The Senate Committee on Public Accounts has requested answers from the Nigerian Ports Authority (NPA) regarding the N1 billion debt amount, which the committee claimed was not explained in the Auditor General of the Federation report.Although it said that $232,354,156.43 of the total had been recovered, its explanations also included the $852,093,731.10 mentioned in the Auditor General of the Federation report that was made public.
In his appearance before the Committee last Friday, Mr. Mohammed Bello-Koko, the Managing Director of the NPA, stated that the House Committee on Public Accounts in the 9th Assembly had fully examined the funds and had given the Authority a clean sheet of health.
Bello-Koko clarified that the ongoing recurrence of amounts from the time prior to the Authority's 2006 concession, which the current NPA Management had previously accounted for but had not yet removed from its records, was the cause of the discrepancy between the positions of the Senate and House of Representatives Public Accounts Committees.
Bello-Koko gave the senators a thorough rundown of the relevant data and stated, "The majority of the debts date back decades." I'm referring to pre-concession debts and legacy obligations from businesses like Nigerian National Shipping Line Ltd.
However, we have been recording these obligations on our records and deducting the sums, so we have made provisions for each and every one of these debts. We have requested the Senate Committee's assistance on this matter and written to the Auditor-General of the Federation regarding the process to remove them from our records.
"In the spirit of public accountability, we will always be open to give account," he promised the committee.
When the MPs pressed him for more details on the debt issue, he clarified that the debt amounts included throughput charges, estate rents, and lease costs, among other things, as specified in the concession agreements.
"The debts date back to the period of 2006 to 2019," he clarified. In the review period, there have been recoveries; nevertheless, these are unrecoverable debts because of things like Volume Change, Gross Minimum Tonnage (GMT)/Penalties, Encumbered Areas, etc.
"It would be necessary to clarify the following terms to avoid any confusion:"Volume Change: Refers to changing the volume. According to the Executed Contract Agreement, the lease price will be paid in full if the percentage difference between actual performance and predicted volume is between the range of minus 10% to plus 10%.
Nonetheless, the lease payment due will be modified by an equal percentage if the performance fluctuation percentage is greater than minus 10% to plus 10%. As a result, the adjustment is made by the percentage change in volume against the leasing fee that is due.
"Encumbered Areas: Describes areas that are inaccessible because of circumstances beyond the tenant's control, such as hostile host community, marshy land, etc."Guaranteed Minimum Tonnage (GMT): This is the estimated tonnage that the concessionaire has promised to attain; it results from the concessionaire's failure to fulfill the commitment.
"Unpaid VAT: This refers to the portion of the unpaid lease fees that are related to the VAT that results from the volume change that was previously described."A penalty is the monetary cost incurred when a contractual agreement's payment obligations are not met. It results from the concessionaire's failure to make payments within the days or time frames authorized by the terms of the contract. In short, it's a fee for making a late payment.
Bello-Koko went on to say, "The amount reported in the media is from the 2019 Auditor General's report and does not represent the actual level of indebtedness to NPA.
It is important to emphasize that a total of $224,354,156.43 has been recovered, out of the $852,093,731.10 mentioned in the Auditor General of the Federation's report and being distributed in the media.$54,663,452.37 is the uncollectible portion due to volume change and contentions; $19,619,459.00 is the portion due to encumbered areas; $11,908,355.82 is the amount of various penalties imposed on the terminal operators for not meeting set standards; and $ 28,693,607.07 is the VAT of said amount. The remaining balance is $504,663,452.37.A balance of N1.6 billion, representing encumbered sections of the terminals, remains after N269 million of the N1.8 billion concessionaire debt has been recovered.
"A total of $10.6 million has been recovered with regard to the outstanding estate rent, ship dues, and service boats of $67 million."
"It is crucial to remember that the uncollectible debts represent the total of the performance metrics, or GMT, mentioned above. The Terminal Operators were unable to meet these performance metrics primarily due to changes in government policies, such as force majeure situations, and deteriorating infrastructure." the speaker said.
In his words, "the Authority is working out modalities with the relevant parties to recover accordingly for some of the other debts, which are also legacy debts being owed by a government agency that transformed into a limited liability company."
He reaffirmed that the Authority was in advanced discussions to settle the disagreements regarding these amounts, emphasizing that by the end of 2022, all amounts owed to NPA had been paid in full.
In a concerted effort to address the anomalies found in the concession agreements, Bello-Koko revealed that the Authority's management enlisted the World Bank to offer consulting services for its review, while an inter-agency committee made up of the NPA, FMOT, FMOJ, BPE, and ICRC created a template to address the inherent anomalies in the agreements that permitted the accumulation of such debts and prevent a recurrence.
He revealed, "As a result, supplemental concession/legal agreements have been signed and will soon go into effect."