HB 51: National Transport Commission Bill, 2015

Bill Analysis:

SHORT TITLE

National Transport Commission Bill, 2015

OBJECTIVES OF THE BILL

The objectives of the Bill are as follows: -

• To establish the National Transport Commission as an effective, impartial and independent regulatory authority in the transport sector and to set out the objectives, functions and powers of the Commission;
• To promote the implementation of the national transport policy;
• To provide an economic regulatory framework for the transport sector or regulated transport industry;
• To provide mechanism for monitoring compliance of government agencies and transport operators in the regulated transport industry with relevant legislation and advice Government on matters relating to economic regulation of regulated transport industry;
• To provide for an efficient economic regulation of the transport sector;
• To protect the rights and interests of service operators and users within Nigeria;
• To create an enabling environment for private sector participation in the provision of services in the transport sector. 

NUMBER OF CLAUSES/PARTS

The Bill has 18 parts and 102 clauses, including the interpretation Clause

APPLICATION OF THE BILL

The Bill shall apply to the use and operation of transport and related services in marine/water, rail and road in Nigeria. 

CONTENTS

The Bill has the following contents: -

• Establishment of the National Transport Commission, Functions and powers;
• Membership of the Commission, Management and staff of the Commission;
• Establishment of the “Fund of the Commission” (The Fund), Regulation of Tariffs, Registration and Access
• The Commission’s Regulatory Powers
• Investigative and Entry Powers of the Commission
• Power to obtain and use information
• Dispute resolution, and Decisions’ review
• Access to Register by the Public, Undertakings

IMPLICATIONS OF THE BILL

1. Establishment of the National Transport Commission: -

The Bill proposes an independent multi-sector transport industry economic regulator under Clause 4 to be known as the National Transport Commission (The Commission). The Commission shall create an economic regulatory framework for the provision of transport services and facilities; facilitate effective competition, promote competitive market conduct and ensure that the misuse of monopoly or non-transitory market power is prevented in the provision of transport services.

The Commission shall also monitor the performance of the regulated sector (Clause 5(e)). With all the listed functions, the regulation of the management and performance of all modes of transportation in Nigeria shall be the duty of the Commission.

   2.   Power to Declare a Regulated Transport Industry: -

The Minister of Transport may order on the advice of the Commission an industry to be a regulated transport industry after having regard to the existence of regulatory benefits to the Nigerian public and any other relevant consideration. The order may declare which services or/and prices are to be prescribed in respect of a regulated transport industry. This power to declare a transport industry as regulated is set to check any significant and non-transitory market power.

3.     Powers of the Commission: -

Under Clause 6, the Commission shall exercise several powers in the performance of its functions. These powers include:

• Implementing government’s economic regulatory policies on transport
• Protect the interest of users of transport services by ensuring that prices are fair and reasonable;
• Examine and resolve complaints, objections and disputes referred to it;
• Register all transport service providers and determine fees and many more.

In effect, all regulated transport service providers must be registered with the Commission for a fee to be determined by the Commission.

4.    Purpose of Regulation: -

Clause 7 states that the purpose of regulation is to ensure that the economic regulatory and decision making processes of the Commission and prescribed agencies are closely integrated and better informed, and that overlaps/conflicts between the regulatory schemes are avoided. Where required, the Commission would consult with any relevant agency as it may deem fit in preparing or reviewing a regulatory practice; likewise, an agency may consult with the Commission in respect to any matter specified by the Commission, which may impact it.

The relationship between the Commission as the regulator on one hand and the regulated agencies on the other, require consultative processes to work efficiently.

5.     Relationship of the Minister and the Commission: -

Clause 8 establishes that the Minister shall convey in writing any general policy direction of the government for the transport sector to the Commission. In so doing, the Minister shall at all times ensure the independence of the Commission with regards to the discharge of its regulatory function is protected. Prior to the formulation or review of any policy, the Minister is required under Clause 8(3) to consult with relevant stakeholders in the relevant sector. Ensuring the independence of the Commission is a blanket provision, which begs for objective interpretation as to how the Minister would ensure the Commission’s independence. However, the Clause requires that the standards of the Commission should not be compromised.

