News Stories in 1st Quarter 2007 Edition of DDH Magazine
APAPA BULK TERMINAL – a major re-development!
Interview of Capt Omotayo.
“…instead of increasing the number of people to be trained we are only increasing the levy”. - Capt Omotayo.
We are standing inside the port at Apapa Bulk Terminal grounds and Capt Omotayo and the manager of the fertilizer plant are informing DDH of their company activities. The encounter was a tour of many parts of the terminal where civil construction and infrastructure works have newly been commissioned in the massive redevelopment of the port facilities. At one of the warehouses being used for fertilizer operations, the following conversation ensued about the new fertilizer blending plant:
Capt Omotayo: We are putting up a new warehouse here.
DDH: How is it coming on, the progress?
Fertiliser plant manager: The building is yet to go up, we are hoping in the next fifteen to eighteen months. And then we will start moving our equipment from Iganmu.
DDH: That means there will be a lot of work taking place here?
Capt Omotayo: In the next five years, there will be a lot of work here, development…
DDH: Now Capt, this facility was it used for a different purpose before?
Capt Omotayo: We have been using it as a fertilizer warehouse…
DDH: In the new dispensation what is going to change?
Capt Omotayo: The only thing that is going to change is that there will be more equipment here for the blending and bagging. Before it was done at Iganmu (plant). But now that we have a space, we build the factory here, we move the machines to this place and use the other side for something else.
DDH: You are a master mariner and this programme has given you a chance to practice your profession. How do you commend what the government is doing with the seaports?
Capt Omotayo: Let me tell you the President has done well by bringing the port reform. The port is more efficient. He has reduced the costs of doing business by 30% from what NPA was charging, because we can only charge 60% of what NPA was charging before. If it remains that way, then eventually it will get to people in the street but as long as government agencies are coming with different caps asking for this, asking for that for no services given, then we are going back to square one. For instance, NAMASA is asking for 2.5% of cargo dues and delivery charges, for a situation that is only known to them, they are only trying to use strong arm tactics to collect money from us. They are not giving us anything, we have inherited the labour, we have absorbed the labour. We have employed them as permanent staff, we are training them, we are investing on the equipment and we are training the labour to know how to operate the equipment, and then government agency is coming through the back door to say it wants to regulate them. What are you regulating? Is it the machine or the people? And they want 2.5% cargo dues and delivery charges. In effect, what we have today, we don’t make 2.5% of cargo dues as profit. Nobody will make any profit until after five years. You can see the enormous investment we are putting up there (pointing to the demolished space for warehouse and offices). We are going to the bank; thanks to Obasanjo, the bank is on. The banks are ready to do business with us. They are ready to give us loan. They are ready to assist us. We all went to the bank to borrow money. But this is the money some government agencies want to take away from us. Of course, as long as they want this extra money, we just have to go back to the government and say, wait a minute, your people are asking for this, please remove this cap (on the amount port operators can charge for services), so that we can recover our money. At the end of the day, we come back to square one.
DDH: What are the concessionaires asking for now?
Capt Omotayo: Now, our major clients are the shipping companies. If the cost of doing business is very high, they will go back to neighbouring ports. That’s number one. Two, if the charges go up, the freight go up, invariably leading to high capital flight, the economy will continue to dwindle. But the people in government are not looking at it that way. Shipping is dollar-denominated. When you say you want 3 dollars, the shipping man has asked for 10 dollars or more. And then come and look at the aggregate number of cargo throughput in a year that comes to this country. Now, you can imagine how much you have lost. Not only that when the shipping companies that are supposed to be our major clients are going through another port, and the cargo still ends up in Nigeria at a cost cheaper than what it is in Nigerian ports, then we are back to square one. Obasanjo has done well, there’s no doubt about that. But implementation is another thing. That’s why I will continue to say that I believe in leadership at every level. There’s leadership at NAMASA level. There’s leadership at Federal Ministry of Transport level. When they all fail us, that’s how it is going to be right through to the Presidency because they are the people giving information to the Presidency because when you give wrong information, those people take a wrong decision.
DDH: Going back to how you are fine-tuning your services, you said your company is investing in trucks?
Capt Omotayo: When you bring your cargo through our terminal, we deliver to your warehouse. The days when you continue to hover around our terminal are gone. All you need to do, once you pay the right fee, you get your goods into our warehouse. We do the bagging for you. We can do the production of bags for you in your own name.
DDH: In this port?
