Namport New for Coastal
Namport has moved to rebut claims by independent researcher, Rainer Ritter who last week released a report highlighting that the Port’s logistics hub plan was not well thought out and hence the parastatal faces grave economic challenges.
In his report released by the Economic Association of Namibia (EAN), Ritter further claimed that Namport is experiencing an overall decline in vessel visits, a decline in profit margins while the enterprise is expected to start repaying the N$3.2 billion AfDB loan from the end of 2019 onwards.
“The very costly and ambitious objective of Namibia to become a logistics hub on the West Coast should be based on proper research, realistic assumptions and facts. This analysis suggests that no rigorous research was done prior to embarking on these huge investments. It should be obvious that merely investing in major infrastructure development will not by itself attract business if other ports are more competitive in terms of tariff rates and proximity to markets.
“The financial situation is of such a nature that a decline in tariffs could worsen the situation should volumes not increase significantly. This shows that the decision by Namport to invest in the new container terminal was the wrong decision. Namport maneuvered itself into a risky catch 22 financial situation that should have been avoided through prudent financial planning,” the report states.
In response, Namport outgoing CEO, Bisey Uirab who rebutted every aspect of Ritter’s report while emphasing that reports were compiled and distributed without the courtesy of according Namport the opportunity to either verify the contents thereof or provide the context to some of the issues raised in the reports explained that although Namport had initially thought not to respond to the malicious allegations, the company felt it was important to clarify.
“While Namport remains very open and receptive to ideas and suggestions which would advance the development of our ports and its role to the nation and the region at large, it is important that such engagements are done in a manner that is inclusive of all parties’ view points, considerate and respectful of each other and devoid of innuendos which border on personal attacks and questioning of the competence and integrity of fellow professionals. It is incomprehensible and smacks of ill intent, why the writer did not have the courtesy to seek for Namport’s input to his reports before sharing his so called findings and analyses with the public.
“The writer questions the country’s development priorities and suggests that some cabinet decisions are devoid of substance. This is quite unfortunate and begs the question that if the intentions are noble, why the writer would not give his input and ideas at the various formal platforms with relevant stakeholders in a positive and constructive manner.
“In fact the writer indicates that he has been a member of the Presidential Economic Advisory Council (PEAC) of the two former Presidents of the Republic of Namibia and then goes on to say “responsibility for the current predicament is due in large part to the reckless government spending from 2010 to 2015”. One would then have expected him to at the least have given his input as part of the PEAC,” Uirab said.
In some of his key submission, Uirab highlighted that Namport has always exercised the principles of cost recovery, fairness and transparency in the pricing of its services and periodic review of tariffs adding that the annual tariff review process at all times entails engagements with port users where, at various fora, the basis upon which tariff adjustments are premised, are tabled and views elicited from the customers.
“As such, Namport prides itself in a competitive pricing regime and this was confirmed, in a recent World Bank sponsored study, by the international firm of ports consultants, Maritime and Transport Business Solutions, which in its survey conducted during 2018 noted that Namport tariffs while on a stand-alone basis may appear high, are in fact lagging behind tariffs charged by other ports on an overall basis.”
Uirab went on to say the main operational inputs for Namport are labour, electricity, fuel and water and further explained that over the years, it is common cause that increases in these input costs have not necessarily been confined to CPI.
“As such it then is unclear why the writer would still expect Namport to limit its own increases every year to CPI and in so doing then have to cross subsidize the above CPI increase in the costs of these inputs.
“Further, there is in fact no basis in business to confine one’s price adjustments to CPI movements especially where immense investments are made and the underlying costs must be recovered together with reasonable returns on investments,” noted Uirab.
Rebutting Ritters suggestions that the decline in vessel calls at Namibia’s ports is an affirmation of Namport’s punitive port charges, Uirab said that this is clearly an incorrect and superficial view of the global factors influencing the number and sizes of vessel deployment by shipping lines.
“The global shipping industry has recently undergone immense viability challenges on the back of high operational costs, increasing competition and declining shipping rates. This has been evident in the high number of liquidations and amalgamations within the industry. A major approach by the shipping lines to counter the viability challenges has then been to deploy the largest vessel sizes available especially on the main routes from Asia to Europe and Asia to Africa.
“Consequently, the deployment of the large size vessels meant the consolidation of volumes within fewer vessels, curtailment of running costs and obviously a reduction in the overall number of vessels calling ports across the world.”
Uirab further stated that Namport has consistently recorded operating profits since incorporation and this has been largely attributable to continuous and aggressive marketing of the ports within the country, the region and beyond as well as adept cost and working capital management.
For the year ended 2017/2018 Namport recorded an increase in revenue of fourteen per cent (14 percent), and for the first time total income attained the N$1 billion mark compared to the N$906 million generated in the previous financial year.
Further, Namport has put in place a Social Investment Fund to help uplift the living standards of Namibians across the country and since inception, has distributed N$30 million to various social causes in all the regions of the country.