Ascanio Russo, whose company, PTML, controls a large percentage of the terminal operations in Nigeria. In this interview, he speaks on the impact of private terminal operators at the port and why government should institute the right policies to boost economic growth.
If you were to make an assessment, how would you describe the sector?
I have been in this country for many years. Actually, I’m a proud Nigerian passport holder. I have lived here for so long, and I have seen a lot of changes in the maritime industry. When I first arrived here, the ports were managed by the Nigerian Ports Authority, and at a time when situations were quite tight; I mean operations lasted for weeks, you have to wait for weeks for your cargoes to be released because of congestion at the ports. Inside the port is another issue, many people are accessing the port, and there is not really an access control system in place, and so in terms of security and safety standards we’re just relatively average.
When the concession exercise started in 2006, we at Grimaldi had already approached the Federal Government to build a new terminal because the type concession we have is quite different from any other concession in the Nigerian port sector. Our own is a build-operate-and-transfer model. What we did in 2003, was to approach the federal government, and proposed to build a new terminal at TinCan Island, an area that was used as a residential area, but was greatly underutilised, and we signed our BOT agreement. Although the concessionaires all started more or less at the same time, but our model was different from all the others, because all the other terminal operators basically took over existing facilities from the NPA, they upgraded and invested a lot. .
To go back to your question of how do I see changes in the industry; there have been tremendous changes. The private terminal operators brought significant investments and in those investments, a much higher level of productivity and efficiency. The turnaround time of the ships has improved dramatically, and even the management of the terminals has improved very significantly. This means that as a result of this improvement, the volume of cargoes which the ports, especially Lagos, could have increased many folds because of the efficiency that was brought by the terminal operators. At the same time also, the governmental agencies, they upped their game, mainly Customs for example, there was a significant process of digitalisation, and now many operations that were managed manually are done electronically.
But we must nonetheless acknowledge that the level of infrastructure around the port areas have not moved at the same pace with the level of development inside the ports, and this is why we are now experiencing this crisis around the port areas. I guess that you are aware of the chaos around the port and all the terrible conditions of all the roads leading to the port areas, be it TinCan Island or the OshodiApapa Expressway. I mean there is no significant work being done there. It’s very sad in a way because while the port operators have invested in the ports, and as a result have been able to increase the capacity inside the ports, most of the infrastructure around the ports have not been upgraded. That is why we are now experiencing this complete chaos, because basically, the roads have fallen apart, and accessing the port area is really becoming a nightmare.
If you take assessment of all that you have described that now characterise the Nigerian maritime sector, would you say that we are competing effectively with our neighbours within the region, within the continent and even the larger world?
The main problem I see aside from the infrastructure around the port areas is the fact that we don’t really have a well-functioning rail system, and we are now developing transportation cargoes using the waterways barges. Even in our own case, we have been using barges for the past 12 years. We are pioneers in using barges to move cargoes to the port. All these infrastructural problems, I think, put the Nigerian ports at a disadvantage compared to other ports in the region, because at the end of the day, we benchmark against our competitors, which of course first is the region.
Second is the high cost of calling the Nigerian ports. I mean for a ship owner to call at the Lagos port, or Onne, or any other port in Nigeria, it is extremely expensive. Well I dare to say that probably Nigerian ports are amongst the most expensive in the world. I know this may be a bit controversial, but it’s a reality. We are part of a larger logistics group which is the Grimaldi Group, and we have operations all over the world, so we know how much it costs to call at a port in Norway, U.S. in Europe, North America, or even in the Far East.
Look at the type of cargoes that come calling, would you then say there is now a trend or an already existing incidence of dumping of accident vehicles in Nigeria?
Yes there is a trend, and the quality of vehicles has deteriorated over the last four years, this is also a result of the recession in Nigeria. Of course the purchasing power of the people has shrunk, and not everybody can afford a very expensive vehicle, and so other people are importing older vehicles or accident vehicles, which are clearly cheaper. This is as a result of the new auto policy, because of course if you increase overnight the level of duty by over 100 per cent, it would make the importation of vehicles into Nigeria much more expensive.
Also, there is the view that used vehicles are very polluting; and maybe we should not use used vehicles in this country, but the reality is that used vehicles is not a luxury. I mean that people are not buying used vehicles because they prefer them to new cars; it’s a matter of price and some requirements. We need cars in this economy, and this leads to what we discussed earlier about trucks coming to the ports. I mean that trucks in Nigeria are probably about 40 years. One of the reasons why we are having this congestion is because we have these very old trucks, so the trade policy, which makes it very expensive to import goods and trucks into Nigeria, is not helping matters.
If you make duty very expensive, people will try to fix their trucks as much as they can; even fleets of trucks in this country are so old. It increases the level of pollution, it increases the level of congestion, increases the number of accidents, and so forth. These are all economies of scale and negative externalities, which are very difficult to measure, because people at the end of the day, will just look at how much it costs to reduce the level of duty.
Can you identify some of those policies that you would like to see changed?
One of those policies which we have been particularly focused on because we have been directly affected is the car automotive policy. That was a policy introduced by the previous administration in 2013, and became effective in 2014, and the purpose of this policy was to develop the automotive industry in Nigeria. A very ambitious goal, and of course we all support any policy which makes the economy better. Unfortunately with this policy, to achieve that goal, it distorted the trade to Nigeria. One of the instruments they used was to increase the level of duty on used vehicles, making them more expensive.
The logic was that the vehicles produced in Nigeria will become more competitive, but unfortunately, what we saw immediately this policy was introduced was that duty was increased. We saw an immediate diversion of cargo to Benin Republic, and you know that Cotonou especially has always been known for used vehicles, which are smuggled to Nigeria.
This auto policy made things worse, because historically, let’s say that 50 per cent of the cars were going to Nigeria, and 50 per cent to Cotonou, even if the all cars were for the Nigerian market.