Home Maritime Why INTELS’ Service Boat Contract was Restored

Why INTELS’ Service Boat Contract was Restored


The Nigerian Ports Authority (NPA) said on Sunday that INTELS Nigeria Limited waived $193 million to resolve the controversy on the pilotage contract with the federal government.

According to NPA, the agreement reached with INTELS was done in the national interest as it expects revenue generation to increase with the awarding of the service boat contract to INTELS.

Commending Adegbeyega Oyetola, minister of Transportation, Marine and Blue Economy, for working towards ensuring that the crisis was resolved, NPA said, Oyetola was disheartened by the needless loss of revenue.

The NPA, however, said Nigeria will save $326.895 million from the agreement it reached with INTELS on the pilotage contract, adding that the federal government will earn a benefit to the tune of over $500,000,000.00.

NPA in a statement tagged, ‘Setting the Record Straight in Respect of Service Boat Monitoring Operation in Nigerian Ports Authority: Reinstatement of INTELS Nigeria Limited as Management Agent,’ the NPA said it agreed on a waiver of the sum of $100,000,000 being part of the accrued interest as of 31st July 2023 on the indebtedness to Deep Offshore Services Limited under the Phase 4B agreement.

“A further waiver of the interest accruing on the outstanding debt under the Phase 4B Agreement for two years commencing from 1st of July 2023 and ending on the 30th of July 2023 which is estimated in the sum of $93,317,556,” NPA said.

NPA further disclosed that both parties agreed on a “Reduction of the interest rate on the indebtedness to Deep Offshore Services Limited from 6-months LIBOR rate + 6.5 percent to 6-months SOFR rate + 3 percent effective from the date of execution of Supplemental Agreement. The Authority will be saving a total sum of $326,895,226 as a result of waiver of part of accrued interest and reduction of interest rate from 6.5 to 3 percent on the debt over the next 15 years.

“Reduction of the agency commission on Pilotage collections from 28 percent to a lower commission of 24.5 percent as opposed to increasing it due to astronomical rise in cost of operations. The proposed spread of the debt of $522,433,453.25 to be paid back over a 15-year period will, of itself, earn for the Authority a huge benefit in terms of preservation of funds to meet its other operational needs over the period,” the NPA explained.

The Ports Authority said that its interest is to ensure that services are provided in line with international best practices, enhance the revenue profile of the federal government and mitigate the attendant loss of revenue.

Intels also made proposal for settlement on behalf of itself and Deep Offshore Services Nigeria Limited. The parties agreed to the following proposed Terms of Settlement similar to the settlement with INTELS.

The NPA added that the federal government considered the proposal and approved same on the 18th of August 2023.

“The federal government further directed that the withdrawal of the cases was to be carried out by filing Terms of Settlement by the parties and for the Court to adopt same as Judgment of the Court. The authority was also to discontinue the un-concluded procurement process, which process was in disobedience to the Orders of the Federal High Court, Lagos.

“The Parties executed Terms of Settlement on the 24th of August 2023, and the same was adopted as the Judgment of the Federal High Court in Suit No. FHC/L/CS/1058/2020 on the 21st of September 2023 by Justice A.M. Liman.

Arising from the foregoing, the authority also filed a Notice of Withdrawal at the Court of Appeal, Lagos in respect of the appeal.

“Following the Judgment of the Federal High Court, Lagos, the Nigerian Ports Authority and Intels Nigeria Limited executed the managing agency agreement, while a Supplemental Agreement with Deep Offshore Services Limited for the Phase 4B Port Development was also executed because the initial Agreement was suspended.

According to the NPA, “After the expiration of the Service Boat Management Agreement, the authority took over the performance of the service through various Departments and Divisions. However, due to the constraint of not having the requisite technology to monitor the operations, the expected revenue dwindled, and it resulted in a drastic reduction of revenue generation for the Authority.

“Analysis showed a sharp decline from $ 216 million and $209 million in 2014 and 2015 respectively under INTELS agency to $130 million and $99 million in 2020 and 2021 respectively after taking over by NPA. The situation in 2023 is even worse as the collection up to June 2023 was only $55.3 million.

