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How to Start Dredging or Sand Stockpile Business Dr. Edmund Chilaka

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  • How to Start Dredging or Sand Stockpile Business Dr. Edmund Chilaka

Dredging activities in Lagos State has become comparatively friendlier since the All Progressives Congress (APC) gained power at the federal level in Abuja in 2015. Before then, there was a cat-and-mouse relationship between successive Lagos administrations and the Peoples Democratic Party (PDP) governments at the federal level. It was due to this friction that the NIWA law was revoked by the Lagos State House of Assembly in 2007 which paved the way for the promulgation of the Lagos Waterways Agency (LASWA) Act. The court case generated by that action is still pending at the Supreme Court. Nevertheless, that fractious relationship which lasted from the Bola Tinubu era in 1999 all through the Babatunde Fashola tenure in 2015 saw intense persecution of dredging and sand stockpile operators in the state who were using the licenses, permits or cadastral coordinates issued by the Federal Ministry of Mines and Steel Development or the National Inland Waterway Authority (NIWA).
To counterbalance the federal authorities, Lagos State empowered its Ministries of Waterfront Infrastructure Development, Environment, LASWA and the Office of the Special Adviser on Solid Mineral Development to also regulate dredging and sand mining activities. Dredgers were made to obtain annual licenses that cost millions of Naira for Categories A, B, C or D depending on the engine and pumping capacity of their deployed machines. Land for the stockpile business was also separately registered with huge sums of annual fees which varied according to the locations such as Epe, Ajah, Ikorodu, Badagry, Ibeju Lekki, etc. In fact, Lagos State raked in billions of Naira to its official coffers and the superintending officials also became stupendously rich through bribes and opaque payments, some extracted by influence peddling or outright violence. The crux of the matter was that licenses from the federal agencies were not accepted as the only pass by Lagos State agencies; at best, the operator had to pay the multiple agencies. The groans and complaints from hapless operators reached high heavens but respite did not come.
However, since 2015, this situation has changed drastically. There is a respite which can only be explained by the fact that the government in the state is now of the same party with the government at the centre. All the legal commotions have been called to rest and dredging activities are now proceeding with a comparatively somewhat human face.

DDH sought the views of our veteran dredging analyst, consultant and operator, Engr. Kunle Shodipe who has worked for many dredging outfits and managed such concerns in many states of the federation. Excerpts:

DDH: In the previous edition, we discussed the Ogun State sand market, which is a very comfortable area for dredging and sand mining. If somebody wants to come into Lagos to dredge in 2017, with a 10-inch or 16-inch dredger, how would you advise him to go about it?
Kunle: The first thing the person needs is space (land). Then, the next stage after acquiring land is to liaise with the community. After that stage, the next is to go to the Federal Ministries, that is NIWA. Two licenses you will get from NIWA. One, you must make sure the vessel operating permit is up to date. After that, you ask NIWA for a debit note for the site you want to register. You also have to let them know the volume of sand you want to pump, they will bill you accordingly, based on the quantity you applied for. It might interest you to know that NIWA’s tariff has increased in the last few months from N100 to N500 per cubic for stockpiling, and for reclamation it’s N1,000. Once they raise debit note for you, you pay them and start your operations. In order to also encourage investors, NIWA can encourage you to split the payment into two, depending on the strength of the company. For instance, if your bill is N4m, NIWA might say, instead of paying N4m at a go, you can pay N2m and pay the balance later.

DDH: What about Federal Ministry of Mines and Steel Development?
Kunle: After NIWA, the next stage is to go to Solid Minerals [MMSD]. Here, you must first confirm if the place you want to use has been registered at the registry office or if it’s free. Once you are able to confirm that the place is free, you file your papers with them. Solid minerals have no much problem but I think their requirement is much.

