The Nigerian Ports Authority (NPA) and its long standing business partner, Intels Nigeria Limited, are now locked in a fierce battle of wit over the cancellation of its multi-billion naira contract.
The war of attrition between the two business partners was triggered by the October 10th letter addressed to the Oil and Gas logistics giant, intimating it of the decision of the Federal Government that the 17 years old pilotage monitoring agreement with the company has being forthwith terminated.
In 2010, the NPA and the logistics company providers had entered into an agreement which ceded the pilotage services to the Intels. Under the agreement, the integrated logistics provider guides ships coming into the ports and leaving for safety purposes.
With the agreement, Intels collects charges on behalf of the NPA from shipowners for the job in which it also receives 28 per cent commission from what it collects.
Pilotage is a usual practice in the maritime industry and is compulsory for all ships of 35 metres overall length or greater unless a valid Pilotage Exemption Certificate is held by the ship’s master.
In return for the service, ship owners and agencies are required to pay a pilotage fee, which Intels collects on NPA’s behalf and retains 28 per cent of the revenue as commission for the services rendered.
But the Federal government soon found the agreement distasteful which it claimed runs foul of the constitution and the Treasury Single Account policy (TSA) of the present government.
Consequently, the Minister of Justice and the Attorney General of the Federation, Mallam Abubarkar Malami,in a letter dated September 27th, 2017, instructed the Managing Director of NPA, Ms Hadiza Usman, to forthwith terminate the contract due to its inherent illegality.
“I refer to your letter dated 31st May 2017, ref: MD/17/MF/Vol.XX/583 in respect of the above subject matter wherein you sought clarification on the legal issues implicated by the continuous implementation of the Managing Agent Contract Agreement dated 11th February 2010 executed between the Nigerian Ports Authority (NPA) and Intels Nigeria Limited for the provision of boats pilotage operations, in the light of the Federal Government of Nigeria’s Treasury Singe Account (TSA) policy.
“Upon my review of your letter under reference and the relevant agreements, I have been able to conclude inevitably that the terms of the agreement as agreed by parties and the dynamics of its implementation which permits Intels to receive revenue generated on behalf of NPA ab initio, clearly violates express provisions of Sections 80(1) and 162(1) and (10) of the 1999 Constitution of the Federal Republic of Nigeria, 1999 (as amended). It is thus curious that parties did not avert their minds to the above provisions of the constitution whilst negotiating the agreement.
“The inherent illegality of the agreement as formed has since been expounded by the TSA policy issued by the Head of Service of the Federation on behalf of the Federal Government of Nigeria directing all ministries, departments and agencies to collect payment of all revenues due to the federal government or any of her agencies through the TSA.
“The objective of the presidential directive (TSA policy) in exercise of the executive powers of the president under Section 5 of the 1999 Constitution (as amended) was in furtherance of the spirit and intent of Sections 80 and 162 of the constitution and to aid transparency in government revenue collection and management.
“NPA being an agency of the federal government is bound by the TSA policy and has not howsoever been exempt there from. Due to the constitutional nature of the TSA, where there is a conflict between the TSA and the terms of the agreement, the TSA shall prevail.
“Therefore all monies due to the NPA currently being collected by Intels and any other agents/third parties on behalf of NPA must henceforth be paid into the TSA or any of the sub-accounts linked thereto in the Central Bank of Nigeria (information of the account will be communicated in due course) in accordance with the TSA policy.
“For the avoidance of doubt, the agreement for the monitoring and supervision of pilotage districts in the Exclusive Economic Zone of Nigeria on terms inter alia that permits Intels to receive revenue generated in each pilotage district from service boat operations in consideration for 28% of total revenue as commission to Intels is void, being a contract ex facie illegal as formed for permitting Intels to receive federal government revenue contrary to the express provisions of Sections 80(1) and 162(1) and (10) of the 1999 Constitution of the Federal Republic of Nigeria (as amended), which mandates that such revenue must be paid into the Federation Account/Consolidated Revenue Fund.
“In the premise of the above, the conflict between the agreement and the TSA policy presents a force majeure event under the agreement, and NPA should forthwith commence the process of issuing the relevant notices to Intels exiting the agreement which indeed was void ab initio’’, the chief law officer of the Federation noted.
However, the company, co-owned by former Vice President, Atiku Abubakar and Italian businessman with Nigerian citizenship, Gabriel Volpi, said the deal was terminated without any consultation or due process, promising to fight the action of the NPA with every means possible.
Giving NPA management seven days ultimatum from October 10th when it was served the letter to reconsider its stand which it described as ‘preposterous’, Intels, through a letter written to the NPA MD, and signed by its Director, Silvano Bellinato, threatened to sue the government agency as well as reconsider its investment plan in the $2.6billion Badagry deep sea port project.
This, the company declared, is in addition to initiating an action to compel the agency to pay the huge debt allegedly owned the company.
“Hence, in compliance with the Article 12 of the Agency Agreement between the NPA and INL, we hereby request you to schedule a meeting within seven days from the date of this letter, in order to analyse the residual critical areas of our relationship and to agree, to the possible extent, on a common solution.
“Should this not happen, we hereby notify you that, in accordance with Article 13 of the Agreement, we will refer the matters to arbitration, in order to safeguard our company from the significant damages and other adverse consequences that may result from this rather unbecoming decision.
“We wish to reach an amicable solution as soon as possible for this complicated matter so that we can avoid request for the intervention of the court for the immediate payment of any amount due to us from NPA, also in light of the likely pressure for action from our banks, which we may be compelled to do, despite our unwillingness.”
The company also claimed that the NPA owes it a debt “in the sum of $674,767,415.00 (in addition to the interests accrued in the meantime)” as evidenced in correspondences exchanged between both parties.
Bellinato further expressed that the NPA’s decision was surprising in light of the cordial relationship enjoyed by both parties.
“Our relationship has always been characterised by timely execution of projects undertaken on behalf of NPA as well as operational efficiency, which has variously been acknowledged by NPA.
“It is also easy for you to ascertain the regularity and timeliness of the payments made by us on a monthly basis for the lease of facilities and throughput fees, equal to an amount of over $170 million since the award of the concession,” he said.
However, NPA management is yet to respond to the threats of Intels as at press time but our correspondent leant that the NPA board and its management has convened an emergency meeting at Eko Hotels this week where the latest development is expected to top the agenda.
Amused stakeholders have however attributed the abrupt cancellation, without notice, of Intels’ contract to the political stance of its co-owner, Alhaji Atiku, who has shown his undisguised ambition to succeed President Buhari come 2019. They also claimed that the contract cancellation was a way to get at Turaki for his various subtle attacks on the present APC led government.
Alhaji Atiku, an APC stalwart, has in several fora criticized some of the policies and actions of the present government, taking positions that are markedly opposed to government views.
‘’Terminating the Intels contract was a way to shrink financial supply to Atiku who is perceived by the presidency as working against the government in his bid to become the next president. And you know you cannot empower your enemy’’, an industry commentator observed.
Alhaji Atiku had once described Intels as his cash cow where makes fortunes on regular basis.
However, the Federal government has dismissed any political undertone to what it considered mutual business concerns between two legal entities.
Mallam Malami declared that the decision of government to terminate the contract was based on the request of the NPA MD who sought clarification on legal implications of the contract in view of the TSA policy of government.
Mr Paul Ibe, the Head of Media for Atiku Organisation declined comment when our correspondent sought his reaction.
He believed that the matter was between two business entities which should not involve the person of his principal.
He also evaded comments on alleged political persecution that has been read into the contract saga.
“I will not be drawn into making any comment on this,” he said with a tone of finality.