Capt Omotayo: We have a sister company, Bagco is our sister company. All you need to do is to give us your design or we can assist you to design. We print bags for you. We put whatever you want to put in them in these bags and we deliver it to your warehouse. It’s been happening in other parts of the world. It’s not new to us….but when the enabling environment to do business is not there, all those investments will be a waste. Because Obasanjo has been traveling up and down trying to woo investors to come to Nigeria, now the people are coming and the government agencies are asking for this and that free of charge. What I am even advocating is that the 3% they have been collecting since the past twenty years, which they have not achieved anything from, should be cancelled. Because there’s evidence that they are not going to do anything with it. Let the government finance NAMASA, they are a regulatory body.”
At this juncture of the tour of the port came to the new gate in the security wire fence that now demarcates the grounds of Apapa Bulk Terminal from common user areas and neighbouring ENL terminal. Some construction workers are busy making foundation for some new structure at one end of the long stretch of rubble where once NPA colonial warehouses and sheds stood for many decades. Capt Omotayo informs the magazine:
Capt Omotayo: That’s a weighbridge under construction, in and out. All those places (pointing to the stretch of rubble), you will see all kinds of modern warehouses there, that’s where the (fertilizer) blending plant will be. There will be a stacking areas, there will be loading bays and all those things.
DDH: You are putting the plan for this construction to last five years. Are you saying from now till that time, there will continue to be construction work here?
Capt Omotayo: Yes, there will be, even beyond five years, because what we are trying to do is to meet modern standards of port operations everywhere in the world. The government has done well by saying okay pay the dock workers out. Can you imagine 800 dock workers were registered in this place before, but in actual fact, now we don’t need more than fifty. And we have employed all those fifty as our staff. Whether there’s vessel or not, we will pay them. And in a week they are entitled to two days off. And above that they are entitled to annual leave.
DDH: Are you saying these conditions were not there before now?
Capt Omotayo: These are new introductions, they were not there before. They were casual (workers) before but they are no longer casual now. They are our staff. This is why we are surprised that NAMASA is saying it wants to regulate the labour, which labour is it talking about. Is it our staff? Are you going to buy them uniform? Are you going to maintain our equipment for us? So, what is the need for this 2.5%? You see, as far as I am concerned, I keep saying they are trying to use strong arm tactics to get whatever they want. But they have forgotten this effort, they are not going to be there forever. When they put all these rubbish in place, they also are coming back to take part of this bitter pill. By the time they come back, their children yet unborn will take part of this bitter pill. This is the difference between us and Europe. When the Europeans think what is going to happen to generations coming behind, we don’t do that here. We only think about ourselves. Today, a winner takes all, and that’s why we are where we are. I mean, 3% for the past twenty years to develop maritime sector, up till today, you cannot point to anybody that has been trained by NAMASA. We know that we were trained by the government, by Nigerian National Shipping Line. For the past twenty years, nobody has been trained. Eventually, that generation will die off and we shall be colonized again. This time we shall pay dearly for it. Then who are we going to blame? Are we going to blame the foreigners again? The only solution is that government should scrap this whole idea of levy here and there. Those of us that are in the business, we will train people, give us a target. Even seamen, we will train them. As I am talking to you now, we have eight cadets from NPA on board our vessels. We are training them for the future. It’s an NPA initiative and we collaborated with NPA, to say, okay, we will assist you and put hands together. If you want to go beyond that, we are ready to do that. All we want government to do is to give us a target. We will train so and so number of people within five years. Forget about this 3% thing, it’s not working. Let everybody go home, close the market.
DDH: Are other concessionaires of this opinion?
Capt Omotayo: Of course, I am the vice chairman of Private Terminal Operators (Association); when I talk I am talking on behalf of private terminal operators.
DDH: So private terminal operators are of the opinion that…(cuts in)
Capt Omotayo: We will train people ourselves because we are the ones that are making use of them. We are the ones that are investing on the equipment they are going to operate. Therefore we don’t need any outsider to come and train people for us; we will train them to meet our standards. Because we know what we want. We know the level of efficiency that is required from them. We know the type of people to employ. People that can meet the challenges of what we want. NAMASA may not know all these but we are the ones right on the field.”
The tour of the Apapa Bulk Terminal facilities and upgrade having come back to the office, we asked Capt Omotayo for the operational vision of their firm in Nigerian seaport business.
