By Godwin Oritse

DESPITE the 151.2 percent increase in Terminal Handling Charges (THC) over the 10-year concession period (2006-2016), concessionaires have been reported to have recorded a 22.4 per cent drop in real earnings within the period.

In a research report released by Akintola Williams Deloitte, a top accounting and audit firm, the inverse earnings was as a result of adjustments for naira depreciation and inflation.

THC is the payment received from transferring cargo from ship/quay side to the container yard for release to clearing agents/customers. It is the main source of revenue for the terminal operators. The charges are regulated by the Nigerian Ports Authority (NPA) on behalf of the Federal Government.

Terminal operators business

According to the report entitled Public Private Partnership (PPP) as an anchor for diversifying the Nigeria economy: Lagos Container Terminals Concession as a Case Study, “Between 2006 and 2010, the charges were N31,850 per THC. They increased in 2011 to N45,500 and increased to N80,000 in 2016. This showed a 43% increase in the first four years, 76 per cent increase in the later years 2011 to 2016 and an overall increase of 151 per cent from inception of the concession.

“During the same period between 2006 and 2016, the terminal operators business was adversely impacted by the rise in Consumer Price Index (CPI)/Inflation with the CPI Nigeria rising to over 177 per cent since 2006. Foreign exchange (FX) fluctuation also impacted the value of the THC with over 224 per cent FX depreciation between 2006 and 2016.

“Adjusting THC yearly with changes in Nigerian CPI only would have increased the fees in 2016 to N92,560 while adjusting for both FX and Nigerian CPI would have increased the fees to N185,112. In real economic terms the operators are losing revenue by not adjusting their THC in line with market realities.”

The report noted that the foreign exchange challenges that Nigeria faces as a result of the fall in global oil prices is further pronounced for terminal operators as a large part of their CAPEX (capital expenditure) and operational costs are in US Dollars. It said the operators’ dollar denominated costs included equipment acquisition and maintenance costs and payment of lease fees to the Nigerian Ports Authority (NPA).

It said, “83% of terminal operators revenues are received in naira,17% is received in US dollars. Terminal operators have to constantly source for US dollars through the parallel market at very high rates in order to meet their statutory and operational cost obligations.” The firm added that terminal operators are faced with huge challenges in the area of storage as the terminals are used as “cheap storage warehouse alternatives” by cargo owners.


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