By Stephen Ubanna
With barely 15 years after the suspension of the Ship Acquisition and Ship Building Fund, SASBF, by late Sani Abacha, an Army General and former Head of State, indigeneous Shipping owners can now heave a sigh of relief.
This is because Rotimi Amaechi , a former governor of Rivers state and now minister of Transportation, who has Presidential mandate to go ahead with the disbursement of the $ 200million or N72 billion Cabotage Vessels Financing Fund, CVFF, to the indigenous Ship Owners who need it to increase the national fleet, has set up a Committee to develop a working guideline for it.
Given the Presidential nod, Amaechi had named Dakuku Peterside , Director General, Nigerian Maritime Administration and Safety Agency, NIMASA, as a the Chairman of Committee, which also has Temisan Omatseye, a former Director General of the agency as member.
Amaechi was said to have broken the cheery news about the disbursement of the CVFF to the Industry stakeholders at a recent meeting in Lagos.. He disclosed that the proposed guideline that will be developed by the Peterside led Committee will be submitted to his office and which in turn, will be sent to the National Assembly as a Bill for approval and then, final accent by President Muhammadu Buhari, to give it a legal backing .
The minister may have alluded to the fact that this is the first time since the establishment of the CVFF, in 2003, by former President Olusegun Obasanjo,, that the money that had had accumulated in the Fund, will be given to ship owners directly. He was said to have also alluded to the fact that the past Administration of former President Goodluck Jonathan of then ruling People’s Democratic Party, PDP, had diverted the money from the Fund to the building a Maritime University at Okekerenko, in Delta state and setting up of Faculties of Maritime in other Universities across the country.
The minister may have dampened the enthusiasm of the ship owners who had been clamouring for the disbursement of the CVFF, over the years, when he declared that ‘’as part of efforts to mitigate the risk involved in the disbursement , Financial Institutions would be involved as the Financial risk would be borne by the banks that would be involved.
He appears to have learnt from the mistakes of the past Management of the then Nigerian Maritime Administration, now baptized NIMASA, in the management of the suspended SASBF, in by the late Abacha administration1995.
Until the suspension of the Fund in 1995, 11 Shipping Companies, two government owned and nine indigeneous shipping Companies were said to have been given the multi-million naira loan to acquire ships in order to increase the national fleet to keep to the UNCTAD Code of Conduct of Liner Conferences of 40:40: 20.
Among the shipping Companies that were said to have benefited from the suspended SASBF, were the defunct Nigerian National shipping Line, NNSL, and the Nigeria Unity Line, NUL, both government owned shipping Companies. The indigeneous shipping Companies, which had benefited from the Funds included Faget Nigeria Ltd, East West Coast Marine Services Ltd, Genesis World Wide shipping Ltd, Cibra Marine Services Ltd and Skolar Nigeria Ltd. And Taboraz Fisheries Ltd. Also, on the debtor list of the suspended SASBF, debtors were Bull Tankers Ltd, and Bilkship Nigeria Ltd, including A and C Engineering and Marine Services Ltd.
A NIMASA source told The Value News that the suspension of the SASB, in 1995 by Abacha, was borne out of the fact that some of the beneficiaries , who were mostly former master mariners, in the employ of the defunct, NNSL, who were ship owners , had refused to honour the terms of the loan agreement anymore.
The source disclosed that less than 50 percent of the beneficiaries actually acquired vessels while some of the vessels that were said to have been acquired constituted more problems to the shipping Companies as they incurred heavy maintenance Costs. There were also reported cases of diversion of the Funds to other businesses .
Given that there was no other sources of free funds for them to run their shipping Companies , many of the indigeneous shipping Companies were forced to have Collapsed. The Coast was left clear for the multi-national Shipping Companies which have the financial muscle to take over the industry by lifting all the cargoes generated by the government , businessmen and Compnaies operating in Nigeria. The case of the indigeneous shipping Companies were made worse as they were schemed out from the lifting of the country’s Crude Oil. Maiknta Baru, a one –time Group Managing of Nigerian National Petroleum Corporation, NNPC, may have hit the nail on the head when he said that’’ Nigeria shipping Companies do not have capacity to participate in the affreightment of the nation’s Crude Oil’’.
Note that NNPC, had adopted Free- on- Board, FOB, as against Cost, Insurance and Freight, CIF, demanded by the indigeneous shipping Companies in the sale of the nation’s Crude Oil. Ibe Kachukwua , former minister of state, Petroleum Resources , had said that NNPC, preference for FOB to sell the country’s Crude was informed by the prevailing security challenges in the Niger Delta and the need to guarantee steady oil revenue into the Federation Account.
He noted that under the CIF arrangement, petroleum cargoes are legally the property of the government which could pose a threat to the country’s oil revenue earnings as foreign creditors could easily secure Court order s to confiscate the crude oil cargoes as a means of repayment of the country’s indebtedness .
He had cited the experiences of the defunct NNSL which had its vessels/crafts confiscated on Court orders obtained by creditors. The former minister of state, had said that the state oil Company, NNPC, found it most appropriate to transfer the potential risks associated with the ownership of the cargo to the buyer at the load port in Nigeria which the FOB sales agreement allows.
According to him, the government and NNPC liability ends as the crude oil passes from the loading hose at the vessels manifold to the loading vessel. The buyer, according to the NNPC, sources pays for the freight , marine insurance , unloading and transportation from the load port in Nigeria to the destination in Europe, North America or the Asia country of China.
But the Ship owners of Association of Nigeria, SOAN, and the Nigeria Ship Owners Association, NISA, may not have agree with the arguments of the former minister as they were said to have put the loss to the nation at N2 trillion annually to the foreign countries that own vessels to lift the 150 tons cargoes from the Nigeria oil terminals. This is an indication that the country had lost over N100 trillion to foreign countries which own Crude Oil Tankers sail into the country Oil terminals to lift Oil and Other products over the last 50 years.
SOAN and NISA, officials, were said to have made it clear severally to NNPC, officials , that under the FOB, which gave the buyer the freedom to nominate the vessel to carry their cargo to the international Oil market, they would continue prefer to use the services of the foreign shipping Companies .
Peterside, the NIMASA , Director General, appears to be on the same page with the SOAN and NISA, by insisting that there is need for NNPC , to adopt the CIF, crude Oil sales arrangement for the country. The NIMASA Director General was said to have spoken his mind at various meetings with officials on the need for transition from FOB to CIF , Crude oIl sales arrangement , that’’ if implemented, it will encourage indigenous fleet expansion , that could lead to massive job creation for qualified Nigeria seafarers, create opportunities for the country’s Cadets and build the expertise and Competence in international shipping trade’’.
The NIMASA boss worry, according to insiders is that Nigeria is one of the major exporters of oil and gas resource in the world , with a daily average output of about N1.92 million barrels which generates huge freight for carriers but the Nigerian shipping Companies had been excluded from the business over the years.
Note that most of the Organisation of Petroleum Exporting Countries, OPEC, members, such as Iran, Indonesia, Algeria, Kuwait, Venezuela, United Arab Emirate, popular, UAE, and Libya, allow their indigenous Operators to participate actively in the shipment of crude oil but this could not be said of Nigeria , which gave room to the Oil producing and Exploration Companies to favour the use of Foreign Shipping Companies.
Energy analysts are optimistic that if the right policies are put in place , Nigeria could build its own capacity , that could result in the change of terms of trade that would benefit the country on the long run.