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Economic Recession Takes Toll on Maritime, as Sector Suffers 51% Decline in Revenue

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Maritime

The current economic recession officially confirmed recently has taken a big toll on the nation’s maritime industry with the sector suffering 51 percent decline in revenue.

This indication was given last week when the Director-General of the Nigerian Maritime Administration and Safety Agency, NIMASA, Dr. Dakuku Peterside met with members of the League of Maritime Editors and Publishers in his office.

Peterside said specifically that NIMASA’s revenue was 51 percent down, a situation attributed to the hard economic times facing country.

Although the DG did not give further elaboration on how the economic recession has affected the agency’s revenue, he gave a clear indication that the economic recession did not spare the sector adjudged as next to oil in terms of revenue generation to the national economy.

However, Peterside attributed the economic recession to the way things were done in the past, adding that the effect was beginning to show on the economy.

“We were living in borrowed times and resources in the past, now we are beginning to face the stark reality”, he said, adding that this situation would take time to adjust.

Peterside however assured that despite the hard times, the management team of NIMASA would do everything within their powers to ensure that the core functions of the agency do not suffer.

Noting the 51 percent revenue drop as part of the challenges facing NIMASA, Peterside however said that the agency was deeply committed to make the industry “transparent, accountable and responsible”.

“That is our core key role in the industry and like I said when we were chatting, we are facilitators of growth and business in the industry. Ours is not just to rake in money for the government. Our is to play our role in such a way that it creates employment for people… we facilitate trade so that there will be exchange of wealth, goods and services. That is our role and we are not taking it lightly. We are very committed to that role. We are very passionate about that role. So we enjoing you to collaborate with us in trying to reposition the maritime industry in Nigeria”, he told executive members of the League.
With 51 percent fall in the revenue of NIMASA, it is also believed that every other agency of government in the maritime sector would also suffer the same shortfall in income.

This is considering that NIMASA’s revenue is calculated on the number of vessels that calls at the nation’s ports or territorial waters from which it collects three percent levy.
Similarly, how much revenue that other agencies of government earn each year depends on both ship and cargo traffic.

As at June this year, the Nigeria Customs Service, NCS, which set a target of N1trillion had announced only NN385.7 bn, a clear indication that other agencies of government would also have been affected by the economic situation.

Incidentally, the Minister of Transportation , Hon. Rotimi Amaechi, had given both Nigerian Ports Authority, NPA and NIMASA a revenue target of N5 OObn each this year, a target many believe will not be met from every indication.

The issue in the maritime sector is that due to the FOREX crises many importers have dropped out of business, particularly those under the 41-item list which the Central Bank of Nigeria, CBN, has denied official forex allocation.

Many of the importers in a bid to remain in business have had to patronize the black market which rate is always too high, one of the reasons why there is high cost of goods in the market.

Even the importers of raw materials who are guaranteed forex are not left out because of the falling value of the Naira to a Dollar.

The President of League of Maritime Editors and Publishers, Mr Ovie Edomi had led the executive members of the association to a courtesy visit to NIMASA last week.

Edomi had during the visit noted that the DG had started well since he assumed office, and hoped that he would take the industry to high heights by improving on what he met on the ground in the agency and the sector.

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

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…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

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The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured

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…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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