Liberia: APM Terminals Concession Agreement Review Delays amid Tariff Increment, But Company Assures Win-win for All
MONROVIA – In the wake of mounting calls from Liberians for the Coalition for Democratic Change (CDC) led government to review the concession agreement of APM Terminals-Liberia for the operations of the Freeport of Monrovia, the company’s Managing Director, Mr. George Adjei has justified that the agreement signed with the government does not spell out any clause for the government to do so.
It can be recalled that the company recently announced a 9.67 percent increment on all current charges of its services at the Free Port of Monrovia with a justification that the move in line with its concession agreement with the government of Liberia which allows a 2021 tariff adjustment using predefined formula.
“The modernization of our terminal to an over US$100m state-of-the-art terminal is one we are especially proud of. We are fully aware of the essential role that you have played and continue to play in contributing towards the growth of the Liberian economy. We appreciate your partnership and look forward to even more positive engagements this year,” APM Terminals stated in its advisory.
The port operator stated that the 2021 adjustment would imply that a 20-foot import container, cleared within storage free-time, shall attract a total charge of US$207.36 (effective 1st February 2021), up from the current total charge of USD 189.08. Hence, the adjustment is US$18.28 for a 20-foot import container.
Following the move, local and foreign entrepreneurs complained that the decision taken by APM Terminals to increase tariff in the midst of growing economic constraints will impose move hardship on the Liberian people, vast majority of who are impoverished.
The situation last Tuesday compelled the Plenary of the House of Representatives to summon key players of Liberia’s shipping industry including the managements of APM Terminals, National Port Authority (NPA), Liberia Revenue Authority (LRA) and major shipping lines to state reasons behind the “unprecedented rise of service fees, especially clearing of containers at the Free port of Monrovia”.
During the hearing, scores of lawmakers also recommended the revision of APM Terminals concession agreement signed with the Liberian government in a bid to reflect present day realities.
But addressing reporters at the company’s premises on the Bushrod Island last week, Mr. Adjei justified that the new tariff announced by the company was not done arbitrarily, but it was done based on certain variables, including the improvement of investment at the gateway to the country’s economy.
He recalled that in 2020, his company did not increase tariff due to the Coronavirus pandemic, but pointed out that the increment in the tariff of cargo services presently is appropriate due to many factors, including the high inflation in Liberia.
“There was an agreement between the shareholders of APM Terminals and the GOL. There was an agreement that the shareholders should raise the right funds to invest in the development and refurbishment of the port. The agreement was based on a few things including, starting the tariff on a small base and when time adjusting, there can be increment based on the pre-agreed formula”.
“The new adjustments are not arbitrarily announced. It is very unfortunate that there are some disagreements about the implementation of the terms of the agreement.
Mr. Adjei denied speculations that the new tariff on cargo services pronounced by APM Terminals will impose more hardship on Liberians, especially the ordinary citizens.
Room for consideration
He pointed out that though the concession agreement signed with the Liberian government and APM Terminals in 2010 does not state a period for review, the company does not in any way believe that there is no room for revision.
He pointed out that APM Terminals believes that any revision of the concession agreement should be beneficiary to both the government and the company.
“There is no specific clause on review of the concession agreement. Any agreement can be reviewed but, there are provisions in every agreement for the review. In most cases when the review takes place, the parties involved with the agreement should be compensated in such a way that there could be no disadvantage to any of the parties”.
“If for instance the government says APM Terminals is not allow to adjust tax for the next five years, then the government will have to propose certain terms that will ensure that APM Terminals will not be short-changed over the five years period. For instance, we can discuss a freeze on corporate taxes for the company for a number of years”.
Mr. Adjei maintained that though there is no “explicit clause” within the document to support a review of the concession agreement, it is possible that all parties can agree to sit down, look at the document and make some adjustments in the best interest of all.
He pointed that one of the parties to the agreement would experience what he calls “undue lost” if the review of the agreement is not done adequately to make everyone happy.