Capt Omotayo: We invested in our own infrastructure from time. NPA didn’t supply anything to us. But what happened after the concession was that we upgraded our equipment, like the cement on-loader at the cost of USD5m. When we discharge now, we can deliver 12, 000 tons per day as against 5,000 tons we were doing before. You can now see, in the past, a vessel that stays for 10 days or 8 days, it’s only 4 days now. You see the turn around time has reduced therefore bringing up the cargo throughput and the cost for the ship owner. So, once the ship owner knows that he is coming to your terminal to spend less time, they want to patronize you. And then your freight will come down. But if the other government agencies allow all these things to find its level, that is how it’s going to go down to the common man on the street. We are the one doing the investment. When some people are waiting to just collect money from us, using their position as a government agency. Not only that, we rehabilitated the whole dock into a modern dock. Although we initially financed it, it was paid back by NPA before the concession. So that added value to the port. Now you can dredge the berth to 14.5 metres as against 9.5 metres (currently). That means that if the channel is dredged to 13.5m or even 14.5m, you can bring in a higher tonnage. Instead of bringing in three vessels, you can now bring in one. Meaning that instead of buying bunkers for three vessels, you buy only one. Instead of paying wages for three sets of crew on three vessels, you pay for only one. Instead of insuring three vessels, you insure only one. On the aggregate, the cost comes down. But when you don’t allow this cost reduction to go out, because somebody is waiting for you there to collect this (saving), the situation remains the same. The government has good intentions, but there some arms of the government that are waiting to thwart the effort of the Presidency.
DDH: Aside from Apapa Bulk Terminal, what is the feeling among other port operators?
Capt Omotayo: Let me tell you, all of us are geared to do a lot of investment. But when the money is not there, when the money that should have been used is being taken away, what do you do? Or when the policies are discouraging, all you need to do is, let me just do my business and recoup my money and go away, leaving nothing just like what the British colonial people did…make only one rail line. So you can only go up and come down, unlike their own country where you have criss-crossing everywhere. So you can see that apart from Dangote (Greenview Terminal) and us, others are more or less foreigners. So you get to a level where everybody will say let me just recoup my money and leave. When the profit that is supposed to come to them for investment is taken away from them. They have 3% to pay on the freight. Okay, you can imagine now, after putting in all these investments, the cargo throughput will go up. Of course, the 3% have to go up, because the cargo due has gone up. What they should be thinking of is how do we use this levy to improve our maritime sector.
The Case of Malaysia…
Let’s look at the case of Malaysia. Before this type of thing was put up in Malaysia they had 44 vessels. Today they have 154. Malaysians have been trained to work on these vessels. Malaysians have been trained as surveyors. They have stopped this collection of 3% and what they do now is inspections, because what they realize on inspections is even higher than this 3% levy. They inspect your vessel to ensure that you meet IMO standards. Their coming on board to issue you a certificate, you know how much it costs. You are not duping anybody, you are doing a correct job. I mean look at the number, 154 vessels. You are not likely to inspect all of them in one day. Even if you inspect one every month or every day because they are not stationary, they are moving up and down. You have improved the sector, you have trained all your people but we have been here instead of increasing the number of people to be trained we are only increasing the levy.
So, that’s why I am asking the government, give us a target. In five years, you must train so-so number of Nigerians. And we will do it, whether as an engineer or as a master mariner, we will do it. But you have to forget what we are paying, the 3% levy. You can’t have the two. The banks are ready to finance the shipping companies but they are asking for your equity when your equity is going to NAMASA.
DDH: But I have seen you people have demolished a lot of the old NPA buildings….
Capt Omotayo: Those buildings are of no use to us. The best thing is to demolish them and put up modern factories. Like I told you, you as an importer you can just sit down in your house and order and on the internet, put it on our vessel, we discharge for you, we bag for you, and deliver to your warehouse. That is what we are putting our investment on. We have invested on plants. You can see a lot of brand new forklifts. And all those equipment have very big store full of spare parts. Because we want to show to Nigerians that we are capable of doing it. And we have seen where it has been done in other parts of the world. You go to the port of Tilbury, you will think it is ghost town. You don’t see many people moving around. You only see people that are working, few people. But here, you can imagine, in some of these terminals, 800 dock workers were registered. Some of them, you don’t see them until pay-day. Now, after this severance pay off, we don’t need more than fifty. What you need them for is to sweep. Sweep the quay and the hatch when offloading is finished. Because, if a ship load of cement comes in now, 50,000 tons for instance, it will take two, three days before you can finish a particular hatch. So for the first three days, you don’t need anybody near you. Just put the machine there, and it is sucking. So what do you need these many people around for? Where it is needful for me to employ them, I employed them on permanent basis, cleaning the environment for me. When is time to go in there, you go in (to the hatch) and pack the remnant of the cement. That’s all I need. But in actual fact, those that have been working there, are not more than fifty. People have been walking around, a lot of people I have not seen in my life since I have been here, and they are supposed to be dock workers on the payroll of the NPA. It was when they came for their severance package that I saw a lot people I have not seen for the past fifteen years. That is what you call “akube”. “Akube” is now dead and buried, the obituary is out! (general laughter).
