The The Director General of the Nigerian Ports Authority, Mohammed Bello-Koko, has explained why shipowners are required to pay for some transactions in dollars.
Bello-Koko in an exclusive interview with sunday punch in Lagos said that shipping is an international business, so all transactions and negotiations, among others, are initiated abroad.
He added that payments are generally made before the vessels arrive in the country.
“Why would NPA start charging in naira on a transaction that has already started and been consummated in a foreign currency? There are some ships that are coming to Nigeria for the first time, if they are charged in naira, how will they pay that naira? she asked.
sunday punch had reported that shipowners operating in the country’s maritime domain accused some maritime agencies, including the Nigerian Maritime Administration and Security Agency and the NPA, of charging them in dollars for transactions carried out in Nigeria.
Shipowners also said that despite their pleas to these agencies, they are still required to pay some of the fees, such as dock moorings and port dues, in dollars.
Nigerian Shipowners Association president MkgeorgeOnyung said the group has been advocating for payments to be made in naira.
“Let’s put it this way; in the past, all payments were supposed to be in dollars. I knew we were advocating for payments to be made in naira taking into account the volatility of the exchange rate. But until now, invoices are issued in dollars because shipping is a dollar-denominated business. I’m not quite sure what the situation is.”
Also speaking, one shipowner, Mr. Tunji Brown, admitted that they still pay some charges to the Nigerian Maritime Administration and Security Agency, in dollars.
“For some duties, we have to pay in dollars. The security tax to NIMASA is paid in dollars. NPA and other charges are some of the payments made in dollars. Most of the time, the ships come from the high seas. Once they come from abroad, it is not a Nigerian transaction anymore because you just come to Nigeria for the first time. That is why they are charged in dollars.”
The president of the Nigerian Petroleum Products and Deposits Traders Association, Ms. Winifred Akpani, recently said that the burden of obtaining foreign exchange on the parallel market for Nigerian domiciled transactions was having an adverse impact on oil traders.
“Accessing dollars for our operations has been an insurmountable obstacle for oil traders. The difference between the Central Bank of Nigeria exchange rate and the parallel market exchange rate continues to increase every day,” he said.
Akpani noted that in addition to basic operating expenses that are denominated in dollars, oil traders also have to seek hard currency on the parallel market to pay fees and levies that are also charged in dollars.
“For example, to charter a ship to transport 20,000 MT of PMS within Nigeria for 10 days, the freight charges are denominated in USD, which equates to approximately N220 million at the official exchange rate of N440 and a whopping N440 millions for oil traders who have to stock up. Parallel market FX on N880. This implies an additional cost of N11 per liter for this transaction due to the official/shadow FX market spread,” he said.
He further said that they have to pay pier fees for the same transaction, which is normally paid in dollars.
However, the NPA chief said: “And all Nigerian exporters naturally also pay in dollars for all cargoes that are exported out of the country to any country in the world, regardless of the currency of use in that country. So why should ours be any different? If you are exporting cargo to Asian countries from here, you pay the shipping companies that transport your cargo in dollars. We have heard this complaint over time. What we are saying is that this is international best practice by which shipping companies are charged in foreign currency.”