Exploring the concept of force majeure, on October 10, 2017, the Nigeria Ports Authority (NPA) wielded the big stick against Intels Nigeria Limited, by abruptly terminating the pilotage districts contract with the company and subsequently gave the firm three months to quit. AJIBOLA ABAYOMI writes
Intels Nigeria Limited is a leading integrated logistics and facilities services provider in the maritime cum oil and gas sectors. The company is 17 years into the 25-year contract.
The recent termination of the pilotage districts contract with the company prompted the House of Representatives to set up a committee to examine the legality of the terminated contract.
Acting on the legal advice from the office of Attorney General and Minister of Justice, Abubakar Malami dated September 27, 2017, the Managing Director of the NPA, Hadiza Bala Usman, explained that the termination of the contract was occasioned by the refusal of the company to comply with the Treasury Single Account (TSA) policy and Nigerian law while collecting revenue on behalf of the agency dated stated thus:
“For the avoidance of doubt, the agreement for the monitoring and supervision of pilotage districts in the Exclusive Economic Zone of Nigeria on terms inter alia that permits Intels to receive revenue generated in each pilotage district from service boat operations in consideration for 28% of total revenue as commission to Intels is void, being a contract ex facie illegal as formed for permitting Intels to receive federal government revenue contrary to the express provisions of Sections 80(1) and 162(1) and (10) of the 1999 Constitution of the Federal Republic of Nigeria (as amended), which mandates that such revenue must be paid into the Federation Account/Consolidated Revenue Fund.
“In the premise of the above, the conflict between the agreement and the TSA policy presents a force majeure event under the agreement, and NPA should forthwith commence the process of issuing the relevant notices to Intels exiting the agreement which indeed was void ab initio.”
She further stated that: “The Authority has taken note of threats by Intels to withdraw its investment plans in Nigeria and must point that business thrives in favour of everyone involved only when the laws of the country of operation are adhered to.”
Intels on the other hand explained that the pilotage agency agreement signed in 2010 did not envisage the TSA, and as such did not factor it in its implementation.
The firm revealed that it borrowed $1.4 billion (N428.4 billion) from banks to execute the agreement with the understanding that the debt would be offset from monies realised from the pilotage services paid directly to the banks.
Its spokesman, Bolaji Akinola, said a series of meetings, letters and proposals on how to resolve the TSA imbroglio were rebuffed by the NPA boss.
“Deliberate stumbling blocks were placed on the path of resolving the issues and this is indicative of a sinister motive”.
He said that on May 5, 2017, Intels sent a letter to NPA proposing the opening of a jointly signed account between the company and NPA on which the boat service revenues would have been directed, but the proposal, like many others, was rebuffed.
He also faulted claims by NPA that the contract was terminated based on the advice of the AGF.
“At what point are revenues eligible to be paid into the Consolidated Revenue Fund? NPA acting on behalf of the federal government entered into a profit sharing agreement with Intels. 72% of the revenue goes to NPA while 28% is for Intels.
“The objective interpretation of the constitution should be that the revenue due to the federation should be the 72 per cent due to NPA. Intels faithfully implemented the covenants of the agency agreement and also substantially boosted government revenue. We took the pilotage service from a revenue stream of a few thousand dollars per month to multimillion dollars per month service, hence attracting the envy of many” Bolaji argued.
But hardly had dust settled on this, the company made an apologetic u-turn on 23rd October through its chairman, Mr Gabriele Volpi saying that: “We intend to comply with the directive of government and transfer all the revenue to the TSA because we are a law-abiding company…We are committed to cooperating with the government and NPA in the development of Nigeria’s maritime sector and this includes the Badagry deep seaport.” Then there is need to dig deep into every detail of the pilotage activities since 2010.
Crux of the matter
Claims and counter claims before the House of Representatives Committee on the matter shows that the jointly reconciled service boat revenue collected by Intels for the period from January 2010 to September 30, 2016 was $1.25 billion.
This is in addition to the sum of $41.039 million being revenue for the period October to December 2016 which is yet to be reconciled, bringing the total revenue for the period of January 2010 to December 2016 to $1.295 billion.
During the same period, it said Intels remitted a total sum of $343.35 million from service boats revenue collection to the NPA, representing 27 per cent of total service boats revenue collected by Intels on behalf of the NPA.
The NPA added that the total agency commission to Intels computed in line with executed agreements was $353.066 million (N107.685 billion). This amount, it added, was deemed to have been deducted electronically from service boats revenue by Intels in accordance with subsisting agreement, still credit notes were issued to regularise the deductions.
The NPA claimed Intels was indebted to it in Onne and Warri Ports in respect to rents, lease and throughput fees. The debt, the NPA revealed,was computed to the sum of $1.03 million (N316.60 million) for lease and throughput fees while debt owed by Intels in respect to rent at Onne was put at N3.343 billion and that its only exposure to Intels was limited to the portion of projects costs not yet amortised which is the sum of $682.4 million. .
The labour unions are more concerned about the fate of the over 7000 Nigerians workers on the wage bill of Intels.
The President of Maritime Workers Union of Nigeria, (MWUN) Adewale Adeyanju said the union as part of organised labour is concerned over the job security and welfare of its members in Intels.
“Today, we are aware that Intels has over 5, 000 direct employees and over 6,000 indirect employees, which makes it up to 11,000 workers. We want to advise the government to avoid anything that will send wrong signals to investors that Nigeria’s environment is not safe and conducive for business.”
Also the President of Maritime Energy Media Practitioners of Nigeria (MEMPON) Dr. Ralph John noted that: “Intels recently dropped over 1,500 staff, which means that, if the recent contract termination is allowed to stand, the possibility is that more workers will lose their jobs”.
The current saga should awake the interest of government to review all trading procedures its agencies had committed to with human face that will protect the interest of investors and the nation.
To further win the confidence of Nigerians and investors, details of transactions between the NPA and Intels should be made public after investigations by the House of Representatives and other bodies to be constituted. This is without prejudice to the right of both parties to seek justice in the court.
Also, why is the federal government just waking up to the reality of transaction at the port where terminal operators are like tin-gods now?