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How Nigeria’s auto policy turns gain for Cotonou

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With the Federal Government’s auto policy that has increased cost by 70 per cent, Nigerian importers have shifted base to Cotonou Port in the Republic of Benin. The resultant effect is the disappearance of imported used vehicles in Nigerian port and resurgence in Benin. RAY UGOCHUKWU writes.

With the Federal Government’s auto policy that has made imported fairly used vehicles (tokunbo) disappear from the nation’s ports, the neighbouring port of Cotonou, Republic of Benin, is now smiling to the bank with influx of automobiles.

 Grimaldi group revelation

As recently revealed by the Managing Director of Port and Terminal Multiservice Limited (PTML), Mr. Asconio Russo, the volume of vehicles being imported into Nigeria has dropped sharply due to implementation of the policy. He gave this hint when the National President of the Association of Nigerian Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu visited the terminal in Lagos, Russo said the volume of vehicles being imported into the country had reduced by 50 per cent since the introduction of the auto policy.

Drop in import volume

He even feared that it might even get worse when full implementation begins, possibly in April when the 35 per cent levy on vehicles would be implemented.

“I may not want to comment on government policy because it is not my prerogative but I can give you the figures, tell you that the number of vehicles being discharged all over Nigeria – I am not talking about our terminal – but in Nigeria, has dropped 50 per cent.

“So the calculation is if the whole of Lagos was discharging 20,000 or 25,000 vehicles every month, it is like we are now doing 10,000 vehicles and these are the ones coming in RORO (Roll-On Roll-Off). There are also some coming in containers, which have also disappeared”.

Russo added, “We have noticed that the number of vehicles coming into Cotonou has increased dramatically; so we are losing business while Cotonou is gaining business. Everyone can understand what this means and we know that Cotonou’s population has not increase from 10 million people they were.

“This policy is dramatically affecting the port industry and this is affecting the overall population because the prices of vehicles are going up in the market and this is something we see every day”.

Why importers opposed policy

Earlier, Shittu, the ANLCA President had told Russo that his association had always being critical of the auto policy because the implementation would affect the businesses of its members.

“We have always being critical of this automotive policy and we have not changed our position. By the time April comes and the 35 per cent levy is added, it will be a problem because there will be no cargo through here; our people will lose jobs and we will lose the whole revenue.

“How do you recover from the investment you have made so far? It is a very serious matter because how many Nigerians can afford to buy a brand new vehicle in this country? So, when duty on fairly use vehicle is 70 per cent and by December, it will be 100 per cent according to what Minister Aganga mentioned to me, should we shut down the whole port in protest? Will it receive popular acceptance? Will the government not see us as saboteurs because this is pre-election and post-election?” Shittu asked.

“We have to watch it because it will be tough this year and we all know,” he added.

The prices of all vehicles are currently heading to the roof top. The worst hit are   newer models. The prices of fairly used cars in recent time, since July this year, have continued to go up. Importation has equally reduced and so the revenue raised from the trade has also gone down.

Government claims recorded gains

Not too long ago, the Minister of Trade and Industry, Dr. Olusegun Aganga, said that the Federal Government had recorded tremendous achievement in the auto policy which took effect few months ago. Aganga disclosed that the policy had reduced importation of vehicles by 20 per cent.

Like many may know, the reduction, he said, was as a result of the auto policy which is targeted at checking Nigeria’s dependence on imported vehicles. He was quoted saying, “We spend about $6.0 billion annually importing cars.

However, since the introduction of this policy, we have experienced a 20 per cent drop in imported cars and have exceeded expectations in a very short period”. While the minister may be right in saying that the policy is achieving result, the issue at stake is the negative side of the policy on the national economy. Yes, no sane person would encourage his/her country to remain import-dependent since it does not portray growth or development.

Yet, stifling importation of goods which Nigeria does not have the capacity to produce or keep pace with demand, could lead to a rise in their prices. And this is exactly what is happening now.

Loss of revenue

The effect of the auto policy is that the Nigeria Customs Service (NCS) has continued to lose revenue on daily basis.

A ready example is the Tin Can Island port which revenue has since gone down since the auto policy became effective with the 35 per cent duty rate.

The Tin Can Island Customs command had recorded N26 billion respectively for the months of April, May and June, but suffered revenue fall in the months of July, August, September and November. The revenue was N23.4 billion for July, N21 billion for August and N24 billion for September and October 2014 which was N27 billion, apparently because of the Christmas season. But the figure was affected dramatically in November when it fell to N22.3 billion. The overall revenue target for the Customs for 2014 was N1.2 trillion. It generated about N951billion, an indication that the target would have been surpassed comfortably but for the auto policy.

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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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