6.     Membership of the Commission: –

Under Clause 10, the members of the Commission shall be persons of recognized expert knowledge, qualification and experience in ports/railway administration, maritime transport, road transport, engineering, finance, law, transport economics and regulatory matters. The President on the recommendation of the Minister of Transport shall appoint all members of the Commission. The power to recommend all the members of the Commission by the Minister could be considered excessive given that the minister is a political appointee and may arbitrarily select his party member or persons who will serve his interest. The Bill needs to include other steps that the candidate would need to go through for through screening to ensure transparency and non-partisanship. Clause 10(3) provides that the conflict of interest provisions contained in the second schedule of the Bill shall apply to all members of the Commission.

7.    Resignation of a Member: -

The Bill provides under Clause 13 that a member is required to give a resignation notice of 3 (three) months to the President through the Minister. This time may be too long depending on whether the member needs to assume office at a different agency or if the member feels that being part of the Commission constitutes a conflict of interest.

8.    Member Removal or Suspension: -

A member of the Commission may be removed or suspended by the President if they are inefficient, guilty of serious misconduct, in breach of conflict or interest or unqualified to be a member. This means that only the President can suspend or remove a member and for only the reasons stated in Clause 14(1)(a) – (f).

9.     Establishment of the Commission’s Fund (the Fund): -

The Bill provides in Clause 19 that the Commission shall establish and maintain a Fund (the Fund), which shall comprise of the Commission’s initial subvention from the appropriation Act; a proportion of proceeds collected by authority empowered to collect royalty from transport service operators not exceeding 0.25% of what is collected from operators, concessionaires, leases, licenses etc.; all charges and levies collected by the Commission; Registration fees; grants, loans or gifts; and all other assets that may from time to time accrue to the Commission.

The clarity of the proportion of proceeds may be in doubt as any percentage not exceeding 0.25% (which is a quarter) could go to the Fund at any given time. No guidelines were stated in the Bill that would be the determinant factors as to how the actual percentage that would go to the Fund at any given time would be calculated. The phrase “a proportion not exceeding 0.25%” is vague and needs to be clarified.

10.    Application of Surplus Revenue: -

Under Clause 20, any excess of the Commission’s revenue over its approved outgoings and charges for the year shall be remitted to the Consolidated Revenue Fund. This would be an avenue to increase the earnings of the Federal government; therefore the management of the monies that accrue to the Fund shall be crucial to the Commission earning revenue for the Federal government.

11.    Borrowing Power of the Commission: -

The Commission shall have the power to borrow from the government from time to time with the authority given by the Minister of Finance. Though a repayment process is not stated in the Bill but since the authority of the Minister of Finance is required for the borrowing to happen, repayment plans might be on a case-by-case basis.

12.    Budgeting and Reporting: -

The Commission shall prepare and submit not later than September 30 in each financial year the budget to the Minister of Finance, showing the expenditure, which the Commission proposes to incur in respect of the succeeding financial year. The Commission shall prepare and submit to the President through the Minister of Transport not later than 6 months after the end of the financial year, the Commission’s audited accounts with the auditor’s report. These processes act as the checks for the Commission.  

13.    Regulation of Tariffs: -

The Commission shall have the power to regulate tariffs for or in respect of prescribed goods and services supplied by or within a regulated transport industry. In making a tariff determination, where necessary, the Commission shall adopt an approach and methodology to meet the objectives specified in the Bill. In determining tariff, the procedure may include specifying an amount by reference to a general tariff index, cost of production, a rate of return on assets employed or any other specified factor.

14.    Approval of Tariffs/Charges with the Commission: -

All regulated transport service operators shall file their tariffs or range of tariffs with the Commission and shall provide services only at the rate approved by the Commission. Service operators shall charge no extra charges or tariffs without prior approval by the Commission. These tariffs or charges shall approved by the Commission shall be published from time to time by the Commission.

