Intels Nigeria Limited recently struck a deal with the Nigerian Ports Authority (NPA), resulting in a significant cost reduction for the country. Nigeria is expected to save about $326.8 million by securing waivers in the boat pilotage monitoring contract. This was revealed in a statement by NPA titled “Setting the Record Straight in Respect of Service Boat Monitoring Operation in Nigerian Ports Authority: Reinstatement of Intels Nigeria Limited as Management Agent”. In a memorandum issued on November 30, 2023, the federal government conveyed to shipping firms the decision to prolong Intels’ agreement for operating within the Lagos pilotage district. Due to various contentious matters surrounding the Intel deal, the renewal of the contract encountered several delays.
In the recent development, the NPA disclosed that it had reached an understanding with Deep Offshore Services Limited to waive its outstanding debt of $100 million. This agreement, which pertains to the phase 4B port development, includes a supplementary agreement. Additionally, as part of this arrangement, the NPA has been granted a waiver on the interest accumulated on the debt for a two-year duration, which is estimated at $93,317,556. According to the NPA, the authority will preserve a significant amount of $326,895,226 through the combination of interest reduction and waivers. Over the coming 15 years, the accrued interest will be waived, and the interest rate will be brought down from 6.5 percent to 3 percent, leading to substantial savings.
A settlement proposal is given to Intels to tackle financial setbacks.
Instead of raising the commission due to the significant increase in operational costs, the agency has opted for a different approach by reducing the commission on pilotage collections from 28% to a lower rate of 24.5%. By allocating the debt of $522,433,453.25 to be repaid within a span of 15 years, the authority secures a significant advantage in safeguarding funds to fulfil its various operational requirements during that time frame. In an effort to tackle the financial setback caused by the dispute and find a legal resolution, the governing body has put forth a settlement proposal to Intels. The proposal has been officially presented to the federal government through the Ministry of Transportation.
Furthermore, Intels, together with Deep Offshore Services Nigeria Limited, presented a settlement proposal which kick-started a series of lengthy negotiations. Eventually, the involved parties managed to achieve a settlement that was only possible due to Intels/Deep Offshore making substantial concessions and NPA/the federal government realising tangible advantages, as confirmed by the authority. The proposed Terms of Settlement agreed upon encompassed the waiving of the sum of $100,000,000.00. The accrued interest on the authority’s outstanding debt to Deep Offshore Services Limited will be completely waived for a period of two years, from July 1, 2023, to June 30, 2025.
This revised agreement will be valid for another 15 years.
Deep Offshore Services Limited has agreed to decrease the interest rate on the remaining debt from Libor 6.5% down to the Secured Overnight Financing Rate (SOFR) of 3%. Additionally, the agency commission for Service Boat Pilotage collections will be reduced from 28% to 24.5%. This revised agreement will be valid for another 15 years. The authority remarked on granting the deal, affirming that the federal government thoroughly assessed the proposition and consented on August 18, 2023. According to the agency, the federal government further instructed that the instances were to be resolved through the submission of Terms of Settlement by all parties involved, thereafter to be officially acknowledged by the court as a binding ruling. The statement further clarifies that the authority was tasked with terminating the ongoing procurement process, which had remained inconclusive and was deemed non-compliant with the directives issued by the Federal High Court in Lagos.
On the 24th of August, 2023, the Parties entered into an agreement known as the Terms of Settlement. This agreement was subsequently endorsed as the official judgment of the Federal High Court in suit No. FHC/L/CS/1058/2020 on the September 21, 2023, with Honourable Justice A.M. Liman presiding. As a result of those above, the governing body has submitted a Notice of Withdrawal to the Court of Appeal in Lagos regarding the pending appeal there. After the verdict from the Federal High Court in Lagos, the Nigerian Ports Authority and INTELS Nigeria Limited put into effect the managing agency contract. Additionally, a Supplemental Agreement was signed with Deep Offshore Services Limited to facilitate the Phase 4B Port Development, considering the prior agreement had been put on hold.
Notable surge in the revenue generation is expected to be accomplished.
Lastly, the NPA reported a substantial loss in revenue for the federal government during the duration in which they assumed control of pilotage management. This decline can be attributed to the absence of essential technology for effective operational monitoring. The authority experienced a notable decrease in revenue, reducing from $216 million in 2014 and $209 million in 2015 under the management of Intels agency to $130 million in 2020 and $99 million in 2021 subsequent to the takeover. The NPA emphasised that the agreement reached with Intels was entirely motivated by the welfare of the nation, asserting that this endeavour would no doubt result in a notable surge in revenue generation.