By Stephen Ubanna
Not many people are surprised that Eng. Muazu Jaji Sambo, the Taraba state born minister of Transportation, had laid the foundation for the disbursement of the Cabotage Vessels Finance Fund, CVFF, to the Indigenous Ship-owners.
Bashir Jamoh Director General, Nigerian Maritime Administration and Safety Agency, NIMASA, who was said to have taken over from where Eng. Sambo, the Transportation minister had stopped may have known that the Presidential approval for the disbursement of the CVFF to the ship-owners would be a waste without the Central Bank f Nigeria, CBN, under the close watch of Godwin Emefiele, making the available forex to be disbursed to the ship-owners at the official rate rather than the black market rate . This is because owning and maintaining a ship is capital intensive, depending on the tonnage.
CW.Kellock and Co and the sister Company, Edggar Forester, both Ship broking firm auctioneers had said that the price of ships varies depending on the size. Take for instance the Capesize, Kamsarmax, Panamax, Ultramax, Supramax, Handymax, or the smaller bulk carriers or VLCC, Suemax, LR2,LR1,MR2,MR1 Aframax, Panamax , products , Chemical and other tankers are very expensive. The ships , whether new build or second hand, runs into millions of dollar to Acquire while some could go for a as much as a billion dollars or more. The wholly owned Nigerian shipping Companies may not be going for these of kind of big size ships.
They may not also be looking out for the LNG, LPG carriers, Container ships, car carrier, Multi-purpose Roro and General cargo vessels, Refrigerated (reefer)vessels, or try to contract a shipyard to build brand New ship for it but would always go for Secondhand vessels to purchase because of the cheap price..
There is no gain saying the fact that owning a ship is expensive, not just the purchase price but the operation and maintenance costs which can be a significant percentage of the value of the vessel Cost of building and contracting
.New cargo ships, based on the Value News findings ranges between $200 million to several millions depending on the kind and tonnage While several hundreds of thousands of dollar would be needed to purchase an old secondhand small one. The easy Number people which used to evaluate ship operations had said that’’ the daily ship operations cost ranges between $25,000 and $85,000, exclusive of fuel cost. The Company had said that the fuel cost can run over $130,000 per day.
Jamoh, the NIMASA, Chief Executive Officer, CEO, may have moved in to boost the country’s tonnage because of what is happening in many maritime nations where ships rot away because of the inability the shipping Companies to dry dock their vessels at least once in five every five years, to keep it seaworthy because of financial constraints. He will want Nigerian ship-owners to buy clean vessels that would be easy to maintain.
The CVFF, which is financed through a surcharge of 2% of the contract sum performed by any vessel involved in the coastal trade and monies generated from the Coastal and Shipping ( Cabotage) Act of 2003, like tariffs, fines and fees for licenses, waivers and other service charges stipulated by the National Assembly was said to have been established to assist the indigenous ship-owners in their drive for ship Acquisition to increase the country’s tonnage.
Between 2003 and now, Eng. Sambo, the minister of Transportation and Jamoh the, NIMASA, Director General , had said at different times that $350 million had accrued into the CVFF, Treasury Single Account, TSA, with the CBN.
Until her deployment to the ministry of Mines and Steel Development during the last Cabinet shake-up, Senator Gbemisola Saraki, a former minister of state in the in the ministry of Transportation had said that what had accrued into the CVFF, in its over 17 years of existence was $350 million, lodged in CBN, TSA.
Indeed, Eng. Sambo and Jamoh’s declaration that only $350 million had accrued into the CVFF, TSA, dollar denomination, clearly shows that there was no little or no coastal trade activities between the period that the former minister had left to her new ministry and now.
Isaac Jolapomo, a former Chairman, Board of Directors, Nigerian Indigenous Ship-owners Association, NISA, would not take it. He had dismissed the claims of the minister and the NIMASA, Director General,that only $350 million had accrued into the CVFF, Account in CBN in 18 years of its existence.
Going by his calculation of the 2% surcharge, fees and other charges that had been collected by NIMASA, from the contract um of vessels used on coastal trade, between 2003 and now, Jolapomo, had said that 2 billion had accrued into the CVFF , Account in CBN. Former President Goodluck Jonathan government was said to have dipped its hand into the fund and collected an undisclosed amount that was never refunded.
Industry operators had said that the amount quoted by the immediate past minister of state, Transportation and the present minister overseeing the ministry including, Jamoh, the NIMASA, CEO, as the amount that had accrued to the CVFF in CBN, was a remarkable improvement from the figure originally announced by Rotimi Amaechi, a former governor of Rivers state and a former minister of Transportation. The erstwhile minister had told Nigerians that what has accrued into the CVFF, TSA, with the apex bank was $150million.
Given the Presidential approval for the disbursement of the CVFF, to the indigenous ship-owners, may have encouraged the NIMASA boss, to give an insight into the naira denomination that was collected and paid into the TSA, in CBN. He had said that N16 billion have been collected so far and paid into the Local currency TSA, in CBN. A source informed The Value News that the amount may have increased substantially in the recent time because the coastal trade ship surcharges, fees, and other charges are collected on a daily basis and lodged into the TSA.
Aware that procurement of cargo-carrying vessels are not transacted in dollars, may have encouraged the NIMASA Director General, to have piled up pressure on the CBN, to provide the required Forex for disbursement to the Local ship-owners as directed by President Muhammadu Buhahari who has barely six months in office before handing over to the next Nigerian President that will emerge after the Federal 25, 2023, Presidential and National Assembly elections.
The NIMASA helmsman could do because the CVFF,surcharges, fines and other charges are collected in both Naira and dollars, lodged in the apex bank. Already, the bank had said that that CVFF, would be transferred to the five selected banks that have been selected to handle the disbursement of the funds upon the recommendation from NIMASA and the Federal ministry of Transportation. They are Union Bank, UBA, Zenith Bank, Polaris and Jaiz. The NIMASA, Director General had said that that the Funds will transferred to the primary Financial Institutions once it hit the$500 million mark.
Although , Jolapamo, a former Chairman of NISA , Board of Directors had said that the $350million, which the minister had said had accrued to the CVFF, over the last 17 years is not enough to buy six ships to boost the country’s coastal trade and tonnage.
The good news was that Jamoh, through the minister of Transportation, has succeeded in getting the Katsina state born Nigerian President to exempt the indigenous ship-owners from ‘’paying high Import duty on brand new ships while the older imported vessels will be attracting higher duty.
Many believe that that the NIMASA boss is doing everything within his powers to ensure that the government provide a conducive operating environment for the Indigenous ship –owners to be able to compete with the Foreign shipping Companies which had dominated the country’s coastal trade over the years.
There are fears in both official and unofficial circles that that Nigeria may lose the gains of the huge investments in the $2 billion Lekki Deep sea project if the CBN , did not move fast now that the Nigerian President is still very much interested to support the country’s shipping sector to reduce foreign domination of the nation’s coastal trade
Osagie Edward, an Asistant Director and the agency spokesperson had said that applicants, referring, to the Indigenous shipping companies in accessing the multi-million dollar Funds, from the five selected Banks approved by government to disburse it, they would make an equity contribution of 15% while the NIMASA would contribute 35% and the remaining 50% would be provided by the banks.
