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Nigerian Shipping Companies face risk of gradual extinction

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One aspect of history which Nigeria and many other countries will not forget in a hurry is colonialism, the product of trans-continental trade.

The trade ushered in the use of merchant shipping and the bulk movement of people and materials in large vessels over long nautical distance, usually across continents.

During this period, merchant shipping was an exclusive preserve of the colonial masters and their allies, and as expected, nations ceremony suffered from the near zero impact to the Gross Domestic Product (GDP) as the benefits of import and exports handing went to the foreigners.

Nigeria, like many other countries in the West African sub-region could not participate in the lucrative business of merchant shipping and the trans continental trade even when she accounted for about 60 per cent of total shipment from the west coast of Africa to European countries.

By 1958, the revenue loss to the country by the non-participation in the shipping business became so appalling that a motion was passed by the then Federal House of Representatives urging the government to take urgent steps to redress the situation.

In 1959, the then Minister of Transport, Mr. R.A. Njoku announced to the House, the incorporation of the Nigerian National Shipping line (NNSL), which took off later with four second- hand ocean going vessels.

Despite the establishment of the National Carrier, the dominance of developed Nations in the shipping industry of developing nations continued, with the former amassing expertise and mounting barriers to discourage new entrants into the lucrative shipping business.

Irked by this state of affairs, developing countries came together and by 1965, they formed a pressure group under the auspices of the United Nations to create what is known today as the United Nations Conference for Trade and Development (UNCTAD). Under UNCTAD, these countries were able to formulate strategies to break the monopoly of international shipping business through a cargo lifting policy later known as UNCTAD 40, 40, 20 in 1994. The policy was aimed at reserving 40 per cent of cargo through-put of nations to indigenous shipping lines.

It was the UNCTAD lifting policy that gave birth to Nigeria Shippers Council in 1978 and the National Maritime Authority in 1987, although it has since changed name to Nigeria Maritime Administration and Safety Agency (NIMASA). The two bodies were put in place then to implement the nation’s shipping policy in line with UNCTAD’S decisions.

This development set the stage clearly for Nigeria’s increased participation in Merchant Shipping activities and between 1980 and 1997, there was an emer-gence of seven indigenous shipping lines that served as National Carriers. These companies, including the NNSL had a total of about 39 vessels.

While the Nigerian Shippers council was estab-lished to create a balance of interest between providers and consumers of shipping services so as to shield Nigerian Shippers from the exploitative tendencies of the shipping companies, NIMASA was established primarily to promote the growth and development of indigenous shipping, although it has regulatory role as its secondary function.

Since 1997, there has been steady decline in ship acquisition by the Nigerian Shipping lines. The NNSL which alone had 27 vessels in its fleet became liqui-dated and the Nigerian Unity line which replaced it had only one vessel which was later sold as scrap.

Although by the year 2000, a total of 122 registered shipping companies were in Nigeria, they depended mostly on chartered vessels to carry their own share of UNCTAD cargoes. Many of them, however, were mere portfolio firms that depended on the sales of cargo allocation papers to foreign carriers to remain in business.

The No 4 Burma Road of the present NIMASA headquarters then was a beehive of business activi-ties as cargo allocation papers exchanged hands freely for millions of dollars. This trend continued until the former Minister of Transport, Dr. Kema Chikwe abol-ished the cargo sharing policy and this made nearly all the shipping companies to close shop.

Today Nigeria can no longer carry even 1 per cent of her UNCTAD approved 40 per cent of cargoes and this has impacted negatively on nations economy.

The last official research carried out to determine the economic implication or the regrettable trend to Nigeria was in 1996 when Nigeria paid a total of $6.2 billion to foreign shipping operators for the lifting of crude oil going by the assumption that the country pro-duced 1.7 million barrels per day or 229,779 tons per day at a freight rate of $90 per tons for 300 days of op-erations. Apart from revenue loss, there was losses in term of employment opportunities with the attendant social problems.

The economic implication of foreign dominance in the shipping sector will be better appreciated if we compare merchant shipping in Nigeria to that of Singapore, an equally maritime nation. The country had the same pre-degree with Nigeria in term of shipping.

Today, Singapore with a population of 3 million people now has over 100 merchant vessels in her national fleet and about 30 shipping lines.

In the past, precisely in 1979, the Federal Govern-ment, through the then National Maritime Agency, intervened to rescue the indigenous shipping companies from going underground. It then established a Ship Acquisition and Ship Building Fund (SASBF), which the Nigerian ship owners assessed to the tune of over $100 million. But many of the beneficiaries refused to pay back and government failed in its attempt to build the needed capacity among the ship owners.

In 2003, when the nations inland and coastal shipping law, also known as cabotage law, was enacted, the country established a Cabotage Vessels Financing Fund, into which a percentage of contract sum executed by vessels operating in the country’s inland water is being deposited after collection by NIMASA. The fund is, like SASBF, aimed at developing indigenous shipping capacity. The fund, as at last count has over $120 million in a bank account with accruing interest since 2004.

But NIMASA continue to hold on to the money, although the agency once said it was awaiting the approval of the Federal Ministry of transport to commence disbursement from the fund having carried out audit to determine five beneficiaries that are still waiting to enjoy the benefit of the fund.

To Captain NIyi Labinjo, it is not only stupid but criminal for Nigeria to concede all her export activities in terms of shipment to foreigners.

According to him, the volume of goods available for shipment in Nigeria is enough to engage indigenous ship owners adding that they have by now acquired capacity for shipping across deep oceans and across continents if they had been encouraged.

‘‘Nigeria produces 2.5 million barrel of crude of oil a day and all your indigenous shipping companies are dying. It is not only stupid, but criminal. Nigeria import general goods and what have you is import oriented country. Our impute is 78 million tons and all the indigenous shipping companies are dying, using the figure, if everything comes from Europe, it will cost us $30 per tons and $30 multiplied by 80 mil-lion tons will give you $2.4 billion. And if everything comes from Asia, it is $65 per ton and multiply that by 80 million tons, it will give you N5 billion. Are you saying your country is generating $5 billion of freight and you have no contribution? Look at what we are generating in freight also from oil and gas, all goes to foreigners and by the time you put them together it is a case of a farmers son dying due to starvation.”

SOURCE: INTERNATIONAL TRADE MONITOR

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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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