The Nigerian Ports Authority (NPA) addressed the Senate Committee on Public Accounts, shedding light on the unresolved $1 billion debt issue, an omission noted by the committee in the report from the Auditor General of the Federation.
The Nigerian Ports Authority (NPA) further clarified matters by addressing the $852,093,731.10 noted in the Auditor General of the Federation’s report, which is being disseminated in the media. The NPA asserted that a noteworthy sum of $232,354,156.43 has been successfully recovered.
Mr. Mohammed Bello-Koko, the Managing Director of the NPA, appearing before the Committee, stated that during the 9th Assembly, the House Committee on Public Accounts thoroughly verified the funds and officially declared the Authority free from any financial irregularities.
In his explanation, Bello-Koko highlighted that the discrepancy between the Senate and House of Representatives Public Accounts Committees resulted from the ongoing inclusion of amounts from the period before the 2006 concession of the Authority. The current NPA Management had accounted for these sums, pending their expungement from the financial records.
Speaking on Thursday (December 8th, 2023) when he appeared before the Senate Committee on Public Accounts Bello-Koko exhaustively explained the facts of the matter to the Senators.
He said ‘most of the debts date back decades. I mean legacy debts from companies like Nigerian National Shipping Line Ltd and from pre- concession period.’
‘But we have been carrying these debts in our books and we have been impairing the amounts, thereby making provisions for all such debts. We have written to Auditor-General of the Federation on the procedure to take them out of our books and solicited for the support of the Senate Committee in this regard.’
Bello-Koko assured the Senate Committee on Public Accounts that ‘in the spirit of public accountability, we will always be open to give account.’
When asked for further clarification on the debt issue, Bello-Koko explained that the debt figures encompassed estate rents, lease fees, and throughput charges, among other components stipulated in the Concession Agreements.
According to him, ‘The debts date back to the period 2006 to 2019,’ adding that ‘There have been recoveries within the period under review, and they are unrecoverable debts owing to issues such as Volume Change, Gross Minimum Tonnage (GMT)/Penalties, Encumbered Areas. etc.’
Read also: Federal Government’s Debt To NDDC Hits N2tn, MD Says
He added: ‘For avoidance of doubt, it would be necessary to explain the following terms:
‘Volume Change – Means volume adjustment. The Executed Contract Agreement stated that if the percentage variation between actual/ performance and projected volume is within minus 10% to plus 10% the lease fee will be paid in full. However, if the percentage variation performance is more than minus 10% to plus 10% the lease fee payable will be adjusted by an equivalent percentage. Therefore, the adjustment is against the lease fee payable by the percentage change in volume.’
‘Encumbered Areas – Refers to areas that are inaccessible due to factors not caused by the tenant such host community hostility, marshy land etc.’
‘Guaranteed Minimum Tonnage (GMT)- This to the projected tonnage pledge by the Concessionaire to achieve, this arises from the inability of the Concessionaire to meet up the pledge.’
‘Unpaid VAT- This relates to the VAT element of the unpaid Lease Fees arising from adjustment brought about by the volume change defined above.’
‘Penalty- Refers to financial burden suffered for failure to meet terms of payment in a contractual agreement. It is as a result of the Concessionaire not paying within the specified time /days allowed in the contractual agreement. Simply put, it refers to a charge for late payment.’
He continued: ‘The figure quoted in the press relates to the 2019 Auditor General’s report and it doesn’t reflect the current position of indebtedness to NPA.’
‘It would be pertinent to clarify that out of the amount of $852,093,731.10 cited in the Auditor General of the Federation’s report and being circulated in the media, a total of $ 232,354,156.43 have been recovered.’
‘The balance $504,663,452.37 constitutes uncollectible portion due to volume change and Contentions, $54,663,452.37 constitutes uncollectible portion due to Gross Minimum Tonnage (GMT), $19,619,459.00 constitutes Portion due to Encumbered Areas, $11,908,355.82 constitutes various penalties imposed on the terminal operators for not meeting set standards and $ 28,693,607.07 represents VAT of said amount.’
‘In relation to the concessionaire debt of N1.8bn, a total of N269m has been recovered leaving a balance of N1.6bn which represents encumbered areas of the terminals.’
‘As regards the outstanding estate rent, Ship Dues and service boats of $67m a total of $10.6m has been recovered.’
Bello-Koko added: ‘It is very important to note that the uncollectible debts are summation of GMT stated above (which is a performance metrics) which the Terminal Operators could not meet mostly because of change in government policies (e.g issues like force majeure) and infrastructure decay.’
According to him; ‘Some of the other debts are also legacy debts being owed by a government agency which metamorphosed into a limited liability company and for which the Authority is working out modalities with the relevant parties to recover accordingly.’
He verified that the Authority was in the final stages of negotiations to settle the disputes over these amounts. Bello-Koko highlighted that all outstanding sums owed to NPA had been accurately accounted for by the culmination of the year 2022.
Bello-Koko disclosed that ‘the management of the Authority, in a concerted effort to correct the anomalies as seen in the concession agreements, engaged the World Bank to provide consultancy services for its review while an inter-agency committee comprising NPA, FMOT, FMOJ, BPE and ICRC developed a template to address the inherent anomalies in the agreements that allowed for the accumulation of such debts and to forestall a recurrence.’
‘This has resulted in the signing of a supplemental concession/legal agreements which will come into effect shortly,’ he added.