INFRASTRUCTURE FINANCING AND MANAGEMENT: THE IMPACT OF CONCESSION ON THE OPERATIONS AND PERFORMANCE OF NIGERIAN SEAPORTS

INFRASTRUCTURE FINANCING AND MANAGEMENT: THE IMPACT OF CONCESSION ON THE OPERATIONS AND PERFORMANCE OF NIGERIAN SEAPORTS

ABSTRACT
This paper study examined the effect of privatization on the performance of Nigerian seaports, using pre- and post-privatization data. A Mann-Whitney Wilcoxon (MWW) test was applied to data (secondary) on two major indices of port operation (average berth occupancy and average turn-around time). The result of the analysis showed that on average, the berth occupancy and turn-around time improved from 51.35% to 72.47% and 8.18 days to 4.83 days respectively. It was also found that at a 0.05 level of significance, the concession of Nigerian ports has significantly improved average berth occupancy and average turnaround time of the vessels calling at Nigerian ports. The study emphasises the need to provide enabling environment through the formulation and implementation of effective policies as a way of ensuring optimal performance of the concession model.

1. INTRODUCTION
Maritime activities could be seen as a life wire of any developing economy. Shipping has become the most effective mode of transportation in the international exchange of goods. Transportation of bulk goods over a relatively long distance is most economically done by sea. This is further facilitated through advances in technology which has brought about more efficient, reliable and demand oriented transportation system. It is estimated that over 90% of global commerce is seaborne [1]. This reflects the level of dependency on shipping for the movement of goods generated in international trade transactions.

Port reforms are policy measures by government aimed at enhancing efficiency and productivity of ports by revitalizing and strengthening the operational and functional modalities at the ports [2]. Within the Nigerian context, ports reforms were with a view to making Nigerian ports both user and investor friendly, thus enhancing smooth operations at the ports.

The reform model chosen by the Nigerian government was port concession, whereby the government retains ownership the infrastructure, and contracts out the management and operation of the facilities to the private sector on competitive basis for a specified period of time. Bousquet and Fayard [3] note that a concession arrangement is one in which the government (or her agency) grants the right to fund, build, own, improve, upgrade, maintain or operate a public infrastructure, and charge users for the cost of services, for a limited period of time to a private sector operator. The official view about concession in Nigeria seems to be contained in the Infrastructure Concession Regulatory Commission Act (2005) where concession is described as:

a contractual arrangement whereby the project proponent or contractor undertakes the construction, including financing of any infrastructure, facility and the operation and maintenance thereof and shall include the supply of any equipment and machinery for any infrastructure and the provision of any services [4].

With respect to port operations, concession refers to lease of port terminals and re-organization of stevedoring companies [5]. The contractual arrangement embodies service criteria and specifies the technical qualities and practices expected from the concessionaire. Perhaps, it is because of the stake that the government still has in the venture that motivates government to ensure that her policies are implemented both in technical and social terms as noted by [6].

The improvement of port efficiency or productivity seems to be the major motivation for port concessions in Nigeria. However, the level of achievement of this objective is yet to be determined. This paper therefore seeks to establish the impact of the reform by analysing the major indices of port operations performance in the port. This impact would be established by:

a. examining of the impact of port concession on cargo average berth occupancy in Nigerian ports

b. analysing the impact of port concession on turnaround time of vessels calling at the ports, and

c. drawing inferences and making recommendations based on the research findings

This study examines only the impact of concession on two major indices of port operation (average berth occupancy and average turnaround time), from 1995-2012 in Nigerian ports. Attention has been drawn to the ways concession has improved the efficiency of services in the Nigerian ports, with recommendations capable of assisting in the actualization of the aims and objectives of the exercise.

Although several studies such as [7, 8, 9, 10] had studied the concept of privatization and how its application in seaports has increased competiveness and efficiency, these have not been specific to Nigeria. This study will complement these existing studies by establishing the impact of privatization (port concession) on average berth occupancy and vessels turn-around time of Nigerian seaports.

INFRASTRUCTURE FINANCING AND MANAGEMENT: THE IMPACT OF CONCESSION ON THE OPERATIONS AND PERFORMANCE OF NIGERIAN SEAPORTS

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