The foreign exchange challenges facing Nigeria has greatly affects terminal operators since a large part of their capex (capital expenditure) and operational costs are in US dollars, National Daily findings has revealed.
In report published by top global accounting and audit firm, Deloitte, Terminal Handling Charges (THC), which is the main revenue stream of terminal operators, declined by 22.4 in the first quarter of 2017 as a result of naira depreciation and inflation
The report revealed that at the beginning of port concession in 2006, THC collected by the operators stood at $232 per TEU but declined to $180 per TEU by 2016.
It was also gathered that between 2006 and 2016, the Terminal Operators business was adversely impacted by the rise in Consumer Price Index/Inflation, with the CPI Nigeria rising to over 177% since 2006. It said foreign exchange (FX) fluctuation also impacted the value of the THC with over 224% FX depreciation between 2006 and 2016.”
The report, which was released by Deloitte Nigeria’s Director of Strategy and Operations, Bola Asiru; Senior Manager, Oladotun Bamigbetan and two others, stated that if the terminal operators were to adjust the THC yearly in line with changes in foreign exchange and Nigerian CPI (Consumer Price Index), the rate should have increased to N185, 112 per TEU.
“In real economic terms, the operators are losing revenue by not adjusting their THC in line with market realities,” Deloitte stated.
The firm further stated that Terminal Operators face huge challenges in the area of storage as the terminals are used as “cheap storage warehouse alternatives” by cargo owners.
“The current policy provides for a free 3 days storage after which a charge of N900 is applied per day and regulated by the NPA. Importers take advantage of the low storage charges offered by the Terminal Operators to store their imported goods at the terminal as opposed to offsite warehousing facilities that charge as much as N60,000 per day. This leads to congestion at the terminal and hinders the productivity and storage capacity of the terminal,” the report said.
Deloitte further stated that during the ten-year period under review (2006 to 216), Terminal Operators made huge investments on the acquisition of modern cargo handling equipment; development of port infrastructure such as buildings, quays and storage yard; lighting; automated tracking system; trainings and supply of electricity.
It said, “As a direct impact of these investments, the ports have witnessed increased ship traffic and throughput which has led to a 400% rise in container throughput from 400,000 TEUs in 2006 to 1.6 million TEUs in 2014.