TheCable

The Nigerian Ports Authority (NPA) says the country would save $326.8 million, due to waivers from the agreement it reached with Intels Nigeria Limited on the boat pilotage monitoring contract.

The NPA made this known in a statement titled, “Setting the Record Straight in Respect of Service Boat Monitoring Operation in Nigerian Ports Authority: Reinstatement of INTELS Nigeria Limited as Management Agent”. 

The federal government had recently informed shipping companies, in a memo dated November 30, 2023, that it has extended Intels’ contract to operate in the Lagos pilotage district.

The Intel deal has been dotted with controversy, leading to delays in the contract renewal.

Speaking on the recent development, NPA said it agreed to a $100 million waiver over its outstanding indebtedness to Deep Offshore Services Limited, with which it has a supplemental agreement for the phase 4B port development.

The agency said there had been a further waiver of the interest accruing on the outstanding debt under the phase 4B agreement for the period of two years, estimated at $93,317,556.

“The Authority will be saving a total sum of $326,895,226 as a result of waiver of part of accrued interest and reduction of interest rate from 6.5 per cent to 3 percent on the debt over the next 15 years,” the NPA said.

“(There’s another) reduction of the agency’s commission on pilotage collections from 28 per cent to a lower commission of 24.5 per cent as opposed to increasing it due to astronomical rise in cost of operations.

“The proposed spread of the debt of $522,433,453.25 to be paid back over a 15-year period will, of itself, earn for the Authority a huge benefit in terms of preservation of funds to meet its other operational needs over the period.”

To address the associated loss of revenue and resolve the legal impasse resulting from the dispute, the authority said it proposed a settlement initiative with Intels, which was submitted to the federal government through the ministry of transportation.

“INTELS also made proposal for settlement on behalf of itself and Deep Offshore Services Nigeria Limited. Protracted negotiations followed and the parties eventually reached a settlement following remarkable concessions by INTELS/Deep Offshore and verifiable gains by NPA/the federal government,” the authority said.

“The parties agreed to the following proposed Terms of Settlement: waiver of the sum of $100,000,000.00 on the outstanding indebtedness of the authority to Deep Offshore Services Limited, a further waiver of interest which may accrue on the outstanding debt to Deep Offshore Services Limited over a period of two years between 1st of July, 2023 to 30th June, 2025, which is estimated in the sum of $93,317,556.

“Reduction of interest rate on the outstanding indebtedness to Deep Offshore Services Limited from Libor+ 6.5 per cent to SOFR+ 3 per cent, reduction of the agency commission on Service Boat Pilotage collections from 28 per cent to 24.5 per cent. The agreement to be renewed for a further period of 15 years.”

HOW FG APPROVED NPA, INTELS AGREEMENT

Commenting on greenlighting the deal, the authority said the federal government considered the proposal and approved it on August 18, 2023.

The federal government, the agency said, also directed that the withdrawal of the “cases was to be carried out by filing Terms of Settlement by the parties and for the court to adopt same as Judgement of the Court”.

“The authority was also to discontinue the un-concluded procurement process, which process was in disobedience to the Orders of the Federal High Court, Lagos,” the statement further reads.

“The Parties executed Terms of Settlement on the 24th of August, 2023, and same was adopted as the Judgement of the Federal High Court in Suit No. FHC/L/CS/1058/2020 on the 21st of September, 2023 by Honourable Justice A.M. Liman. Arising from the foregoing, the authority also filed a Notice of Withdrawal at the Court of Appeal, Lagos, in respect of the appeal at the Court of Appeal, Lagos.

“Following the Judgment of the Federal High Court, Lagos, the Nigerian Ports Authority and INTELS Nigeria Limited executed the managing agency agreement, while a Supplemental Agreement with Deep Offshore Services Limited for the Phase 4B Port Development was also executed in view of the fact that the initial Agreement was suspended.”

NPA said the federal government lost enormous revenue in the period it took over the management of pilotage due to the lack of necessary technology for operational monitoring.

The authority its revenue significantly decreased from $216 million in 2014 and $209 million in 2015, under the Intels agency, to $130 million and $99 million in 2020 and 2021, respectively, following the takeover.

NPA said the agreement struck with Intels was made in the interest of the country and that the endeavour would lead to an increase in revenue generation.