$145.84m remittance default: NPA terminates intels pilotage contract

The Nigerian Ports Authority (NPA) has terminated its boats pilotage monitoring and supervision agreement with Intels Nigeria Limited after about two years of bickering, following non remittance of $145.84.

In a letter dated March 29, 2019, addressed to the Managing Director of Intels, which was obtained by THISDAY, NPA said the decision to revoke the contract was taken in line with Article 8 (C) of its agreement with Intels, dated February 11, 2011.

The letter signed by NPA’s Assistant General Manager, Legal Services, read in part, “We refer to the agreement dated 11th February, 2011 and 24th August, 2018 between the NPA and Intels Nigeria Limited for the monitoring and supervision of oil industry related activities in the compulsory pilotage districts of the authority (service boat operator).

“The NPA (the principal ) hereby serves on you Intels Nigeria Limited, (the Managing agent) notice of termination in line with article 8 (C) of its agreement with Intels, dated 11th February, 2011, which said notice shall expire three months from the date of this notice of termination.”

In a letter dated March 27, 2019, addressed to the Managing Director of NPA, Hadiza Bala-Usman, NPA’s Executive Director, Finance and Administration, Mohammed Bello-Koko, had accused Intels of non-compliance with the presidential directive and circular on implementation of Treasury Single Account (TSA) and Article 4.1 of the executed supplemental agreement by refusing to remit the sum of $145, 849,309.33 being outstanding service boat revenue generated from November 1, 2017 to October 31, 2018.

According to Bello-Koko, Article 4.1 of the executed supplemental agreement states, “The total revenue generated on behalf of the principal in each of the pilotage districts from the service boat operations shall be paid directly into the principal’s TSA at designated commercial banks which will be swept daily into the principal’s corresponding TSA at the Central Bank of Nigeria (CBN).”

He stated that Intels neither remitted the sum of $55.72 million, which it pledged to remit in a letter dated February 12, 2019, nor the sum of $145.84 million, which it demanded via various letters.

The letter by Bello-Koko also stated, “Let it be clearly stated that Intels persistent refusal to remit all service boats revenue to TSA as clearly stated in Article 4.1 of the supplemental agreement and the sudden introduction of the ‘concept of reciprocity’ in your letter dated March 6, 2019 is worrisome. The concept of reciprocity is alien to the executed supplemental agreement.

“In a letter dated March 6, 2019, Intels alluded to the following as defence for its refusal to comply with terms of executed agreement: that the outstanding revenue of $145. 84 million, which covers the period of November 1, 2017 to October 31, 2018, is not true, that its pledge to pay the sum of $55.70 million as revenue for period from November 1, 2017 to March 31, 2019 is predicated on authority’s payment of $19.67 million. And added that the authority’s fulfilment of the payment is a prerequisite for the reciprocity of rights and obligations of each party in executed agreement.

“That the unreconciled amount of $145. 84 million included revenue expected from both clients under Intels agency and other agents.”

On NPA’s reaction to Intels assertions, Bello-Koko said NPA and Intels had jointly reconciled service boats transactions covering the period of November 1, 2017 to July 31, 2019.

He said, “That the reconciled and jointly signed report covered November 1, 2017 to March 31, 2018 and the associated outstanding reconciled revenue is $55.702 million. However, Intels persistently refused to transfer the agreed amount to TSA, instead, it introduced the concept of reciprocity, which is alien to the executed agreement.

“That the jointly reconciled report for the period of April 1 to July 31, 2018 has been submitted to Intels for signature. That this has not been signed till date. And the outstanding revenue for the period is $49.008 million, which ought to have been transferred to TSA by Intels.”

He added, “That the period from August 1 to October 31, 2018 was reconciled by the authority and forwarded to Intels for review to enable joint agreement. However, Intels has not responded and this has held down further reconciliation. The supplemental agreement stipulates that reconciliation should be monthly but the apparent delay to speed up the exercise appears inconsistent with agreement.

“That the executed supplemental agreement does not provide that revenue transfer to TSA be dependent on conclusion of reconciliation, it is worrisome that an average of 80 percent of revenue is being withheld by Intels while a meagre 20 percent is being paid to TSA. The authority by its letter of March 1, 2019, has given Interls a Grace period of five days within which to remit the outstanding revenue to TSA. However, it is worrisome that about 20 days after no payment was made as requested.”

It was on this ground that NPA decided to cancel the authority’s agreement with Intels Nigeria Limited.

This decision according a usually reliable source should have come much earlier but had wait to avoid giving the termination political colouration.

The source also admitted that NPA is owing Intels about $600 million which it intends to pay from the revenue source.

On how NPA intends to proceed with revenue collection going forward, the source stated that it was going to go through the process of engaging another company when the termination process is fully executed.