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In 2016, the Nigerian Ports Authority (NPA) took stock of the 10th anniversary of Port reforms in Nigeria amid assurances by the Minister of Transport, Mr. Rotimi Amaechi, that a comprehensive audit of the concessionaires’ operations would soon be carried out to know whether to review their agreement with NPA, especially those whose tenure expires this year.

The Nigerian economy accounts for about 70% of all seaborne trade in the West African sub-region and yet, the system of seaports, established in 1921, had not undergone any systematic process of re-development until the concession programme of port reforms, which commenced in 2000 and was concluded in 2006.

The concessioning programme with concession terms ranging from 10-25 years brought into existence the current system of private port operators in Nigeria, namely Lagos Port with 7 concessionaires, Lagos Tin Can Island Port with 4 concessionaires, Rivers Port (Port Harcourt) with 2 concessionaires, Delta Port Complex with 5 concessionaires, Onne Ports (Federal Lighter Terminal & Federal Ocean Terminal) with 4 concessionaires, Calabar Port with 3 concessionaires.

The concession system has resulted in compliance with international standards, particularly the International Ship and Port Facility Security Code (ISPS Code). Security compliance bench-marking to international regulations and elimination of a multiplicity of poorly coordinated federal law enforcement and security operatives, has also served to curb the incursions of unauthorised personnel within the port; along with the several vices long associated with the Nigerian ports, namely, pilferage, bribery and unscrupulous labour and stevedoring practices (including excessive charging). Additionally, plant and equipment inefficiencies and inadequacies have been minimized.

Significant gains have been made as a result of the concessioning such as: shortened turn-around time for ships; significant reduction of costs, seaport congestion, demurrage, overtime cargo and complaints of untraceable or missing cargoes; the rehabilitation/replacement of cargo-handling plants and equipment owned by the Nigerian Ports Authority (NPA) which were hitherto mostly unserviceable.

Nevertheless, it hasn’t been all smooth sailing, with concessionaires, who spoke under the aegis of the Seaport Terminal Operators Association of Nigeria (STOAN) in commemoration of 8 years of port reforms in 2014, cited ills affecting the effective and efficient running of the nation’s seaports to include inadequate power supply and incessant removal of management of government agencies. Others are arbitrary arrest of vessels at berth and attendant consequences, friction among maritime statutory agencies due to overlapping functions and lack of national carrier capacity for the United Nation Conference on Trade and Development (UNCTAD) 40:40:20 liner code.

STOAN have also recently cited, further challenges in need of attention, namely, inadequate provision of pilotage facilities, which reduces berth occupancy and utility rate; irregular sweeping of the Harbour bed, thus reducing draft and endangering vessels berthing; insecurity of vessels at the anchorage and water front of the Harbours and inconsistent cargo reception and release processes in the terminal together with associated delays.

In our 2016 third quarter year review, we examine specific challenges confronting the Nigerian oil and gas sector as it continues to be affected by global externalities in 2016.

This year, the Nigerian petroleum sector continued to confront the downturn in global crude oil prices since the third quarter of 2014. The resultant slowdown in upstream exploration funding and investment is currently having an impact on oil well exploration and developmental programs. Equally, the power sector has had to confront interrelated challenges mostly emanating from supply shortages and gas pricing, the preferred fuel for power.

As NNPC has undergone much-welcomed restructuring in 2016 and Nigeria, in its capacity as an OPEC member continues to engage with fellow OPEC members in addressing global crude oil pricing; industry experts predict that funding and investment in the Nigerian petroleum sector will be positively influenced in the medium to long term if also accompanied by regulatory certainty and reform.

However, the short-term key existential and overriding challenge is militant activity. Since February 2016, midstream infrastructure facilities have come under incessant attack and vandalism by the new militants in the Niger Delta, triggering force majeure on production streams, bringing Nigeria’s production down to 1.2m-1.6m barrels per day for prolonged periods from the 2016 budget production estimate of 2.2m barrels per day and reducing the crude oil feed stock to local refineries.

The former government (2011-2015) had despite the news of continued pipeline vandalism, engaged in a militant amnesty programme substantially reducing the disruptions to industry facilities and enabling production to go back up to previous peaks of approximately 2.5 million barrels per day. Nevertheless, the gains of the amnesty were undermined by the revelation in 2013 that crude oil theft was costing Nigeria between 150,000-400,000 barrels per day.

The present government now seeks to re-evaluate the militant amnesty programme and address key Niger Delta security and environmental remediation issues through the establishment of a Joint (Army-Navy-Airforce) Task Force and the inauguration of the $1 billion Ogoni fund in February 2016 for the environmental restoration of Ogoni lands. The NNPC is also strengthening its collaborations with the Nigeria Security and Civil Defence Corps (NSCDC) to better protect its oil installations/pipelines in the country. In NNPC’s monthly financial and operations reports since September 2015, it has prioritised pipeline security reforms that would ensure reduction in crude oil theft as well as address the loss of other petroleum products.

To date, the NNPC continues to strive to fulfil the mission statement in its monthly report for September 2015 that “A comprehensive reform of the pipeline security situation will unlock several industry upsides, including improved upstream oil production due to reduced pipeline disruptions, improved refinery utilisation due to increased crude oil feed from restored pipelines, and reduction of crude/product losses”.