Nigeria risks 1,000 jobs over Concession dispute between NPA, BUA

Nigeria risks over 1,000 jobs over Concession dispute between NPA, BUA – The festering dispute between the Nigerian Ports Authority (NPA) and BUA Ports  and Terminals Limited, a subsidiary of BUA Group over the status of its Concession in the Port Harcourt Ports area, may scuttle the coming to fruition of the $400million investment by the conglomerate that could provide over 1000 direct jobs and thousands of indirect jobs in haulage, loading, stacking, sales, among others, in the Group’s manufacturing value chain.

The General Manager, BUA Ports and Terminals Limited, Mohammed Lile Ibrahim, who spoke with the media on Wednesday in Port Harcourt, said when BUA got the concession in 2006, it engaged Julius Berger at a contract of 22.6 Euros for the Engineering, Procurement and Commissioning (EPC) of the area in accordance with the concession agreement.

He said Julius Berger worked on the concession area quay for about 12 months from March 2014 to July 2015 and had to leave when its request for cost variation arising from expanded scope of work was delayed by NPA.

Ibrahim said the concession which is for 20 years in the first instance and subject to renewal has subsisted for only 13 years, saying that the step contemplated by the Managing Director of NPA, Ms. Hadiza  Bala-Usman announcing the decommissioning of the whole concession arrangement, was capable of undermining the NPA concessioning agreements and against internationally acceptable judicial/dispute resolution procedures.

He said NPA’s argument that the reason for the decommissioning of BUA Jetty was a result of the unsafe operational environment of the jetty which needed urgent repairs and reconstruction is not tenable since BUA Group had on different occasions written the NPA seeking approval to perform remedial works on the terminal, wondering why NPA refused to grant approval but rather  hurriedly decommissioned the terminal despite the repair works required for the part of the Jetty in question not requiring a decommissioning or closure of the entire Terminal.

Ibrahim said NPA failed to meet with its obligations regarding the lease agreement and of disregarding a ruling of the Federal High Court, Lagos Division injunction restraining NPA from terminating or giving effect to the Notice of Termination pending the referral of the issues in dispute to arbitration as provided under the lease Agreement, pointing out that NPA will jettisoned the pending arbitral processes of the Court of Arbitration of International  Chamber of Commerce in Paris and took laws into its hands by taking physical possession of the Terminal.

He said BUA Group was unshaken by the actions of NPA, vowing that the company will defend its rights as provided under the Agreement both in court and the arbitration proceedings whilst remaining committed to the terms of the agreement.

He said the closure is costing BUA Group a monthly revenue loss of between $500,000 and $600,000, and by extension, the Federal Government, which the NPA ought to collect on throughput charges which range from $85,000 to $105,000 monthly, depending on the volume of cargoes discharged.

Ibrahim said: “This is affecting the economy because when you keep a vessel out for  one month without berth, money is going, somebody is losing. The tank farm that is close to us is losing. Crown Flour Mills take their product from BUA Terminal, we have so many customers that bring in fish through our terminal, all of them now are in big problem because the four berths available can only take four ships at a time and when one berthes cargo vessel, the one you saw has being at the port terminal for more than 10 days, which means that that berth  cannot take any other ship until this one leaves.”

He said under the agreement between the parties, NPA has an obligation, among others, to dredge the port and repair the quay apron of the Terminal which responsibility it has failed to perform till date.

The Lease Agreement provides for mutual rights and obligations and makes provision for dispute resolution mechanism which explicitly states that dispute shall be resolved by arbitration.

“To our surprise and utter bewilderment and in clear breach of the contractual provisions , NPA by a letter dated 11th November, 2016 terminated the Lease Agreement. BUA Ports and Terminals as a law abiding corporate citizen approached the Federal High Court, Lagos Division in Suit No. FHC/L/CS/633/17 between BUA Ports and Terminal Ltd v. NPA contesting the purported termination of the Lease and obtained an order of injunction restraining NPA from terminating or giving effect to the Notice of Termination pending the referral of the issues in dispute to arbitration as provided under the Agreement. The Order granting injunction is dated 18th January, 2018.

“By the terms of the Agreement, the parties are enjoined to continue with the observance of the terms and performance of their respective obligations under the Agreement even while disputes are being resolved by either court or arbitration.

“As a result of the injunction and the terms of the contract, BUA Ports and Terminals continues to carry out its obligations under the contract pending the resolution of the dispute. It is important to state that subsequent to the order of injunction, BUA Ports and Terminals wrote several letters and made overtures to the management of NPA for an amicable resolution of the dispute. NPA did not respond to the request for amicable settlement or the overtures made as the management of NPA appears bent and determined to give effect to the Notice of Termination by several measures including but not limited to decommissioning the Terminal.

He said in accordance with the terms of the agreement, “BUA wrote a letter dated  16th May, 2019 to notify the NPA of the state of the jetty and the need for immediate remedial works. BUA Ports and Terminals specifically in that letter requested the approval of NPA for it to carry out the necessary repairs and reconstruction to avert imminent collapse and danger to human lives.  However, NPA instead of giving the requisite approval as requested in our letter and consistent with the terms of the Agreement, in its determination to give effect to the purported Notice of Termination took laws into its hand by directing the decommissioning of the jetty and immediate closure of the Terminal.

“It should be stated that the repairs required was as a result of the nefarious activities of hoodlums and vandals who had over a period of time cut the pipes and steel beam of the berths thereby affecting their stability, among others. The activities of these hoodlums and vandals were at various times reported to the NPA who had the responsibility and obligation under the Agreement to provide security for the Ports. The NPA did nothing. Indeed BUA in its determined effort to tackle these issues caused some arrests to be made and some of the suspects prosecuted, but NPA as owners of the Ports showed little or no interest in the prosecution and the case was lost. Obviously if the NPA had been alive to its responsibilities and provided the required security, the activities of the vandals would have been prevented,” he said.

“It is important to stress that the repair and reconstruction required for the part of the Jetty in question does not require a decommissioning or closure of the entire Terminal. The carrying out of the remedial works if approved by the management of NPA would have remedied the defects stated in our letter to NPA and averted any risk of loss of property and lives.  It is apparent that NPA is using the said letter by BUA Ports and Terminals as a subterfuge for an effective termination and closure of the Terminal in violation of the order of the court restraining NPA from carrying into effect the purported Notice of Termination.

Ibrahim said contrary to the impression being created by NPA that BUA Ports and Terminals refused or neglected to reconstruct the berths it is imperative to point out that BUA Ports and Terminals Limited awarded the contract for the rehabilitation and reconstruction of the berths to Julius Berger Nigeria Limited  (arguably the best civil construction company in Nigeria) and made a payment of Four Million Seven Hundred Thousand Euros as part-payment for the contract which was frustrated by the deliberate refusal of NPA to fulfil part of their obligations stated above. The contract is however still subsisting,” adding that a copy of the letter from JBN acknowledging advance payment also exists.