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Atiku v FG: Controversy trails termination of INTELS’ pilotage contract

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Atiku v FG: Controversy trails termination of INTELS’ pilotage contract

Rift will cost over 11,000 job loss—MWUN•It’ll scare away  investors –Amiwero

 

Nearly two years after the Federal Government commenced moves to cancel its 17-years pilotage monitoring contract with INTELS Nigeria Limited, the Nigerian Ports Authority (NPA) penultimate week finally announced termination of the contract. PAUL OGBUOKIRI reports that the action is being interpreted as a political victimization rather than a move to correct an infraction

 

The pilotage monitoring agreement

 

The NPA on February 11, 2011 entered into a fresh agreement with INTELS Nigeria Limited for the monitoring and supervision of Nigeria’s oil industry related activities in the compulsory pilotage districts of the authority (service boat operator). The agreement had allowed INTELS to receive revenue on behalf of NPA for seven years.

 

Controversy over compliance with TSA

 

NPA had in September 2017 announced suspension of its pilotage monitoring and supervision agreement with Nigeria’s maritime logistics firm, Integrated Logistics Services (INTELS) Nigeria Limited because the firm failed to comply with the Federal Government’s directive on the Treasury Single Account (TSA).

 

 

This came as NPA had insisted that all funds collected on its pilotage agency agreement be remitted into the account, but INTELS had then argued that such directive was in violation of the terms of its contract. The stalemate led the NPA to suspension of the pilotage agreement contract.

 

Then Attorney General and Minister of Justice, Abubakar Malami, said the contract was void ab initio and was reported to have relayed the government’s decision to the Managing Director, NPA, Hadiza Usman, in a letter dated September 27, 2017. Mr. Malami said it was in contravention of the Constitution and that the company failed to comply with the TSA policy of the Federal Government. The NPA in a statement explained that it relied on the advice of Mr. Malami in arriving at the decision to terminate the contract.

 

Constitutionality of the contract

 

However, speaking on the constitutionality of the contract, the Nigerian Importers Integrity Association (NIIA) said that the contract is legal, constitutional and similar to the Joint Venture (JV) agreements signed by the Nigerian National Petroleum Corporation (NNPC) with the International Oil Companies (IOCs). NIIA President, Godwin Onyekazi, also said that termination of the contract will impact negatively on government revenue and on efficiency at Onne Port. “Since the story broke, we have sought legal advise from our lawyers who informed us that the contract is constitutional.

 

“The Nigerian Ports Authority (NPA) outsourced its pilotage services on a mutually agreed profit sharing ratio of 72:28 just like the crude oil exploration contracts with the International Oil Companies (IOCs). “Can the Nigerian National Petroleum Corporation (NNPC) demand that IOCs like Chevron, ExxonMobil, Shell and others pay crude oil sales directly into TSA before deducting what is due to them? “It is the same case with the NPA-INTELS contract. If you now say the NPA-INTELS pilotage services contract violates the constitution, then the same argument must apply to all the crude oil sales contracts with all the IOCs,” he said.

 

Onyekazi further said that Onne Port is the only viable port outside Lagos because of the contribution of INTELS, which “provided an alternative port” to importers especially those doing business in Onitsha, Aba and other cities in the Eastern part of the country.

 

“We want to believe that the Federal Government has been misinformed about the importance of INTELS and of the Onne Port and we urge the powers that be to reconsider their stand on the matter,” he said.

 

Also, a columnist, Mr. Eze Onyekpere said: “If this analysis of the sums due to the CRF (Consolidate Revenue Fund) is right, then the contract cannot be said to be void, unconstitutional and illegal. The illegality would have arisen where a party withholds the actual percentage (in this case 72 per cent) due to the CRF.” INTELS’ effort to placate FG Shortly after the NPA announced suspension of the agreement, Founder of INTELS, Gabriele Volpi flew into the country to apologise to the Federal Government over the dispute that resulted in the termination of contract with the NPA. Volip said INTELS will “comply with the directive of government” and transfer all the revenue collected from the boats monitoring and supervision services in the Nigerian maritime waters to the TSA.

 

“We want to apologise to the Federal Government and NPA over this disagreement with INTELS. I was not personally involved in the negotiations with NPA, but we apologise for what has happened,” Volpi told journalists. “We intend to comply with the directive of government and transfer all the revenue to the TSA because we are a law-abiding company. Furthermore, Volip said INTELS remained committed to the development of the Badagry deep seaport.

 

“We are committed to co-operating with the government and NPA in the development of Nigeria’s maritime sector and this includes the Badagry deep seaport,” he said. Consequently, a fresh agreement signed on August 24, 2018 between the organisations on compliance with the TSA.

 

It was against this backdrop that the contract controversy between INTELS and NPA seemingly eased off following the payment of $42.6 million (N13.2 billion) by INTELS into the NPA’s TSA.

 

The Managing Director of NPA, Hadiza Bala Usman, stated this while addressing members of the House of Representatives Ad Hoc Committee probing into the matter, saying that the company after receiving termination notice from the agency, wrote to apologise for not complying with TSA and the new sharing formula. She said as a result, INTELS has paid the sum $28.1million into the agency’s TSA account with a notice of additional $14.5million said to have been paid, but yet to be confirmed by the NPA.

