NIMASA Secures Presidential Approval For Disbursement Of $200 Million CVFF As It Bans Use Of Single- Hull Oil Tankers

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  By Stephen Ubanna

Between March , 2020 and now, Bashir Jamoh, Director General, Nigerian Maritime Administration and Safety Agency, NIMASA, has dominated  the  News  in the nation’s maritime sector.. This is because of his reformist agenda  to  reposition the sector.

  Only recently, Jamoh, the NIMASA,  Director General, broke  the  cheery news to the members to the Ship-owners Association of Nigeria , SOAN, that the NIMASA, has secured the Presidential approval    for the disbursement  of the $200 million Cabottage  Vessel Financing  Fund, CVFF.

 The approval was said to have been secured through Rotimi Amaechi, a former governor of  Rivers  state  and now minister of Transport. The CVFF, was established   by  former President Olusegun Obasanjo as contained  under the Coastal Inland  and Shipping Cabottage Act 2003, which he signed into Law.

Between 2017 and 2020,  the  leadership of Ship- owners Association of Nigerian, SOAN, had intensified their  pressure on NIMASA and the Federal ministry of Transport, under the close watch of Amaechi  to disburse the fund instead of keeping ship-owners waiting.

Mkgeorge  Onyung,  the  SOAN , President, who could not hide his feelings had  lamented that the delay in the disbursement of the Fund   had created much problem for the indigenous ship-owners  who are finding difficult   to take over  from  the  Foreign  operators who still dominate  the lifting of the country’s Crude oil to the International  market.

 He could  not understand why  NIMASA  could hold on  to the fund  instead disbursing it  to the ship-owners  in order  to boost their operational capacity  and compete  strongly in  cargo  freitage  with the foreign shipping Companies.

Recall that Greg  Ogbeifun, a former President of SOAN,was said to have pushed hard to see that the Fund was disbursed to the  ship owners during his tenure. He had  said that the ‘’non-disbursement of the Fund  had affected the activities  of the indigenous ship-owners  to compete favourably  in the global maritime sector. Although out of office, he insists that’’ the Fund  must be released to allow Nigerians  acquire vessels and be able  to take their  rightful position in the nation’s maritime sector’’.      

Schedule  43, part VIII, of the Act setting up the CVFF, gave an insight on how the money in the Fund  was realised.  The Act had stated ’’there shall  be  paid into  the Fund , a surcharge of two percent  of the Contract sum  performed by any vessel  engaged in Coastal trade in the country’’. This is in addition’’ to the revenues  generated  from tariffs, fines and fees for licenses and waivers’’.

Single-Hull Oil Tanker: Phased Out By IMO

Other sources of income to the fund  include  interests   paid on  and repayment  of the principal   sums  of any loan  granted  to any ship –owner. There was  also said to be  funds from  the  primary lending Institutions, PLIs, which were accredited to the Fund. Among the  accredited Commercial  banks linked  to the Fund included Fidelity bank, Skye bank, now baptised Polaris bank by the Central Bank of Nigeria, CBN, under the close watch of Godwin Emefiele,  and Diamond Bank, which had been acquired by Access Bank , on the orders of the CBN. The PLIs, were said to have contributed 50 percent of the $200 million that had accrued into the Fund.

 It could not be ascertained whether there had been other banks that had been selected to join the existing PLIs  with the increase in the size of  the Fund  over  the last  10 years in order to manage it as a Commercial facility. The argument in financial circles is that Fidelity and the other existing PLIs are too small to manage the mult- million dollar fund.  They had expected the agency to engage the five banks: UBA, a Pan-African Bank, Zenith , Guarantee Trust Ban, popular, GTB, Access Bank and First Bank , to be part of the PLIs for the management of the Fund as a Commercial facility.  

Going by the Act setting up the Fund , it was basically meant  for the facilitation, acquisition and ownership of vessels  to be employed  in the domestic and  Coastal   trade by  indigenous shipping  Companies  and individuals as well as vessel Charterers.

 It was also meant  for the development  of shipyard, maritime infrastructure to facilitate vessel  construction, repairs and maintenance, as well as  other shipping auxiliary projects relating to the development  of local tonnage capacity and shipyards.

Signs that the indigenous ship –owners may soon start accessing the Fund, without the government shifting of the gold post again  emerged last December  when the minister of Transport   hinted at the  Nigerian Shippers Council, NSC  end of  year  Stakeholders Appreciation Night that the Kastina  state born Nigerian President has given approval for the disbursement of the Fund to ship –owners.

