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FOR BUHARI, THERE ‘LL BE NO HONEYMOON – AKABOGU

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… OTL Downstream Chairman sets agenda for President-Elect on Subsidy and Surviving on $40 Petroleum Oil

Seasoned Maritime lawyer, Emeka Akabogu has tasked the President -elect, Gen. Muhammadu Buhari to de-emphasize attention on proceeds from crude oil, in his march towards revitalizing the nation’s economy, even as he stressed that much can still be achieved in terms of national goals, with oil, even at $40 to the barrel. 

Gen. Muhammadu Buhari

Gen. Muhammadu Buhari

Akabogu who is also the Chairman, OTL Africa Downstream made the observation in a congratulatory message to Buhari, noting that for the in-coming President, “there’ll be no honeymoon”, as work begins in earnest, even before May 29, 2015.

“His work does not start on 29 May, but immediately. He has barely six weeks within which to put a formidable team together and hit the ground running on inauguration. One thing is clear: for the President-Elect, there’ll be no honeymoon”, observed the highly revered industry analyst, highlighting of a country’s haemorrhage from subsidy payment, which he maintained could only be sustained at the expense of long-term economic ruin.

“I’d like to highlight some important issues and steps relating to the economy which will be useful for him to ponder as he readies for work, and I’ll limit myself to the sectors within which I work – maritime and petroleum.

“Global crude oil prices are down and have inevitably affected the Nigerian economy, so I won’t dwell on the obvious. How do we cope with that while revitalising the economy that depends on oil money? The truth on this is twofold: (1) with effective cost-cutting and prudent management, we’ll discover that even at $40 to the barrel, we still have enough to achieve reasonable national goals; (2) despite (1), we really don’t have to depend on oil money. At least not as singularly as we have over the last four decades. 

“With respect to cost-cutting, we simply have to think back to realise that we were enjoying a relative oil boom exactly 10 years ago at prices similar to what we have now. In April of 2005, oil traded at a ‘record-high’ of $47 per barrel. Adjusted for inflation (using data from inflationdata.com), the price of oil in 2005 would be the same as oil trading for $60 today.

“It is instructive that at the 2005 price of oil, we were able to significantly grow the external reserves and exit the ‘Paris Club’, becoming debt-free in one fell swoop. By parity of reasoning, at today’s $50 per barrel we should be able to reasonably run the country with change to spare. We simply have to cut the added costs we have racked up over the years as a result of additional disposable income. Add to that, prudence in expenditure to ensure that commensurate value is received for money spent on projects and services, and the President-Elect will discover that he can indeed work his own little miracles.

” There must be conscious load-shedding and cut-back on operating costs in the Nigerian oil industry, while increasing capital expenditure. The country’s production volumes should be maximised, and here the President-Elect will have to deploy all the skills at his disposal to ensure that production is not shut-in as a result of renewed agitation in the Niger Delta. 

“On the downstream side, the country’s continued haemorrhage from subsidy payment can only be sustained at the expense of long-term h. A two-fold solution is crucial: (1) scrapping of subsidies; and (2) support for local refining. 

“The Petroleum Support Fund Scheme must now be scrapped, and subsidy completely done away with. For a government that has come to power on the crest of the popular vote, that will be a difficult call, but it is the only sustainable call to make. As long as the country continues importing petroleum products, savings on low oil prices will be of insignificant impact given the decreased value of the naira brought on by the imports.  

“The patronage driven allocation of import quotas also discourages creativity and value addition in the downstream petroleum chain, thereby suffocating a considerable swathe of economic and job opportunities. Strategic and prudent deployment of subsidy savings could have massive knock-on impact on critical infrastructure services like high-speed rail and inland navigation. 

“Development of local refining, leading to a significant reduction in imports will see the naira shoring up against the dollar. The idea promoted by some global refining interests that refining projects in Africa are uneconomical is not supported by current supply and demand realities in West Africa. But government should neither build nor manage the refineries, as that festers corruption and feeds a system of patronage, ultimately resulting in products unavailability, lack of competition and total supply inefficiency.

” On the contrary, refineries can be built on BOT or BOOT terms with government’s stake limited to feedstock guarantees. Investors will run and manage the refineries commercially. Every support which can be given to the current Dangote Refinery project to commence production in the quickest possible time should be given, even as a broader template for refining support is being developed. 

“The import substitution proposed for petroleum products will have to be replicated in all other areas, if GMB’s dreams of naira-dollar parity is to be given serious attention. In the circumstances, he will do well to see through the power sector reform as it is inextricably tied to import substitution. Finally, the President-Elect must find a way to remedy and address the most spectacular petroleum industry failing of both the legislature and executive over the last eight years – the PIB. Here, the task is simple – get it enacted.

“Despite the foregoing analysis, we still don’t have to depend on oil money, and here my focus is on the maritime industry. Broadly, the President-Elect has to cast his eyes on the quantum economic impact of (1) competitive port operations and procedures; and (2) promotion of key local shipping and maritime services. 

“The first is easily achievable by strategic leadership through executive actions, regulatory compliance and tidying outstanding legislative frameworks. The result can be instant – increase of port service levels, fast-tracking of import procedures, huge savings on foreign exchange otherwise wasted on service inefficiency, new jobs within the import/export logistics chain and drastic improvement in the country’s ease-of-doing-business rating.

” The impact of these will be immediately reflected in the entire economy. The second directly puts foreign exchange in the hands of Nigerians and creates millions of multiplier jobs”, he explained further, before zeroing in on the peculiar area of maritime.

“Maritime and shipping services in Nigeria are currently 85 percent outsourced out of the country, despite strong existing local capacity and a ready captive market. The President-Elect must reverse this by encouraging compliance with existing maritime laws and leading the line to encourage local investment. 

“The role of government for economic development is to set agenda for governance through policy, and ensure attainment of set goals through effective regulation and implementation. The President-Elect has the opportunity to lead a new economy anchored on value and wealth creation for all Nigerians. Here’s wishing him and his team strength and Godspeed”, the maritime guru concluded.

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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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