 

NPA ends agreement over non-remittance of $145m to TSA

 

In this season Atiku Abubakar, co-Founder of INTELS; Nigeria’s former vice president and PDP presidential candidate in the February elections is challenging the President Muhammadu Buhari’s victory at the polls; and the government seems to be fighting him back in all fronts, the NPA announced the termination of the boats pilotage monitoring and supervision agreement with INTELS Nigeria Limited.

 

This is coming after nearly two years of wrangling between the NPA and INTELS and allegation of non-remittance of $145million to the TSA. In a letter dated March 29, 2019, addressed to the Managing Director of INTELS, NPA said that the decision to revoke the contract was taken in line with Article 8 (C) of its agreement with INTELS, dated February 11, 2011.

 

The letter signed by NPA’s Assistant General Manager, Legal Services, read in part, “We refer to the agreement dated February 11, 2011 and August 24, 2018 between the NPA and INTELS Nigeria Limited for the monitoring and supervision of oil industry related activities in the compulsory pilotage districts of the NPA (service boat operator).

 

“The NPA (the principal ) hereby serves on you INTELS Nigeria Limited, (the Managing agent) notice of termination in line with article 8 (C) of its agreement with INTELS, dated February 11, 2011, which said notice shall expire three months from the date of this notice of termination.”

 

In a letter dated March 27, 2019, addressed to the Managing Director of NPA, Hadiza Bala-Usman, NPA’s Executive Director, Finance and Administration, Mohammed Bello- Koko, had accused INTELS of non-compliance with the presidential directive and circular on implementation of Treasury Single Account (TSA) and Article 4.1 of the executed supplemental agreement by refusing to remit the sum of $145, 849,309.33 being outstanding service boat revenue generated from November 1, 2017 to October 31, 2018.

 

According to Bello-Koko, Article 4.1 of the executed supplemental agreement states, “The total revenue generated on behalf of the principal in each of the pilotage districts from the service boat operations shall be paid directly into the principal’s TSA at designated commercial banks which will be swept daily into the principal’s corresponding TSA at the Central Bank of Nigeria (CBN).” He stated that INTELS neither remitted the sum of $55.72 million, which it pledged to remit in a letter dated February 12, 2019, nor the sum of $145.84 million, which it demanded via various letters.

 

NPA owes INTELS $750m

 

But INTELS denied that it is indebted to the NPA to the tune of $145.8 million, insisting that the authority owes it over $750 million.

 

The company, which issued a statement in response to the termination of its boats pilotage monitoring and supervision agreement by NPA, said it was open to an amicable resolution of the contract dispute with NPA. It added that it was willing to proceed in all appropriate directions to protect its interests and its 5,000 employees.

 

The statement added that the company had not breached or violated the agreement with NPA. “INTELS further confirms the correctness of its actions, in line with the agreement signed on August 24, 2018, according to the terms and timing established therein, in compliance with the principle of reciprocity of rights and obligations thereby provided for. “The same agreement supplements the original agreement and reinforced the understanding of the parties that the agency service was entrusted to INTELS, in order to guarantee a repayment plan for the significant investments made.

 

“INTELS reiterates that, overall, it is not in any way indebted to NPA, but it is instead a creditor of NPA for an amount exceeding $750 million against the financing granted by INTELS and associated entities to NPA over time,” the statement says.

 

Stakeholders caution FG

 

Reacting to the development, President, National Council of Managing Directors of Licenced Customs Agents (NCMDLCA), Mr. Lucky Amiwero, said NPA has no right to cancel the contract it signed with INTELS as the NPA Act empowers authority to enter into contractual agreements with its stakeholders and partners for efficient port operations. He called on the Federal Government to resolve the disagreement with INTELS quickly, saying the development would give investors a very wrong signal, if not handled with care.

 

He said in the event of its not been resolved, it will not be easy to get any investor who will be ready to invest as heavily as INTELS has done , knowing fully well that at the end of Buhari administration, the next government will start breading down on him. “We cannot pretend to be looking for investment when we cannot insulate people’s investments from politics.

 

He noted that it is believed that what INTEL is passing through is because of Atiku Abubakar’s political activities in Nigeria today. Also speaking, Mr. Eze Onyekpere, said: “If none of the parties is alleging being shortchanged or withholding of funds due to it by the other and the issue is just one of the TSA versus other accounts, then this seems like a huge storm in a tea cup.

 

Meanwhile, the Maritime Workers Union of Nigeria (MWUN) had earlier appealed for an amicable resolution of the rift, warning that over 11,000 Nigerians will be pushed into the unemployment market if it is unresolved.

 

President-General of the MWUN, Comrade Adewale Adeyanju, said in a statement that INTELS has 5,000 direct and 6,000 indirect workers on its payroll and that if issues were not resolved, the workers risk losing their jobs. Adeyanju added that the cancellation of the contract would send wrong signals to the international community, as it would discourage investors. “We want to advice that the Federal Government should avoid anything that will send wrong signals to investors that Nigeria’s environment was not conducive for business.

 

“Most of these employees are Nigerians with families and responsibilities. We are, therefore, worried that if the issue is not resolved amicably, their jobs could be on line,” he said.

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