The Nigerian Ports Authority (NPA) has announced a settlement agreement with INTELS Nigeria Limited, a leading oil and gas logistics company, over a long-standing dispute on the pilotage contract.
The NPA said the deal, which was approved by the federal government, would help Nigeria save $326.8 million in waived interest and reduced commission, as well as increase its revenue from service boat operations.
The pilotage contract, which was signed in 2010, allowed INTELS to collect and remit fees from service boat operators on behalf of NPA, in exchange for a 28 percent commission and a repayment of a $1.2 billion loan for port development.
However, the contract was terminated in 2020 by the NPA under the leadership of its former managing director, Hadiza Bala Usman, who accused INTELS of violating the Treasury Single Account (TSA) policy and breaching the terms of the agreement.
INTELS and its sister company, Deep Offshore Services Limited, challenged the termination in court and sought an injunction to stop NPA from engaging new service providers.
The legal battle resulted in a loss of revenue for NPA, as it could not effectively monitor and collect fees from service boat operators.
According to NPA, its revenue from service boat operations declined from $216 million and $209 million in 2014 and 2015 respectively under the INTELS agency to $130 million and $99 million in 2020 and 2021, after taking over by NPA.
The situation in 2023 was even worse as the collection up to June 2023 was only $55.3 million, NPA said.
To resolve the impasse and recover its outstanding debt, NPA initiated a settlement proposal with INTELS, which was submitted to the federal government through the Ministry of Transportation.
After protracted negotiations, the parties agreed on the following terms:
- Waiver of $100 million on the outstanding debt of NPA to Deep Offshore Services Limited
- Waiver of interest on the debt for two years, estimated at $93.3 million
- Reduction of interest rate on the debt from Libor+6.5 percent to SOFR+3 percent
- Reduction of commission on pilotage collections from 28 percent to 24.5 percent
- Renewal of the agreement for another 15 years
The federal government approved the proposal on August 18, 2023, and directed the parties to withdraw the cases from the court.
The parties executed the terms of settlement on August 24, 2023, and the Federal High Court adopted it as its judgment on September 21, 2023.
NPA also executed the managing agency agreement with INTELS and a supplemental agreement with Deep Offshore Services Limited for the port development.
NPA praised the Minister of Marine and Blue Economy, Adegboyega Oyetola, for his role in facilitating the settlement and putting Nigeria first.
It also stated that the agreement was done in the national interest and would enhance the revenue profile of the federal government.
Meanwhile, former Vice President Atiku Abubakar, who co-founded INTELS, denied being a beneficiary of the deal, saying he had divested from the company in 2020.
He said the insinuation that he was a beneficiary of the decision to rescind the cancellation of the contract was untrue and mischievous. He urged the public to disregard the false reports and focus on the positive impact of the deal on the economy.
The settlement agreement between NPA and INTELS is expected to boost the confidence of investors and improve the performance of the maritime sector, which contributes about 10 percent to the nation’s GDP.
Source: Arise TV