DDH: Do you mean in terms of payment?
Kunle: No, the requirements. They will need the consent of the community you are operating in. You must employ a mining engineer, have bank statement, documents to show that you don’t have any criminal records in the past, tax clearance, and company bank account. Your bank will also guarantee you and attest that not less than N1m to N2m runs through that account for the past three months. Solid Minerals [Ministry] is not complex, but they require more and they are straight forward.

DDH: Are these the only two agencies? What about Lagos State Ministry of Waterfront Infrastructure Development?
Kunle: Waterfront [Ministry] belongs to Lagos state and recently they have limited themselves to the haulage aspect of it.

DDH: When you say haulage, does it mean levying the trucks?
Kunle: Yes, levying the trucks that do the haulage, not the dredging site. That’s why I said for Lagos state we don’t have any issue.

DDH: So all those licenses for dredgers, Category A, Category B, and Category C are no more applying?
Kunle: They no longer apply.

DDH: When they move into a site, like your own which is a very big site and well positioned on the road, what kind of visitation do you have? In the last meeting we had, some operators were complaining of multiple taxation. How about now?
Kunle: That is no longer an issue. For the fact that we have dredging companies here, Lagos State still has the right to sanitize the situation. Because we have clusters of dredgers concentrated very close to themselves. Lagos State has the right to say look, this thing is affecting or impacting on our environment, particularly the Ministry of Environment in Lagos state. If the community goes to Lagos state to complain that there is a vast effect as a result of the dredging activities, they have the right to come in but they will go through Solid Minerals before coming to you. They even go to NIWA. The new Lagos state we have now carries the agencies along. In most cases they carry NIWA along before taking decisions so that these agencies will back them up in their actions against you. The last meeting we had with the Minister at Oriental Hotel, one of the Commissioners for Environment in Lagos State stood up and gave an instance that he went to Badagry between Hospital Road and Lagos State Recreational Centre. That he counted 15 dredgers, dredging along that road. He contacted the guys involved and Solid Minerals, and they consented that they are aware. So the Minister said that it was too much for the community, that there has to be space. Similar thing also happened in Addo Road, Ajah, where you have a lot of cluster vessels. I think NIWA took a decisive action by approving between nine and eleven dredgers in the whole of Ajah.

DDH: What happened to the rest of the dredging companies operating there?
Kunle: They had to relocate. Once you are not among the eleven slots, there is a problem if you operate within that area.

DDH: So, what is going to happen on the Badagry case?
Kunle: I think similar decision would be taken where the Agency will approve certain slots and if you don’t fit into the slot, you will relocate.

DDH: In terms of the economy of sand, definitely it’s still very lucrative with the constructions going on.
Kunle: Yes, you will say lucrative. But the issues here are the market. Here we are struggling to get market for them. Also, the painful aspect is the price. Like every other commodity, diesel went up, other things went up. But sand, instead of going up, it started crashing. What we are selling sand today is what we have been selling in the past four years. We sold here as at 2014 for N13,000 for 10 tons and today it’s still the same price. In fact, in some cases people are selling for N12,000 despite the fact that all the complete cost of production has gone up. Solid Minerals tariff and everything has gone up, the cost of dues, instead of N100, it’s now N500. That’s why I said, the investors are not finding this funny at all. And now NIWA and Solid Minerals are insisting that we should do the right thing, that’s the least they expect us to do. Because in the past, we do not pay dues, very few of us pay dues. Now they are insisting that we pay our dues and on the process, a lot of money is involved trying to perfect your documentations.

DDH: The issue of Chinese people taking part in dredging activities is not very palatable because they exploit the use of Nigerians.
Kunle: That aspect of Chinese participation in dredging activities and in the process depriving locals of jobs opportunities, I think that can better and best be handle by Nigerian Immigration Services. I don’t see why any Chinese should have any business being a dredge master in Nigeria when we have competent Nigerians who can do this job at cheaper cost.

