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Business News of Monday, 28 January 2019

Source: asempanews.com

Tema Port expansion agreement flawed – MDU


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National Executive Council of the Maritime and Dockworkers’ Union (MDU) has said the concession granted Meridian Port Services (MPS) to construct a new Container Terminal in the Tema Port did not follow due process.

The Council is of the opinion that as a result of unwarranted political interference, the concession agreement did not go through competitive bidding before it was forwarded to parliament for ratification.

The Council made these reservations known at the Resolution of the 63rd Session of the National Executive Council (NEC) of the Maritime and Dockworkers’ Union (MDU) held in Tema last November.

The meeting further discussed the policies of government that had resulted in increasing job losses in the maritime industry as well as casualization of permanent jobs in the ports.

The ambitious project, a Public Private Partnership between the Ghana Ports and Harbours Authority (GPHA), representing government and MPS, involves an upgrade and significant expansion of Ghana’s main seaport.

Successful completion of the project is set to fundamentally change Ghana’s position in West Africa’s maritime industry by effecting an increase in trade flow and improvement in transport links across West Africa.

Even though the Council lauded the initiative, it argues that the implementation of the agreement in its current form would lead to a reduction of GPHA’s container related businesses from $105 million to $30 million with a resultant loss of over 1,400 jobs for GPHA alone.

”The Council notes with deep concern that the implementation of the agreement in its current form would lead to the collapse of businesses of Stevedore companies, Inland Container Depots (ICDs), Ghana Dock Labour Company (GDLC), Terminal operating companies among others. These could lead to massive job losses in the maritime sector.

”The Council notes that since the operations of the new container terminal would be a semi-automated one, there would not be substantial job creation to absorb the huge job losses for GPHA and other affected companies,” the Council noted.

It, however, expressed the view that the tax waiver for the concession agreement of the container terminal which is over $800 million is too high when considered against the investment cost of $ 1.5 billion which has reduced to about $ 1.1 billion after revaluation.

President John Dramani Mahama launched the start of the expansion works at Tema Port in 2016.

Whiles commending government for the introduction of the paperless system and automation at the ports, which has so far helped in reducing the time and cost of clearing goods at the ports, it warned that the initiatives must not lead to job losses.

”The Council expresses the strong opinion that machines and technology must not take over the jobs of workers and that there should not be automation without negotiations,” the Council added.

Below is the full statement

RESOLUTION OF THE 63RD SESSION OF THE NATIONAL EXECUTIVE COUNCIL (NEC) OF THE MARITIME AND DOCKWORKERS’ UNION (MDU) HELD ON 23RD NOVEMBER 2018 AT THE HOSPITALITY CENTRE, TEMA.

Introduction

The 63RD Session of the National Executive Council (NEC) of the Maritime and Dockworkers’ Union (MDU) which was held on 23rd November, 2018 discussed the activities of the union within the national and global economic context. Most importantly, the meeting discussed the effects of the concession agreement of the new container terminal of the Meridian Port Services (MPS) on GPHA and other operators in the port in terms of job losses. The meeting further discussed the policies of government that had resulted in increasing job losses in the maritime industry as well as casualization of permanent jobs in the ports.

The Tema Port Expansion Project of Meridian Port Services (MPS)

The 63rd NEC discussed the effects of the construction of a new Container Terminal in the Tema port by Meridian Port Services (MPS) and expresses the view that the project is a good project with a bad concession agreement.

The Council expresses the strong opinion that the process of the development of the concession agreement was flawed because the contract did not go through competitive bidding due to political interference before it was presented to parliament resulting in the development of a concession agreement for the building of a new semi-automated world class container terminal which has the potential to destroy other maritime businesses and undermine national interest.

The Council expresses deep worry that, when the new container terminal of MPS becomes operational in June 2019, Ghana Ports and Harbours Authority (GPHA) would lose much of its container related businesses which would result in loss of huge revenues from reduced royalty payment, rents, port dues, berth occupancy among others.

The Council expresses further worry that the implementation of the agreement in its current form would lead to a reduction of GPHA’s container related businesses from $105 million to $30 million with a resultant loss of over 1,400 jobs for GPHA alone.

The Council notes with deep concern that the implementation of the agreement in its current form would lead to the demise of businesses of stevedore companies, Inland Container Depots (ICDs), Ghana Dock Labour Company (GDLC), Terminal operating companies among others. These could lead to massive job losses in the maritime sector.

The Council notes that since the operations of the new container terminal would be a semi-automated one, there would not be substantial job creation to absorb the huge job losses for GPHA and other affected companies.

The Council expresses the view that the tax waiver for the concession agreement of the container terminal which is over $800 million is too high when considered against the investment cost of $ 1.5 billion which has reduced to about $ 1.1 billion after revaluation.

The Council therefore resolves as follows:

That the government of Ghana should as a matter of urgency renegotiate the concession agreement of the new container terminal of MPS to ensure the protection of national interest, jobs, sustenance of businesses of GPHA, local stevedore companies, existing terminal operators and other local operators.

