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NPA Usman
Managing Director of NPA, Hadiza Bala Usman

Why INTELS, experts rejected NPA’s termination of agreement

Reactions have started trailing the sudden termination of Pilotage Agency Agreement between the Nigerian Ports Authority (NPA) and Nigeria’s Oil and Gas logistics giant, INTELS Nigeria Limited.

Both INTELS and industry stakeholders say action send’s wrong signal of policy inconsistency, abuse of due process and government’s unseriousness to ease of doing business campaign.

Industry pundits say NPA’s decision to terminate the Agency Agreement, at a time several meetings held by parties and exchange of letters was yielding results amounts to the highest of targeted witch-haunting of INTELs in the nation’s maritime industry.

The company in letter signed by its Director, Silvano Bellinato and sent to the Managing Director of the NPA, formally contested the contents of the letter follows;

“On March 15th 2017, we received your letter ref: HQ/F&A/ED/AD/INTELS/034 in which, in addition to other contents, the following points were stated: “NPA acknowledged a debt towards Intels Nigeria Limited (INL) amounting to $674,767,415.00 in addition to the interests accrued in the meantime”.

“NPA communicated the need to reconcile the sum of $109,000,000.00 for the additional works carried out. “NPA informed INL about the implementation to be discussed in respect of a “transit account” called NPA service boat revenue collection account domiciled at one of the banks indicated by you and the related standard operating procedures (SOP).

“NPA confirmed 28 per cent agency commission to INL and the 72 per cent balance to be shared between NPA and INL in the ratio 30:70.

“On March 27th 2017, we replied to every point in your letter of March 15, 2017 as stated: “INL took note of NPA’s acknowledgement of debt; “INL declared availability to meet NPA to discuss the details for the certification of the $109,000,000.00 for the additional works carried out; INL requested for postponement of the SOP application.

“On April 19th 2017, NPA acknowledged our acceptance of NPA’s proposal in respect of 28% agency commission (already included in the existing running Agency Agreement) and in particular to the 30% – 70% split, respectively to NPA and INL, related to the 72% balance. This would imply that the 30% is to be remitted on monthly basis to NPA while the 70% is to be applied towards reducing indebtedness to INL.

Bellinato argued further that “Regarding the TSA application, NPA reiterated the strategic importance of such a request. However it is noted that TSA was not part of the existing agency agreement between the parties”.

Continuing, the leading logistics group revealed further that on May 5, 2017, it replied NPA’s letter of April 19, 2017 proposing the opening of a jointly signed account between INL and NPA to which the boat service revenues would have been directed.

INTELs averred that “Afterwards the account holders, with relative proxies, would remit the respective portions due to the parties being 30% in favour of NPA and 70% in favor of INL.

“We also indicated our availability to identify the bank from among the ones indicated by NPA; regarding the reasons of our proposal we firmly reiterated the precariousness of our financial status, mainly attributable to the credits towards NPA and heavily financed by various credit institutions.

“Such circumstances rendered alternative solutions to the ones suggested by us unviable, and also taking into consideration the inapplicability of TSA to running contracts in the manner According INTELs, “Clearly, deduction of entitlements due to INL from collections under the Agreement and payment of the balance into the designated NPA account for TSA purposes, would be in compliance with the TSA policy”.

“Hence, in compliance with the Article 12 of the Agency Agreement between the NPA and INTELS, we hereby request you to schedule a meeting within seven days from the date of this letter, in order to analyse the residual critical areas of our relationship and to agree, to the possible extent, on a common solution.

“Should this not happen, we hereby notify you that, in accordance with Art. 13 of the Agreement, we will refer the matters to Arbitration, in order to safeguard our company from the significant damages and other adverse consequences that may result from this rather unbecoming decision.

“We wish to reach an amicable solution, as soon as possible on this matter so that we can avoid requesting for the intervention of the Court for the immediate payment of any amount due to us from NPA also in light of the likely pressure for action from our banks, which we may be compelled to do, despite our unwillingness,” INTELs averred.

Observers argue that such horrible decision by government agencies like NPA is capable of damaging Nigeria’s international credit rating and scare away foreign direct investment.

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