according to an official correspondence seen by PREMIUM TIMES, NPA still went into a joint venture deal with Niger Global Engineering and Technical Company Limited, a firm owned by Hope Uzodinma, the Senator representing Imo West Senator.

The NPA partnered with Mr. Uzodinma’s firm to form the Calabar Channel Management, and handed the company $12.5 million in 2014, without any bidding, for the dredging of Calabar channel.

The consultant had advised against the establishment of a management company for the Calabar channel because the volume of the ship traffic was low and “did not justify a joint venture arrangement which is normally funded from ship dues”.

Yet, Mrs. Usman told the Minister for Transportation, Rotimi Amaechi, that the Calabar dredging work was never done, and the matter, PREMIUM TIMES is aware, is now being investigated by Economic and Financial Crimes Commission (EFCC).