Notwithstanding however, the Commission may intervene in such a manner as it deems appropriate in determining and the setting tariff rates for any non-competitive services provided by any transport service provider for reasons of national interest or other related matters as provided in the Bill. Regulation of rates has a key advantage for consumers or users of the services such that the service operators would not charge arbitrarily and the prices would fall in the same range across board.

The Bill did not specify whether there could be exceptional circumstances, for instance during commodity scarcity like petrol or diesel and transport operators have to procure at higher prices. The Commission needs to prescribe an emergency or contingency plan to cushion the effects of commodity scarcity on both the consumer/user and operator.

15.    Penalty for Unauthorized Tariffs: -

In order to enforce the approved charges or tariffs, the Commission shall prescribe appropriate penalties on any transport service provider who violates the duly approved rates or tariffs for the provision of any of its services. The nature of the penalty specified was not clearly stated under Clause 30 of the Bill. This gap leaves the penalty open for interpretation by the Commission, and if the penalty would vary on a case-by-case basis, the parameter to be used to determine the penalty should be stated.

16.    Registration: -

No person shall operate a transport facility or provide transport service in a regulated sector unless the person is a holder of a Registration Certificate granted by the Commission (Clause 31). In other words, operating a transport service without a certificate shall be illegal and punishable under this Bill

17.    Penalty for Non-Registration: -

Any operator or transport service provider who does not register with the Commission and obtain a certificate, shall on conviction be liable to a penalty not less than ten times the relevant fee payable to the Commission in the first instance or a fine not exceeding ten times the initial fee for the relevant registration (Clause 31(4))

18.   Wait Period for Registration Certificate: -

The Bill provides under Clause 32(5) that within 6 (six) weeks after receiving an application in accordance with the provisions of the Bill, the Commission shall issue a Registration Certificate or refuse to issue a Certificate giving written reasons for such refusal.

19.     Recommendation from Government Agency: -

The Commission shall prior to the grant of registration under the Bill, refer the application to and obtain written recommendation on such application from the relevant government agency. It shall be the duty of the Commission to ascertain that the guidelines and criteria for evaluation and selection issued by the relevant government agency has been strictly complied with. The guidelines for granting registration certificates shall be issued from time to time by the Commission.

20.   Access to Facility: -

Every operator or transport service provider shall subject to registration provide access to a significant infrastructure facility on fair and reasonable terms and conditions. Before determining whether a facility is significant for open access, the Commission shall ensure that several criteria under Clause 35(2)(a) – (f) are met. Failure to meet relevant criteria as required by the Commission may cause refusal of open access to that facility.

Any person, who is aggrieved by the terms or criteria to be considered for granting a facility open access, shall have to appeal to the Commission stating their grievance. The Commission will consider the appeal in accordance with its extant regulations on appeals. An aggrieved person may question the impartiality of this consideration by the Commission as its criteria disqualified an operator’s facility from being granted an open access, and it will have to consider an appeal against its own decision. However, this may create an opportunity for the operator to make a representation again for consideration.

21.   Provision and Determination of Access: -

Subject to exemptions as may be determined and published by the Commission, an operator shall provide access to a significant infrastructure facility on fair and reasonable terms and conditions. The terms and conditions may vary according to the actual and opportunity costs to the operator.

If an operator has not made a formal proposal in accordance with the provisions of this Bill, the person seeking access may apply in writing to the Commission for the making of a determination in accordance with the provision of this Bill when passed into law. The Commission shall within 14 days after receiving the application give notice in writing to the applicant on any required information. The Commission shall specify a reasonable time for which the information shall be provided. The Bill did not define “reasonable time” in this context and leaves it open for interpretation. The Commission may determine what amount of time is reasonable.

The Commission shall determine an application within 21 days after receiving the application. Where the Commission is unable to determine an application within this time, it shall extend the time to 30 days. For an extension of time, the Commission usually notifies the applicant and the operator.

