A rare insight was recently provided into the concession agreement signed between the Federal Government and private terminal operators otherwise known as concessionaires operating at the nation’s seaports.
Former Legal Adviser/Secretary to the Board of the Nigerian Maritime Administration and Safety Agency (NIMASA), Mr. Mathew Egbadon, who provided the insight, said that the concession agreement signed by the Federal Government and private terminal operators clearly identified the Nigerian Ports Authority (NPA) as the regulator of the nation’s seaport.
Speaking recently at a forum organised by the Nigerian Ports Authority (NPA) in Lagos, Egbadon who is a one-time Speaker of the Edo State Assembly, said that the concession agreement clearly stated that NPA would perform the regulatory role until there is a change in the law.
Speaking on the topic, ‘Salient rights and obligations between the concessionaires (as the lessees) and NPA (as the lessor) in the concession agreements’, the leading maritime lawyer said, “Between 2004 and 2006 when the port reforms programme was implemented, the Nigerian Ports Authority (NPA) entered into several concession agreements with different private companies and ceded some of her responsibilities and functions to Private Terminal Operators.
The concession lease agreements range from 10 years to 25 years. In these agreements, the NPA gave the exclusive right to the private companies (the Concessionaires) to operate, maintain and where necessary, carry out investments on port facilities, within designed premises at the nation’s ports for a given number of years and on terms and conditions agreed on, between the NPA and the respective Concessionaire.
“The Bureau of Public Enterprises (BPE) midwife the lease agreements and signed as a “Confirming Party”. Among the terms and conditions in the agreement, are salient rights and obligations which the parties, NPA as “The Lessor” and each of the Concessionaires as “The Lessee”, are expected to enjoy and perform in order to “consummate” the concession agreement. “It is important to underscore the point at the outset, that the various concession agreements entered into between the NPA and the concessionaires have a common thread running through them as rights and obligations of the Lessee and the Lessor,” he said.
Egbadon said both the lessee (NPA) and the lessors (concessionaires) have basic obligations clearly spelt out in the agreement.
He said the agreement clearly stated that “the lessee shall keep and maintain the leased property in the condition in which it is transferred to him on the effective date, fair wear and tear excepted, and free and clear of all security interests arising from the performance of the operations or any other of its obligations under the agreement”.
Speaking further, he said: “The Lessee shall keep and maintain the fixed assets in good conditions and working order, reasonable wear and tear excepted. “The Lessee shall pay the lease fee & other fees in consideration of the agreement in accordance with the terms and conditions set out in the agreement and in the currency agreed between the parties.
“Three types of fees are payable under the agreement are commencement fees payable immediately after the execution date; fixed annual payment of a sum as specified in the agreement payable in installments; and throughput fees payable on total volume of cargo handled on vessels that used the leased premises or property.”
He disclosed that the throughput fees are adjustable on an annual basis in accordance with the “Consumer Price Index for the U.S City Average for All Items”.
He said that to the extent that the lessee complies with the terms and conditions of the agreement, “the lessee shall peacefully and quietly hold, occupy and enjoy the leased property”.
On the responsibilities of NPA as the lessor, Egbadon stated that the “lessor undertakes to lease the leased property to the lessee, free and clear of all security interests for the term, while the lessor (concessionaire) remains the owner of the leased property. “Lessor to indemnify, defend and hold harmless the lessee from and against the claims arising from losses or damages occasioned by other third parties having a right of use over the leased property prior to the execution of the agreement. “The Lessor shall grant to the Lessee for the benefit of the lessee and its employees, contractors, customers and invitees during the term, the nonexclusive right to use, in common with others entitled to such use (including the lessor) the common areas as they exist from time to time, subject to all rights reserved by the lessor in the agreement. “The lessor however reserves the right from time to time to make changes to the common areas, close temporarily any of the common areas or perform such other activities with respect to the common areas, as the lessor may deem appropriate.”
The lessor, according to him, is under obligation to cooperate with the lessee as reasonably necessary to enable the lessee to perform its responsibilities under the concession agreement.
Egbadon also disclosed that it is the responsibility of the lessor (NPA) to provide for the general security of the ports (outside the security fence of the leased property) as well as security of all lands and sea entrances to the port including the perimeter fencing.
“In the lease agreements, the NPA as the Lessor, doubles as the interim “Regulator” and is required to perform the aforestated responsibilities in addition to its roles as the lessor, until there is a change in the law and the roles of the regulator in the port industry is assigned to another government authority,” he added.
By Pita Ochai