DDH: During the seminar held by the Ministry of Waterfront in January 2016 at Alausa, they mentioned the issue of the quantity of sand demolishing in Lagos. You are a practitioner, you know a lot of these things. Can you attest to that?
Kunle: Well, technically what I will say has happened is this. By nature, a dredging company goes to a virgin land and wants to operate within the first 200m and 500m to the shoreline, that’s natural to a practitioner. But as soon as they exhaust that, they want to go to 700m. It is very rare for them to go to 700m. They will operate all the coastlines 500m and below to even 100 meters and 50 meters in some cases. By the time they exhaust that area, they will start saying that there is no sand in that vicinity. Whereas ideally, what you should do is to get additional pipelines depending on the capacity of your dredger. On the average, a 12-inch dredger should be able to do 1km and above to get to the limit and there is still sand in that vicinity. But it will not be fair to use that to judge the quantity of sand in that vicinity.

DDH: Generally, will you say the industry is improving from last year? Last year seemed very hard..
Kunle: If you talk about the industry, in Lagos I will say it’s generally been sanitized. As it’s being sanitized now, proper dredging activities are taking place. That will solve most of the problems. It depends on the area you are but generally economy-wise everywhere, Lagos is picking up as against last year in the economy. The first indication that the economy is better is from constructions. Construction reflects on dredging companies.

DDH: The trucks moving around, who are they supplying?
Kunle: Most of these trucks you see moving around are supplying individuals that are constructing their houses or casting blocks. Because most of the products going out are sharp sands and is basically for constructions of houses and casting of blocks and not for major works like constructions of roads.

DDH: How is host community issues handled here? You were saying that after you secure the land, there is a process of negotiation with the community?
Kunle: When you get your land, the community has what we call a dredging committee, you meet with them and come to a compromise, which will allow you to have access to their waterways. The committee tells you that the sand you are mining is their own natural resources, as such they will agree with you on what to pay. It’s not uniform. This community, Oto Awori, since my years of working with them will never come to disturb your operations. Well, occasionally, you may have some elements coming in, that’s normal. Like any other community, you could give them N2,000.00, N2,500.00, the boys will be there to assist you. But as a community, they will not come to disturb you.

DDH: Do they have the available land for dredging activities?
Kunle: Yes, they have but the issue may be accessibility [by vehicles].

DDH: That means you may have to do your own road?
Kunle: You may have to dredge your site, but if the dredger is sound, that is not a problem.

DDH: On the issue of EIA, many regulatory organizations now require it as part of your documentation. What has changed in the way of its presentation or packaging?
Kunle: Previously nobody cared about it in the process of documentation, but Lagos State has started emphasizing on it. NIWA and Solid Minerals now agreed with them and said as part of the system, before we register anybody under us, we will insist on EIA to ensure that since it is a requirement in Lagos State, everybody is properly documented. That is why I said that these days the dredge owners are properly prepared.

DDH: But we understand that it has to be in a certain way to be acceptable, is this true?
Kunle: No. Lagos State has a list of companies that do EIA, the Ministry of Environment. Those are the ones that are accredited.

DDH: So, if you do your own with any other persons…
Kunle: You can still do your own provided the person is acceptable to them. If Solid Minerals accept him why would Lagos State not accept that person? If Lagos State accepts him or NIWA accepts him, of course. The thing I know about Lagos State is this, when you submit your EIA, they have team that reviews it. Of course if they see faults in it, they will point it out to the guy who wrote it and ask him to amend it. I remember years back, I used to witness their interactions with the person who did our EIAs. They will bring it back to him, he will amend it and go back and forth, sometimes, two or three runs until finally they will approve it.

DDH: On the average, how much money can somebody spend to do EIA?
Kunle: Now, it costs millions…

DDH: That will put some people off from the business..
Kunle: That’s the point we are making. Some people think we making huge money but considering the costs and the competition involved, you have to pay this agency and that, you have to comply with this and that, the income is not that staggering.

DDH: So, for Lagos State now, there’s a harmonious environment, no more quarrels between the agencies?
Kunle: No, they work side by side. It’s like they also have their own periodic meetings.