Posted on October 5, 2022
- NCS yet to auction over 8,000 containers after three years
- Scraps occupy 25% of port spaces
- Customs: We are awaiting govt’s gazette to auction cargoes, deploy scanners
- Hoodlums take over ports, frustrate legitimate businesses
- Government warehouse facilities run out of capacity
- Nigeria losing imported cargoes to Lome
Investigations have revealed that over 8,000 stranded overtime cargoes, valued at about N3 trillion, are currently littering the country’s three major seaports – Apapa, Tin Can and Onne – with little or no effort made to find a lasting solution to the nuisance caused by the scraps.
Findings revealed that over 2,000 containers are abandoned at Onne port, while 6,000 are in Lagos ports (Tin Can and Apapa). They were abandoned by importers/consignees after the consignments were detained by Nigeria Customs Service (NCS) officers.
The containers are currently occupying about 25 per cent of port space. The Customs Excise and Management Act (CEMA) classifies cargoes as overtime if the importer fails to clear and take delivery of it after 28 days in the port.
The law allows Customs to auction such cargoes after 90 days of arrival at the port. The cargoes have spent at least three years at the ports but are yet to be auctioned.
The Guardian gathered that high duties, tariffs, as well as other unfavourable clearing conditions and policies, slammed on importers and exporters could have been the major cause of the rising number of abandoned containers.
Over one year after the NCS invested billions of naira into purchasing electronic scanners to fast-track cargo examination at the port, the agency has yet to put the scanners to use.
Despite taking delivery of new scanners in September 2021, Tin Can and Onne ports, as well as Seme border, still rely on a manual examination of cargo, with Customs agents complaining it takes over five hours to examine one container, thereby creating delays for consignees.
Vice Chairman of Business Action Against Corruption (BAAC) Integrity Alliance, Lagos, Jonathan Nicol, said the number of boxes involved in the overtime cargoes has become intolerable. He said the problem does not arise from importers’ unwillingness to clear them but rather due to the harsh operating system.
He said Lagos has the biggest port in West Africa, with the volume of overtime cargoes sometimes rising to as many as over 6,000, which when computed, costs about N3 trillion.
According to Nicole, the space the containers take at the ports makes it impossible for import inflow as there is no space in the terminals for new cargoes, adding that the government warehouse at Ikorodu is shrinking already, as it has exceeded its capacity.
“Customs seized containers are abandoned daily. In a year, you get close to N3 trillion worth of overtime cargo as losses. We have a government policy that has collapsed, the government is not helping us. Every year, government gives the Nigeria Customs target of N3 billion, N4 billion, which pushes the pressure on customs to do things they are not supposed to do, which sometimes, may be unethical.
“Recently, for instance, you bring tiles for building materials and the customs place it under a particular regime where you have 1x20ft, you must pay a duty of N3 million, how much is the worth of the goods? Minus other charges and levies, you pay shipping companies, terminal operators, transport and the clearing agents, how much is the importer making?” he asked.
He said government is losing revenue to overtime cargoes, saying: “When people are losing their goods and containers, at the end of the day you receive these containers and auction it in the open market. So, they will prefer to go and buy their goods at an auction price. If it cost me N15 million to N20 million to clear my goods, I can buy those same goods from the customs for N1 million or N2 million, won’t I wait? That is exactly what it is.”
General Secretary, Association of Bonded Terminal Operators of Nigeria, Haruna Omolajomo, lamented the space overtime cargoes are occupying at the terminals.
“In Lagos ports today, we have lots of containers that are already over time. Some containers are already staying up to three years if not more. As of today, if proper documentation is done, there could be nothing less than 25 per cent of such containers in Apapa port,” he said.
Continuing, he said Customs would then advise the terminal operators or the designated terminals where such containers are located to start compiling the list of such containers, which is sent to NCS command and then to Abuja for gazetting as overtime cargoes to be auctioned. He said the compilation and gazetting might likely take time, which could be 90 days.
Highlighting reasons for the overtime cargoes, Omolajomo emphasised that government’s staggering policy, high exchange rate and duty are the major causes of the lingering problem.
“Can you imagine a situation where the tariff was put at five per cent before importers brought in their goods and the government suddenly decided to increase the tariff to 35 per cent. This would increase the amount to be paid by importers. This goes to show the money the importer would have used to clear 15 containers may not clear more than five.
“As of today, this is what is happening to the clearing of vehicles in Lagos port. It is a known fact that the clearing cost of vehicles has jumped higher now. Another cause of this is the exchange rate.
“The consequence is a container that should ordinarily pay a duty of N2 .5 million may end up being auctioned at N350,000. Other levies will also be overlooked. Such levies may be from the National Agency for Food and Drug Administration and Control (NAFDAC), Nigerian Ports Authority (NPA) or Standards Organisation of Nigeria (SON) and others. Same with Value Added Tax (VAT) that is supposed to be collected.
“The terminal operators or bonded operators, as well as the shipping companies will also lose. All their rents and services rendered incorporated into their terminal or shipping charges would be lost.
“It would also be both labour and financial loss to the owners of the cargoes. Besides, if the containers are perishable, it would be a total loss to the owner, government and buyer. The same thing if the contents in the containers already have a short expiring date, it will be a great loss to everyone,” he said.
Omolajomo also blamed importers for contributing to overtime cargoes, saying some importers have issues with clearing documents.
“Some importers may be in a hurry to bring containers into the country without proper documentation. While waiting for these documents to come, the containers would have entered overtime.
