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Stakeholders Canvass Benchmarking of Customs Duty Assessment Rate

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  • As NSC Expresses Readiness to Partner NITT on Capacity Building

The foreign exchange challenge in the economy is far-reaching. The excruciating effect is not sparing anyone, from small businesses to big businesses and of course from the low income earners to the rich. Even the federal government is not left out as its revenue target in various sectors of the national economy is far from being met.

When it became clear that oil revenue was on the downside, many had looked on to the maritime sector as the only hope. But the situation in the sector has dashed this expectation of the government and indeed stakeholders, who had said as much as N7 trillion could be realised from the sector annually.

Perhaps, it was as a result of this that the Minister of Transportation, Rotimi Amaechi, had months after his appointment given the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA), an annual revenue target of N500 billion each. The Comptroller-General of the Nigeria Customs Service, Col. Hameed Ali (rtd), had also set a revenue target of N1.2 trillion this year for the service. So far, both Amaechi and Ali may have realised that their targets could not be achieved under the current economic crisis in which sourcing foreign exchange to import goods has become a herculean task.

The reaction of the federal government to the fluctuation of the foreign exchange has made international trade very difficult. The government had directed the Customs Service to calculate import duty on the prevailing exchange rate. The rate at which the importer sourced the foreign exchange to buy his goods may not matter.

The circular which was signed by the Deputy Comptroller-General, Tariff and Trade, Nigeria Customs Service, A. Adewuyi, read: “In consonance with the provisions of CEMA on the evaluation and clearing of imported goods into the country, Mr. President has approved the use of the exchange rate at the time of making entry as provided in CEMA, Customs and Excise Notice No.13 on the value of imported goods. Where the value of an imported good is shown in foreign currency, such value is to be converted to the equivalent Nigerian currency as at the rate at the time of making entry. The current rates of exchange are published at the Customs House.”

Before the new policy, the duties were calculated at the exchange rate of N197 per dollar and later at N282. But now, importers whose goods are in the ports will have them calculated at the prevailing rate. The sad side of this development is that many importers, particularly those affected by the CBN position on the 41 items list, who source their foreign exchange from the parallel market, are on their own.

This is one of the reasons why trade has become difficult with the attendant result of high prices of goods in the market. While it could be argued that the fluctuation may favour some importers at a stage, it is not all smiles, because a trader who pays for his goods at any prevailing rate of the dollar may be hit when the rate goes down. His competitor may buy the same goods cheaper and therefore sell cheaper. That has been the problem affecting many, who are into importation. This was the fear of many importers who had at a stage put a hold on importation.

An importer of trade goods, Uche Mba, who spoke to THISDAY said that fluctuation in exchange rate affects importers as they become uncertain what the market rate would be next. “If the rate comes down when the importer had sourced forex at high rate, it will be a loss for him as it will be difficult for him to sell such goods and make profit based on the exchange rate”, he said. According to him, every international trader is usually careful not to import when there is uncertainty of what the exchange rate would be.

Following the increase in import duty occasioned by the foreign exchange rate, customs brokers and freight forwarders have threatened to shut down the ports. Those who made the move were members of the Association of Nigerian Licensed Customs Agents (ANLCA).

But the Nigerian Shippers’ Council (NSC) intervened by stopping the customs brokers from shutting the ports. Such action by the customs brokers or freight forwarders would not be the best for the national economy, the Council said.

It was gathered that the Executive Secretary, NSC, Mr. Hassan Bello, who held series of meetings with the customs brokers and freight forwarders associations to stop them from shutting the ports may be meeting relevant authorities on benchmarking of forex for import duty assessment by the Customs.

Reacting to the development, the President of ANLCA, Olayiwola Shittu, said that it was not for the customs brokers to protest but the importers.

Shittu was quoted saying that as far as he was concerned, customs brokers were simply intermediary. He, instead, called on importers to organise themselves and protest to the federal government.
Pointing out that the new rate at which Customs will calculate duty will affect importers, Shittu appealed to the Customs leadership to adopt a holistic approach in the evaluation of duty. In his view, Customs should be able to let importers know what exchange rate they will be using as benchmark for duty payment.

According to him, a situation whereby after paying for duties, importers are stopped at the point of release on the excuse that another rate of duty was released, would not be acceptable.

A maritime lawyer and trade expert, Emma Ofomata, while reacting to the foreign exchange issue said it had hit everybody in Nigeria. Ofomata said it did not matter what one does, the effect was being felt by everyone because of the economic hardship it had brought to the country.

According to him, it has reduced the volume of trade into the country. “Those who used to import as much as 40 containers in a month can no longer do so. At best, they bring in 20 because of the rate of exchange”, he said.

Ofomata pointed out that manufacturers were the ones affected more than the importers of finished goods, explaining that while the manufacturer suffers the effect of forex regime, he also has to battle with the problem of power as he has to buy diesel at probably N200 per litre. He said at the end, the consumer would be the one who will take the whole shock as the importer or manufacturer has to recover all the cost to be in the market.

As part of the solution to the problem, the Publicity Secretary of NAGAFF, Stanley Ezenga, said the CBN and the Finance Ministry should consider benchmarking the exchange rate for import duty for the interest of Nigerians. He said this will save the importers the nightmare they have been suffering as a result of the fluctuation of exchange rate.

According to him, “we indeed advise that the Minister of Finance in consultation with the CBN Governor can benchmark the exchange rate for Customs duty purposes. It is legal and legitimate in favour of trade and the society in Nigeria.”

In the meantime, the Nigerian Shippers’ Council (NSC) has expressed its readiness to partner with the Nigeria Institute of Transport Technology (NITT) for effective training and capacity development of its personnel.

The Executive Secretary and Chief Executive Officer of the Council, Mr Hassan Bello, disclosed this in Lagos when he received the officials of NITT led by its Director General, Dr. Aminu Yusuff who paid him a courtesy call in Lagos.

Bello who said the capacity building is instrumental to the development of the nation’s maritime industry, called for signing of Memorandum of Understanding between both parties.

According to him, maritime are knowledge driven institution and hence the need for the maritime industry to be driven by personnel in specialized transport and other related fields.

He, however, commended the effort made so far by the institute noting that it has trained large number of professionals in the transport sector of the economy.

His words ‘’ the two institutions are knowledge driven. What we need to do is to get the required knowledge because it is the knowledge that drives the industry and so many mistakes have been made due to lack of knowledge.

But the choices we have for the industry are limited and we cannot afford to make such mistakes. Therefore, we have to patronize this fountain of knowledge called NITT’’.

The NSC as Economic Port Regulator, he said, is to make Nigeria a regional maritime hub in African sub region.

Earlier, the Director General of NITT, Dr. Aminu Yusuff called for more patronage and support by sponsoring its workforce on short and long term professional and continuous skill development programmes of the institute.

The NITT boss who, commended the NSC for its meaningful contributions to the nation’s maritime sector, said more development is still expecting if both institutions agree to come together.

Thisday with additional report from Shipping Day

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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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