22.   Refusal of Determination of Access: -

The Commission may refuse to make a determination if it considers that an application lacks merit. A person, who is aggrieved by a decision of the Commission to refuse to make a determination, may appeal to the Federal High Court. The cost of the Commission in making a determination is to be borne by the non-prevailing party.

23.    Hindering Access: -

An operator or any person having access to a significant infrastructure facility shall not engage in any conduct having the purpose of hindering access by any other person in the reasonable exercise of a right of access (Clause 31(1)).

A person who considers that their right of access has been hindered by an operator in contravention to Clause 31(1) may apply in writing to the Commission for making a determination in accordance with the provisions of this Bill (when passed into law).

24.   Significant Infrastructure Facility: -

The Commission shall conduct an enquiry under Clause 40(1) of the Bill every 5 years commencing from when this Bill becomes law, to make a determination on whether a facility declared to be a significant infrastructure facility has ceased to be such. A facility ceases to be a significant infrastructure facility if it fails to meet the criteria listed under Clause 40(2)(a) – (f)

25.    Dispute Resolution: -

The Commission may require a person who is a party to a dispute to refrain or desist from doing any of the actions listed under Clause 42(1)(a) – (e). A person without lawful excuse fails to comply with requirement prescribed by the Commission commits an offence and is liable on conviction to a fine of not less than N300,000.00

26.   Application for Deregistration: -

Any person or operator may apply for deregistration to the Commission in writing. The Commission shall consider the applicant’s financial standing to determine whether they are indebted to the Commission. In the event that the applicant is indebted to the Commission in any way, it shall recover the debt by either confiscating property or recovering money owed. Where the applicant does not owe, the Commission shall proceed to deregister the person.

The Commission shall deregister unconditionally, any person or operator who dies, goes bankrupt, fails to pay penalty for more than 60 days or is winding up. In the interest of public policy, a person or operator may be deregistered also.

27.    Powers of the Commission: -

The Commission shall be vested with such powers as contained in the Bill –

• Power of oversight – The Commission may make determination for or with respect to registration, market conduct and other economic regulatory matters as may be conferred on it;
• Power of Monitoring and Reporting – The Commission shall monitor all matters relating to the performance and compliance of all transport service operators and publish reports at the end of each financial year;
• Power on Competition Matters – The Commission shall have competence in relation to regulated industry, to determine, pronounce upon, administer, monitor and enforce compliance of all persons with competition laws and regulations. The Commission may publish guidelines and regulations on the determination of dominant position for transport service operators.
• Authorization of Specific Conduct – The Commission may authorize a conduct, which may be construed to have the effect to substantially lessen competition, if it is satisfied that it would be in the national interest to do so.
• Issuance of Directives – The Commission may from time to time issue directives or orders in writing to any person regarding the compliance or non-compliance with the provisions of the Bill when passed into law. The Bill requires that the Commission gives a person a written notice of its directive or order not later than 30 days from the date the decision was made.
• Conduct of Enquiry – The Commission may hold public enquiry on any matter of a general nature in relation to the administration of this Bill when passed into law. The Commission shall announce this public enquiry on a national daily, and on the Internet. The Commission may also conduct the enquiry privately if the issue is of confidential nature or commercially sensitive nature (Clause 60). The Commission shall publish the report of any enquiry it conducts within 45 days after conclusion of the enquiry (Clause 61).
• Investigation and Entry – The Commission shall investigate any matter pertaining to the administration of the Bill when passed into law if there is an infringement, civil or criminal, of the provisions of this Bill. Where a complaint brought before the Commission is investigated, the parties involved shall be notified of the decision within 60 days from the date of complaint receipt.

The Commission may in writing, authorize any of its officials to enter the premises of operators in exercise of the powers of monitoring and enforcement in accordance with the provisions of the Bill. To enter the premises of any operator or person, the Commission shall obtain a court warrant.