“Another cause is the loss of documents, especially original copies, to clear containers. Before they could get another one, the containers are already working overtime.
“Closely related to the above is not having money to finance the containers. Sometimes, importers do bite more than they can chew. This means they can import many containers, let’s say 10 containers when their money can only clear two containers.”
The Minister of Transportation, Mu’azu Sambo, during his visit to Port Harcourt recently, expressed worries over the alarming rate of overtime cargoes littering the nation’s seaport.
Sambo, who addressed stakeholders at the Onne and Rivers’ ports, during a facility tour of the Eastern Ports, charged NCS management to find a lasting solution to the problem, saying the affected cargoes were occupying strategic spaces with a negative impact on revenue in the ports.
The Chairman/Managing Director of Lamsam Intercontinental Company Nigeria Limited, Port Harcourt, Samuel Njoku, said there are up to 2,000 overtime cargoes at Onne port, which customs have examined.
He said some of the reasons behind overtime cargoes at Onne port are delay in procuring the Pre-Arrival Assessment Report (PAAR) and government policies on the opening of Form M. Njoku blamed importers for shipping cargoes into the country without first opening Form M.
He explained: “Some of Nigerian importers are careless, they will not get the Form M first, they will rather ship in their goods and by the time it gets here, they will start to open Form M. In the course of doing that, the Central Bank of Nigeria (CBN) will refuse to open Form M and before they try to do all these things, it would have taken time.
“The money in question would rise and some of the importers will consider the value of the goods as well as the demurrage and storage they are going to pay. They will discover they cannot afford to pay and by doing so abandon the containers. That is how most of the cargoes were abandoned at the port.”
A clearing agent operating at Onne port, Okere Celestina Chinyere, noted that the hike in tariff, duty and forex were the major reasons for overtime cargoes.
“Minimally, you can use anything around N2 million for 20ft and N4 million for 40ft. If an importer is used to clearing his container, maybe 1×40ft container with N4 million and now he is clearing it with more than N7 million, it is either he borrows money to clear the cargo or he abandons the containers there,” he explained.
Last year, the Managing Director of NPA, whose territories and operating spaces are being clogged up by the consignments, during an interactive session organised by the House of Representatives committee on customs, demanded that NCS should auction the over 6,000 overtime containers at the various terminals to decongest the seaports.
He said even the Ikorodu terminal, which was designated as a location for evacuation of overtime cargoes, is filled up.
“There is no space to move in more containers and we have written to Customs about this situation. I believe they must have started the process of auctioning some of these containers,” he said.
Under the CEMA, overtime cargoes are subject to seizure and are auctioned under the customs e-auction platform. The platform supposedly works on popular and transparent bidding sales, where the best bidder takes the goods.
However, owners of overtime cargo are given some priority over the best bidder. If the importer is interested in the overtime cargo, he must pay for duty and all other charges to retain ownership.
EXPLAINING reason for the delay in auctioning overtime cargoes, NCS spokesperson, Timi Bomodi, said Customs will not auction overtime cargoes without following a process guided by regulations.
According to Bomodi, the Customs and Excise Management Act classifies a cargo as overtime when it spends 28 days at the port without the consignee coming to either clear or take it out from the port.
“From the 29th day, the cargoes will be moved to uncleared cargo list. But when the Federal Government concessioned the ports, there was no more space given to customs to warehouse overtime cargoes; that is why most of them are taken to Ikorodu Container Terminal.”
He said after the overtime cargoes have been separated from others, Customs will still give another 60 days grace period for owners to come for them, after which Customs will make a public announcement and gazette the cargoes.
According to him, it is after the announcement and the gazetting that the government can go ahead to auction the cargoes.
“So, Customs do not just wake up to auction peoples’ cargoes. There is a procedure for it, which is what the Service is following now and when it gets to auction, it is not a hidden thing. We have a website and an online portal where the auction is done. When that time comes, we will also put it up at the portal,” Bomodi said.
In terms of trade facilitation, he said the newly acquired scanners would soon be deployed, and that the Finance Minister would commission them.
“Scanners are not television sets that people buy and plug in to start working. We have been training the officers that would use them and those that would maintain them. We do not want a situation where we start using the scanners, and after two months, they would develop problems. After we have finished all of that, we will deploy the scanners,” Bomodi said.
He assured that the scanners would be put to use before the end of this year to reduce manual examination of cargo, which is creating delays for consignees.
On the way forward as requested by the Minister for Transportation, Mu’azu Sambo, Omolajomo advised government to have consistent policies as well as make their regulations well known to importers and other stakeholders, which will make the maritime industry friendly.
Omolajomo advised terminal operators and shipping companies to charge only for services rendered as well as make their charges fair and moderate, noting that the world knows that cost of clearing goods in Nigeria is higher than in most countries in West Africa.
Already, high volume of Nigerian-bound containers are being diverted to Lome port, Togo, due to high cost of shipping and extortion. A recent finding revealed that cost of shipping a 20ft container from Miami Port, United States, to Lagos port was 43 per cent higher when compared with Lome port.
Importers pay $3,673 on a 20ft Lagos-bound container as against $2,087 used in freighting the same container from Miami to Lome. Last year, the influx of cargoes to Nigerian ports dropped, while Togo recorded more containers throughput. It was gathered that while Lome port recorded 1.73 Twenty Equivalent Units (TEUs), Nigerian ports container inflow was 1.52 TEUs, a difference of 196,750 TEUs.