 The revelation was said to have been  quickly followed by the  setting  up of  a Committee last February for the disbursement of the Fund, headed by   Peterside, the then  Director General of the agency. The Committee  had  a  mandate’’ to fine-tune  the  guidelines  for disbursing he Fund to the ship –owners who qualify for the loan’’.

Insider sources  had informed The Value News  that the maximum amount  a ship owner could be allowed to given  from the Fund  as a  loan  was  $25 million and shall have a maximum of seven years to repay  back  Completely.  The source disclosed that the loans  are  to  be disbursed to the  beneficiaries in the United States dollars and not in local currency because shipping is an international business.

Rotimi Amaechi: Minister of transport

 Perhaps to ensure that the ship-owners would not experience any difficulty in the procurement of  the ships for their business, the agency  was said to have recommended  the Fiscal and Monetary  incentives   to the minister  to seek  for the disbursement of the  funds  on a single-digit interest rate  of 5.6 percent and 0.25 percent processing fee but that was how far the  then Management could go.  

Many of the ship –owners had expected  that with the removal of  Peterside  as the Director General of  the Maritime Regulator agency  last March by President Muhammadu Buhari,  that  the ban on  the use of the  oil  Single- hull tankers  in the country  by December   31, 2020, would be reversed.  Some of the ship-owners using such  oil tankers  were said to have been planning  to procure  additional Single- hull tankers if given the  loan, an indication that  they were not ready to comply with the NIMASA directive. 

  Jamoh, the NIMASA boss may have shattered their plan  at  a recent  meeting  in Lagos. He was said to have  told   such desperate ship-owners  who  think that the agency would allow them to use the Single-hull  tankers in Nigeria waters to have a rethink. He has his reason. A decision has  been taken  on  the matter under the previous  Management to  completely  phase out  the use of the Single- hull tankers in Nigeria waters by December 31, 2020. ‘’There was no going back on the decision’’, he had said.

He was said to have  advised  the indigenous ship-owners still using the  phased out Single –hull tankers  ‘’to start making   adequate preparation to comply with the December 31, 2020, deadline to replace it  for their Coastal trade or be grounded to a halt.    

As a prelude to arriving at the decision to phase out the Single –hull tankers from Nigeria, The Magazine was informed that the agency under the previous Managemen t in 2015, had discussed the timeline for discontinuing the use of such oil tankers with the ship owners.

 Given an  insider information to the discussion with the ship-owners, as the then Executive Director, Finance and  administration , Jamoh, who is  now the Director General,, had said  that they were  given five years  to comply with the ban,  describing it  as ‘’a generous allowance’’.

He noted  that the agency the   same year  had revised the timetable   for the phase-out of the Single-hull oil tankers in Nigerian waters. The NIMASA  Director General had attributed the revision of the timetable  to the decision of the International Maritime Organisation, IMO, under the close watch of Kitack Lim  ‘’to extend its deadline  for the  ban on  the Single –hull tankers for certain categories of tankers  not engaged in international trade.

The NIMASA, boss disclosed  that the agency had  utilised the opportunity provided by  the IMO, extension window ‘’to shift the final  phase-out  date  for the Single-hull   oil tankers to December 31, 2020. The Magazine cited  the IMO’s revised  Regulation  of annexes I  to the International Convention  for the Prevention of Pollution from ships, MARPOL,  which required  Flag administrations  to phase-out  categories  II and III Single –hull tankers by 2015. However, it extended  the deadline  for some other  oil tankers not engaged  in International trade ‘’owing  to the difficulty  in achieving  wholesale  fleet replacement’’.

He maintained  that  the ship-owners need not worry themselves about the disbursement of the  CVFF as it  was meant  to assist operators  in the acquisition of maritime assets, noting   that ‘’shippers are the beacon and hub  of any developing economy’’.

 He may have gladdened the heart of the ship owners when he said the details of s the  scheme  were  being considered  before commencement of the pay-out. The NIMASA boss had said that only the fine  details for the disbursement of the $200 million or N72.4 billion Fund  are currently being discussed with the ship –owners  with a view  to avoiding the mistakes  made in the administration of the scrapped  Ship- Acquisition and Ship Building Fund, SASBF, by the then  General, rtd,  Ibrahim Babangida  administration over alleged abuse.

 The NIMASA Director General confirmed that a proposal had been submitted to the minister’’ to seek  fiscal and monetary incentives for the indigenous ship-owners.  The proposal, according to sources was not different from the earlier one submitted to the ministry  under the Peterside  administration.

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