That the government of Ghana should renegotiate the concession agreement to protect jobs of GPHA workers and other operators in the port before the commencement of business at the new terminal in June 2019 because it will be very difficult to review the concession agreement when the container terminal becomes operational.

Operational Problems of Stevedore Companies

The Council recalls that in its resolution of 2017, it complained that government’s policy to increase the registration of Stevedore companies from 7 to 21 (about 300% increase) when the cargo volumes had only increased by about 10% in 2017, had resulted in operational and financial problems of Stevedore companies.

The Council notes that the policy of government to increase the number of stevedore companies has worsened the operational and financial problems of the Stevedore companies resulting in massive redundancies of employees of Stevedore companies and casualization of permanent jobs.

The Council expresses disappointment that government has not taken any measures to address the problem which had led to loss of jobs in the maritime industry.

The council is of the view that the situation would worsen if government does not take immediate action to address the problem.

The council makes the following recommendations to government to address the problem:

That GPHA should place a moratorium on the granting of licenses for stevedore, shorehandling and labour supply operations in the ports.

That government should set up a committee comprising government, port authority and Maritime and Dockworkers Union to investigate the current happenings in the stevedore, shore handling and labour supply operations in the ports and the effects of such liberal policies on the efficiencies of the ports as well as job losses.

The committee should also determine the optimal number of shore handling, stevedore and labour supply companies required to operate at the ports giving the volumes of cargo and an appropriate rotational and shift systems to accommodate further capacity of stevedore, shore handling and labour supply operations.

PAPERLESS AND PORT AUTOMATION

The Council supports the efforts of government to ensure competitiveness and efficiency in the port operations and revenue assurance by government.

The Council commends government for the introduction of the paperless port system which has helped in reducing the time and cost of clearing goods at the ports.

Whilst supporting the introduction of automation in the ports to make labour more efficient, the Council is concerned that automation should not lead to job losses.

The Council expresses the strong opinion that machines and technology must not take over the jobs of workers and that there should not be automation without negotiations.

DEVELOPMENTS AT TEMA SHIPYARD AND DRYDOCK

The Council notes that Tema Shipyard and Drydock is one of the strategic national assets within the maritime economy of Ghana and has a huge potential to create decent jobs in the maritime industry in Ghana.

The Council commends government for making efforts to attract investment into the operations of the Tema Shipyard and Drydock.

The Council calls on the Ministry of Transport to involve the leadership of the Maritime and Dockworkers’ Union (MDU) in the discussions on the Strategic Investor to ensure a transparent process that will bring greater improvement in the fortunes of the Ship yard and Drydock and also help improve the working conditions of the workers of the company.

The Council expresses the view that the experiences of the Malaysian administration should serve as a guide for all of us to work together to take advantage of the current opportunity to ensure that the selected Strategic Investor would have the required technical and financial capacities to revamp the company.

The Council expresses the strong opinion that government must ensure the protection of jobs for all the workers of the company in the transition to the takeover by the Strategic Investor.

HIGH TAXES ON IMPORTS

The Council notes with concern the high levels of import duties at the port currently which is having a negative impact on cargo volumes arriving at the port.

The Council notes further that available statistics indicate a 3% reduction of cargo throughput in the third quarter of 2018 compared to same period in 2017. Already there is a steady reduction in the rate of increase in cargo volumes for the first three quarters (January-September, 2018) compared to the same period in 2017.

The Council acknowledges the need for government to raise revenue, but high taxes on imports would lead to a significant shrinking of the import market hence further revenue loses and jobs within the maritime sector.

The Council urges government to ensure that taxes on imports are reduced to help grow the manufacturing sector and ensure that essential goods are brought in for consumption. High import duties also have implications for inflation as cost of high importation leads to price hikes with negative implications on final consumers.

National Health Insurance Scheme

The Council commends government in its efforts to stabilise the National Health Insurance Scheme.

The Council calls on government to ensure prompt payment of service providers to ensure the operational efficiency of the scheme which has implications for maritime Labour workers who call at the hospitals as card holders.

The Council recognises that the National Health Insurance Scheme is a major social policy intervention by government which should be given the needed priority in providing efficient healthcare for Ghanaians.

Operational problems of Volta Lake Transport Company(VLTC)

The Council recognises that VLTC is a company with the potential to provide economic and social benefits that would make substantial contribution to national development.

The Council is worried that despite the potential of VLTC, operational and financial problems have prevented the company from realising its potential, thus creating social and economic problems for the workers and the company.

The Council is worried that VLTC is being excluded in the discussions and decisions regarding the construction of the railway terminal in Akosombo.

The Council holds the view that the construction of a Railway Terminal at the Akosombo Port would help the company to take advantage of the commercial benefits of the Tema-Akosombo railway line.

The Council expresses the opinion that if VLTC is excluded in the management and control of the railway terminal that would be constructed in Akosombo , it would sound the death knell of VLTC.

The Council notes that the absence of a permanent management for VLTC has contributed to the adoption of adhoc measures to address the perennial problems of the company.

The Council therefore calls on government to put in place a permanent management that would be empowered to take major decisions to revamp the company.

The Council calls on management to seek a Strategic Investor for VLTC to solve the perennial problems of the company as a matter of urgency.

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