• Collection and Use of Information – The Commission may by written notice to an operator or person subject to the provisions of the Bill, request for any document or account records within a specified time frame, in the manner specified in the request.
• Settlement of Dispute – The Commission shall have powers to resolve disputes regarding any matter under the Bill, and shall make a determination, which it shall provide to the parties to the dispute. The costs of the Commission will be borne by the non-prevailing party.
• Power to make Regulations and Guidelines – The Commission may make and publish regulations and guidelines in respect of any matter or thing required or permitted under the Bill

28.    Failure to Comply with Directives: -

A person who fails to comply with a directive of the Commission shall be liable to a penalty not exceeding N20 million and to a further penalty not exceeding N200,000 for each day of contravention after the directive or order is issued.

29.    Failure to Disclose: -

A person who fails to disclose any relevant information requested by the Commission or omits any part commits an offence under Clause 68(1) and shall be liable on conviction to a fine of not less than N500,000. Where a false or misleading information is provided, the person on conviction is liable to a term not exceeding 1-year imprisonment or not less than N500,000 for an individual, or N1.5m for a company/corporate entity.

30.    Registration and Undertakings: -

Under Clause 85(1), a party to an agreement subject to the provisions of the Bill (when passed into law) shall apply to the Commission for registration of the Agreement, if required. The Commission shall maintain a register of all agreements required to be registered as provided by the Bill (when passed into law). A person may provide an undertaking to the Commission for the any matter for which the Bill provides for. Any undertaking provided to the Commission in this circumstance is deemed duly registered.

31.    Regulation Relating to Agreements: -

The Commission may make regulations or rules in respect of agreements between private sector transport service operators on one hand and between the government and private sector operators on the other hand. The Commission shall only make rules regulating these agreements, which are intended to mitigate or prevent any misconduct by the parties or misuse of market power in any respect.

32.     Right to Judicial review: -

An aggrieved person has the right to apply to the Court for a judicial review of the Commission’s decision, which shall remain binding until expressly reversed by an Order of the Court. The “Court” is interpreted in the Bill as a Court of competent jurisdiction, which could mean a State High Court or Federal High Court or which ever Court at the time of application is deemed to have jurisdiction.

33.     Personal Liability: -

A Commissioner or employee or member of a committee or a delegated authority derived from this Bill shall not be personally liable for anything done in good faith (Clause 94) in the performance their duties.

34.     Role of National Council on Privatization: -

The National Council on Privatization shall in consultation with the Ministry of Transport not later than 3 months after this Bill is passed into law, take necessary steps to bring into being the institutional structures of the Commission

35.   Jurisdiction: -

The Bill did not expressly mention any court of competent jurisdiction, however Clause 96 requires the Commission to apply to the Federal High Court for an injunction or declaration or both in respect of an order or direction served by the Commission under this Bill.

ANY SIMILAR EXISTING BILL

The Bill is similar to the National Transport Commission Act, 2001 (Establishment, etc.) Bill 2016 (SB 242) sponsored by Senator Andy Uba

CONCLUDING ISSUES

The National Transport Commission Bill aims to regulate the use and operation of transport and related services in marine/water, rail and road in Nigeria. The Bill is all encompassing in terms of the functions and operation of the Commission as the ‘regulator’.

However, any intending service operator or person may note that the Commission has the duty to advise the Minister to order an industry to become a ‘regulated transport industry’, and would impose the services that this industry has to provide and the fees it has to charge (Clause 3).

The Bill is also silent on which court has jurisdiction at first instance, although the Federal High Court can hear the appeal of an aggrieved person in a matter where a decision made by the Commission is unfavorable to them (Clause 38(9)). The Bill further stipulates that the cost incurred by the Commission in making such determination shall be borne by the non-prevailing party, which is the party decided against in the matter.

Regulation of industries in the transport sector is a welcome development, especially with the economic impasse that Nigeria is passing through; and it can provide a stable business environment for the private sector to invest in transportation. Bills that have the potential of attracting businesses that could stimulate the economy of Nigeria need the speedy attention of the National Assembly and the National Transport Commission Bill is one of them.

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