VZCZCXRO8012
RR RUEHMA RUEHPA
DE RUEHOS #0154/01 1161116
ZNR UUUUU ZZH
R 251116Z APR 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 9880
INFO RUEHUJA/AMEMBASSY ABUJA 9595
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 02 LAGOS 000154 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR AF/W 
 
E.O. 12958: N/A 
TAGS: ETRD EFIN EINV PGOV NI
SUBJECT: Nigeria: Stakeholders Assess Impact of Port Reforms 
 
Ref: 08 Lagos 132 
 
¶1. (U) Summary: Nigeria's port reform program, which has turned over 
state-owned and operated ports to private concessionaires, has 
significantly improved efficiency of port operations and reduced 
vessel demurrage and turn around time.  However, delays in customs 
clearance resulting from Nigeria's lengthy list of banned imports 
coupled with the prevalence of fraudulent cargo declarations have 
caused the cost of clearing goods to rise by 300 percent. Increased 
access to the ports by improved roads and rail lines is necessary in 
order for Nigeria to fully benefit from port reforms. End Summary. 
 
¶2. (U) In February 2008 the Federal Ministry of Transportation (MOT) 
organized a stakeholders' forum in Lagos to review two year old port 
reforms.  The forum, which was the first of its kind since the 
sector reform began, was attended by major maritime sector 
stakeholders including the Minister of Transportation, Diezani 
Maduekwe, and her deputy minister, Okechukwu Emeka.  Members of the 
National Assembly committees on ports and maritime transportation 
also attended. Terminal operators, shipping companies, freight 
forwarding companies, truck drivers' association and other port 
users were also represented. 
 
Reforms Reduce Vessel Waiting, Turn Around Times 
--------------------------------------------- --- 
 
¶3. (U) Stakeholders acknowledged that the port reform had recorded 
some successes including increased cargo throughput and berth 
occupancy, and reduced waiting and turn around time.  Average 
waiting time for vessels has been reduced from 28 days to less than 
24 hours, and container moves also improved from seven 
twenty-foot-equivalent units (TEUS) per hour to an average of 19 
TEUS per hour.  Port working hours per day have increased from 12 to 
24 hours.  Cargoes that once took 18 days to clear now clear in 
fewer than nine days. 
 
Concessions Also Improve Efficiency at the Ports 
--------------------------------------------- --- 
 
¶4. (U) Port efficiency has also greatly improved post-concession. 
The Director General of the Nigerian Shippers Council, Ify Akerele, 
noted that in two years since the concessions, terminal operators 
have cleaned up the ports, provided electric power and water 
facilities and put up International Ship and Port Security 
(ISPS)-compliant fencing.  Clients no longer have to incur the 
additional costs of providing security for their containers as 
warehouses have also been refurbished and better secured.  Improving 
ship turn around time alone helped to eliminate about 200 million 
naira (USD 1.67 million) in additional costs annually. Despite this 
achievement, operators contend that a great deal of work remains to 
be done on the terminals. 
 
Port Costs Up 300 Percent 
------------------------- 
 
¶5. (U) Despite these gains in efficiency, the  cost of handling 
freight at the ports has increased by 300 percent post-concession. 
According to Dr. Boniface Aniebonam, a freight forwarder, the cost 
of clearing 1 TEU through Customs at the Apapa Port Terminal, 
increased by 329 percent from 11,715 naira (USD 98) pre-concession 
to 50,285 naira (USD 419), post-concession.  Other costs such as 
handling fees, the fees charged by shipping companies for handling 
containers between the container terminals and the ships, and 
deposit charges for containers, which belong to the shipping 
companies, have also increased.  As a result, Mark Walsh of ENL 
Consortium, the private operator of Apapa Terminals C and D, said 
cost increases are attributable to shipping companies and their 
agents.  DG Akerele insisted a ports and harbor bill must be passed 
to create a regulator (National Transport Commission) to monitor 
costs in these areas and prevent untoward price increases. 
 
Government Agencies at Ports Undermine Reform 
--------------------------------------------- 
 
¶6. (U) Over 15 government agencies are represented at Nigerian 
ports.  Nigerian Custom Service Comptroller Rasheed Taiwo said 
although port reform has resulted in a reduction of government 
control, multiple government agencies still have control over some 
aspects of port operation, including police, military, drug 
enforcement agencies, immigration and customs, among others.  Taiwo 
noted that while most of these agencies have a legal basis for 
operating at the ports their activities are a constant interference, 
creating bottlenecks, increasing cargo clearance costs, and 
undermining port reform.  Taiwo said that the number of government 
 
LAGOS 00000154  002 OF 002 
 
 
agencies operating at the ports should be limited to those whose 
duties must be conducted there, for instance the Nigerian Custom 
Services (NCS), Nigerian Port Authority (NPA), Immigrations, Port 
Police, and designated custom agents. 
 
¶7. (U) Although Nigeria has customs policies in place designed to 
reduce the amount of cargo that needs to be screened, the country's 
long list of import-prohibited items coupled with incorrect 
declaration of goods by importers results in 95 percent of 
containers being physically examined.  Notwithstanding the increase 
in operational and services efficiency introduced by the 
concessionaires, custom inspections taking place outside the 
terminal gates drastically delays the clearing process and 
exponentially increases costs.  According to Taiwo, these delays 
have resulted in the diversion of 70 percent of Nigeria-bound cargo 
to Benin, Togo and Abidjan for offloading and transport via road. 
(Note: The border station along the Lagos-Benin Republic highway is 
notoriously choked with trucks awaiting customs clearance.  End 
note.) 
 
Neglect of Other Transport Undermines Reform 
-------------------------------------------- 
 
¶8. (U) Stakeholders also criticized the lack of development of road 
and rail transportation which could enhance the results of port 
reform.  Even if cargoes are cleared within 48 hours, it takes much 
longer for the cargo to get from the port to its final destination 
due to poor road conditions and the lack of rail service. 
Stakeholders urged the government to improve basic infrastructure in 
and around the port to help terminal operators. 
 
¶9. (U) Comment: While the concessioning of the ports was a positive 
step by the GON, rising port costs are of concern.  From the 
meeting, it is not clear if the rising costs are the result of the 
market seeking its natural price after years of inefficient 
government operation or the result of rising worldwide costs and 
customs delays as noted by some stakeholders.  Rising costs may 
reflect a shift in the mix of goods now using the port and the value 
shippers place in being able to offload more rapidly.  Though 
privatization has revitalized Lagos' once decaying port 
infrastructure, more must be done in order for Nigeria to fully 
benefit from port reforms.  End Comment. 
 
¶10. (U) This cable has been cleared with Embassy Abuja. 
 
BLAIR