Admitting that errors were made by its past management, NPA disclosed, “Before the expiration of the Service Boat Monitoring Agreement, the authority commenced the procurement process for the engagement of Service Boat Operations Monitoring Agents. Several companies submitted bids and the Parastatal Tenders Board of the authority considered the proposals and approved forwarding the four companies considered qualified for the next stage of the process, to the Ministerial Tenders Board for further procurement processes in line with the requirement of the Public Procurement Act.

The Four companies are Pacific Silverline Limited, Nexttee Oil and Gas Trading Company Nigeria Limited, ICA Logistics Limited and Ishasha Investments Limited.

“Shortly after the opening of the bids, Intels Nigeria Limited and Deep Offshore Services Limited instituted a suit no FHC/CS/L/1058/2020 at the Federal High Court, Lagos against the Authority seeking orders of the Court to restrain the authority from engaging new Service Providers to carry out the monitoring of Service Boat Operations in the Exclusive Economic Zone.

Intels further claimed that the authority was in breach of the management agreement and sought relief including that the contractual status quo remains. Deep Offshore claimed that the termination of the Managing Agency Agreement would negatively affect the process of recovery of the Project cost from the Authority.

“The Federal High Court, Lagos per Justice Oweibo by an Order of Interim Injunction dated 24th July 2020 restrained the authority from giving effect to the Public Notice calling for Expression of Interest for the provision of the Service Boat Operation from interested entities in line with the Procurement Act.

“The authority notified Intels Nigeria Limited vide its letter dated 5th August 2020 of the expiration of the Service Boat Management Agreement on the 8th of August 2020 and of its intention to take over the provision of the said Service Boat Operation. A Public Notice was equally issued to all Service Boat Operators requesting them to deal with the various Port Management on all Service Boat issues. Intels Nigeria Limited again approached the Federal High Court, Lagos in suit no. FHC/L/CS/1058/2020 requesting an Order of the Court to restrain the Authority from giving effect to the Notice of Expiration served on Intels.

At the Federal High Court Lagos, Justice Aikawa granted an Ex parte Order of Interim Injunction on the 28th of August 2020 restraining the authority from giving effect to the Notice of expiration of the Agreement pending the determination of the arbitration between the parties.

“By another application dated the 18th of September 2020, the Authority challenged the jurisdiction of the Court to entertain the suit without first issuing and serving on the authority the mandatory pre-action Notice as provided in the Nigerian Ports Authority Act. The Federal High Court, Lagos extended the lifespan of the Interim Injunction and thereafter referred the matter to Arbitration.

However, despite the orders of the Court, the authority continued with the procurement process and forwarded the names of the companies to the Federal Ministry of Transportation. The procurement process was subsequently put on hold based on the advice from the Federal Ministry of Transportation that the authority should comply with the orders of the Court.

“The authority was thereafter sued by Pacific Silverline Limited, Nexttee Oil and Gas Trading Company Nigeria Limited, ICA Logistics Limited and Ishasha Investments Limited at the Federal High Court, Lagos in suit No. FHC/L/CS/1772/2022 seeking declarative reliefs and an injunction restraining the Authority and the Attorney General of the Federation from awarding the contract for the Service Boat Operations Monitoring contract in the four pilotage districts to any entity other than one which participated fully in the procurement process.

“The Federal High Court on the 11th of July 2023 upheld the objection of the authority and struck out the suit. The claimants have since filed an appeal at the Court of Appeal against the ruling of the Federal High Court and also applied for an injunction to restrain the Authority from executing the ruling of the Court. The appeal is pending at the Court of Appeal, Lagos and no date has been fixed for the hearing of same.

“Messrs Pacific Silverline Limited recently filed another suit at the Federal High Court, Kano in suit no. FHC/KN/CS/245/2023 against the Attorney General of the Federation challenging the approval granted the authority to settle the cases with Intels Nigeria Limited. The Federal High Court wholly dismissed the said suit on the 30th of November 2023.

The authority proposed a settlement initiative with INTELS which was submitted to the federal government through the Ministry of Transportation.

Intels also proposed a settlement on behalf of itself and Deep Offshore Services Nigeria Limited. Protracted negotiations followed and the parties eventually reached a settlement following remarkable concessions by Intels and Deep Offshore and verifiable gains by NPA and the federal government.

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