DDH: On his contribution to the formation of NMA in the 1980s…
Capt Omotayo: When the struggle to form NMA was on, I took the minutes of the meeting. It was the brainwork of the Dokpesi’s, the Capt Biu’s. Those are the people that started NMA. We wanted government backing. That how government hijacked the whole thing when they realized the money that was involved. None of the people that started this NMA idea had the privilege of working there today. The idea was, we looked at our bottom ( Nigerian owned total tonnage of ships for sea trade) we were not carrying as much cargo as we should be carrying. If foreigners were carrying much of our cargo, what do we benefit from these foreigners? And the UN brought out the UNCTAD code and as master mariners who knew these trade details, we came home and said such a thing should be established here. So all of us that sat and put our heads together to put NMA in place never had opportunity of working there. But we never minded, all we wanted was to develop our maritime sector and correct any imbalance. So, I took the first minutes at Umarco Building there (Apapa) when (Dr Raymond) Dokpesi was managing director of Africa Ocean Lines (AOL). Chief Val Osifo, (Kunle) Folarin, those were the principal actors. None of them had a chance to work there, you can imagine those people have been long in shipping sector, although they were not interested in working there. But the idea was to develop the maritime sector so that their children yet unborn can call them blessed men. But what do we see today, it’s a show of shame, where we should bury our heads in sand and cry. We are still asking for more. Malaysia started shipping ten years after us. Today, we have no single bottom. We had 26 when NMA was set up, today we don’t have any. Are we moving forward or backward. What about the few people that were trained by NPA and NNSL, those are the people we are still having around. We are not replacing anybody, who do we pass the knowledge to? Nobody. Nobody is looking at that side, we are thinking of ourselves alone. We cannot be everywhere. I cannot be here and there. That’s why I am bothered, because I knew how these white people felt when we were cadets in Liverpool. Because they saw us that one day we shall take over. After that we went to bed and slept off. Giants of Africa, we slept off. We forgot about moving forward.
DDH: Now Capt, amongst your generation of master mariners when you meet in your association, this must be giving you some pain?
Capt Omotayo: It is giving us a lot of concern. But the only thing we hear people say is you too go and join politics. We don’t believe you have to go and join politics before you can push up brilliant ideas. If those people are there thinking about what is going to happen to generations coming, we don’t need to go and appeal to people. The only thing we have to do is to put up our position as professionals on issues. And that we have been doing. You look at it, and if they have the same feelings as we have then they will look at it objectively, not subjectively and they will do the right thing. The time is up now. Let’s go back to where we were before. Let’s train people, send them to first class maritime nations. Let us cover this part of the vacuum.
Controversy on Stowage Factor…
Maritime sector today in Nigeria will compete with the oil sector if it is properly managed. When people who read history and law are maritime experts in NAMASA, I don’t where they got their expertise from. The little they know about shipping they knew it there in NMA and they are telling us they are experts in shipping. Somebody heard about stowage factor and started applying stowage factor to the manifest that was submitted to NAMASA. And they started making life difficult for us. Stowage factor is as old as shipping itself. It is applicable to different types of cargo because of space occupied. For instance, if you carry ordinary paper reams. It takes a larger volume. If you have to calculate your freight on weight, you wont be able to buy fuel to run that vessel. You cannot insure that vessel. Therefore you look at the space occupied by that paper and sell the space. Is NMA selling space? Does it have ships? Do they buy bunkers? Do they pay wages? Do they insure ships? On what basis are you applying stowage factor. I am the one to apply it and whatever I have collected, even the law says 3% of the freight earned by shipping companies ( should be levied). If I haven’t earned it, you cannot make me pay tax on it. You make me pay tax on what I have. And these are the people calling themselves shipping experts, trying to make me pay levy on what I did not earn. They have their own freight. That’s not the freight I collect. Freight for shipping company, that is our weapon. Where there is a fierce competition, you can decide to bring your freight down. They don’t want to hear that. But if you don’t bring your freight down…because that is why the government is putting all these reform in place. So that this type of things can come down, but it doesn’t sound well in their ears. That is what the NPA has in mind by giving us a free hand to say okay develop your terminal, so that we can dredge the channel to meet your demand and once you can bring in higher tonnage, usually, the freight comes down. But NMA doesn’t want to hear that, they will say you have under-declared. Whereas the infrastructure and environment is becoming better for you to say I can afford to bring down my freight. If you charge 20 dollars, for instance, from Brazil to this place, they say no, it’s supposed to be 60-something dollars per ton. These are the people that are supposed to be driving the economy of this country if they really understand what they are doing.