‘Nigeria loses $500m annually to foreign yards’

Engr. Greg Ogbeifun is the President, Shipowners Association of Nigeria (SOAN). In this interview with SHIPS & PORTS DAILY’s Babalola Yusuf, Ogbeifun spoke on the Cabotage act, how government can develop shipbuilding and other issues in the industry.

 

What do you want the Government of President MuhammaduBuhari to do for the Maritime Industry? 

 

As you know, the state of affairs in the Maritime Sector at the moment is not the best. Over time, a lot of things have not been addressed properly in the Industry and these have resulted in the non-utilisation of the huge potentials and opportunities that abound in the nation’s Shipping and Maritime Industry.

Proper utilization of these opportunities would lead to the improvement of national economy, creation of jobs, growth of the Maritime Industry, skill acquisition by seafarers, stoppage of capital flight from the country, etc.

 

In my opinion, the place to start is to engage the appropriate stakeholders of the Maritime Industry of which shipowners are a critical group, to brainstorm on what the issues are, the current state of affairs, the challenges and the way forward and it is from such a forum that ideas will emanate that will give the government insight on how to revamp the Industry.

 

As we all know, government is made up of politicians who are not always necessarily technocrats and when there is no person in a position of authority who is of maritime background then the government will find it difficult to understand the maritime policies; not to talk of implementing them. So, there is need for government to identify proper maritime stakeholders and experts they can work with to help them understand the policies and implement them. That, in my opinion will be the best way to start.

 

What policy of Government is affecting shipowners?

 

The policy of government affecting shipowners is centered on the Cabotage Act. The Nigeria Maritime and Shipping sectors have the capability of creating substantial job opportunities for our teeming youth in the country. The fact that it has not been effectively implemented is a deep source of concern to shipowners.

 

How can Government make Cabotage work?

 

First of all, Government should work with the legislative arm to review certain aspects of the Act in order to make it work because the Act was supposed to be reviewed every five years to evaluate its performance. I don’t think that has been done since the inception of the Act, because if you review the Act you will see that the first provision which is that ships must be built in Nigeria is not feasible because we don’t have shipyards to build ships.

The essence of that provision is to stimulate the establishment of shipyards to be able to build ships. For example, if there is a review of the Act in respect to ship building, my personal recommendation will be that the government should say between now and five years’ time, it is our intention that we must have one or two shipyards that can build ships up to certain sizes and specifications such as tugs, crew boats, PSVs, other offshore service boats or even tankers. 

Now, if we want to achieve this, government should involve appropriate stakeholders and established shipyards in other parts of the world to develop milestones and put in place an implementation plan for the period of five years. In the meantime, government can allow waivers that would terminate at the end of five years by which time the yards would have been put in place and ready to run.

Government may not singlehandedly establish shipyards but they must create an enabling environment or go into public-private partnership that will attract investors to such capital intensive projects. If we do that, the first requirement of Cabotage would have been satisfactorily accomplished and implemented.

 

How can the government improve the capability of our seafarers?

I have spoken every time on it and I have said that it is not the responsibility of the Federal Government through any agency to train cadets. It is the responsibility of the shipowners who ultimately would utilize the services of such trained seafarers on their ships. This is why the NLNG and some private shipowners today have embarked on training cadets who they expect ultimately would work on their ships. This was the practice in the early days with the NPA, NNSL and the likes of Black Star Line of Ghana in the good old days. It is in view of this that the Shipowners Association of Nigeria (SOAN) has resolved to donate from member’s fleet, a hundred training berths to NIMASA to support their NSDP programme.

 

I believe that our waters have enough ships that can provide training berths that will absorb all cadets coming out of our Maritime Institutions such as Maritime Academy of Nigeria (MAN) Oron for instance, and this can help develop a crop of better-trained seafarers. The idea of sending our children to the diaspora to train with the excuse that they can be exported to international shipyards when we have not been able to satisfy local manning needs in my opinion is not right. In any case, the program that involves taking students to different parts of the world to institutions who see our NSDP programme as a source of income for themselves and then sending these students back to Nigeria after completing the academic aspect of the work to seek seatime opportunities in Nigeria is a defective one. I believe that if properly articulated, there are sufficient vessels and enough willing shipowners in our country who can provide the required ship berth opportunities that the system desperately needs and if we do that, in a matter of time, we will begin to grow a large population of better-trained, qualified and skilled Nigerian seafarers to man our Cabotage vessels and this way, the second pillar of the Cabotage Act will be satisfactorily met.

 

The aspect of ownership which is another pillar has been a challenge, we all know the story of Cabotage Vessels Financing Fund (CVFF). This fund has still not been disbursed and we do not know why; but the fact that an initiative that is very good has not been implemented has defeated the essence of Cabotage; ?which is about trying to enhance ownership of vessels by Nigerians.

 

Finally, on the issue of flagging, we have to be conscious of the fact that if the number of Cabotage vessels increases, the number of vessels flagged within the Cabotage regime will increase and the tonnage will also increase. However, because the fleet seize is not increasing, the flagging though taking place is not achieving its main aim. Having analysed it this way, we know that it is very easy for a government that has the political will to know what to do to address the present sorry state of affairs in the Industry.

 

What should shipowners who contributed to the CVFF do for the money to be disbursed?

 

It is left for the shipowners who contributed the money to take whoever is responsible for the non-disbursement or depletion of the fund to court. But you know that it is not very feasible in our country. The new government should set up a small panel to investigate what the issues are. Some of us are on the ?list of the six companies shortlisted for the CVFF after due diligence was completed but the question is why was it not disbursed since 2012?

 

The CVFF is a very important issue and the new government must address the problem so that the shipowners can benefit from the fund and grow their fleets. Expectedly, this intervention should result in new guidelines for the management of this fund.

 

Shipowners have been groaning over lack of ship building and ship-repair yards in the country, how can government develop this sector?

 

As you know, there is a difference between a ship repair yard and a shipbuilding yard. I have always been an advocate of proliferation of ship repair yards because Nigeria is a country where about 85% of vessels operating in our waters leave the shores of this country to look for docking facilities outside for repairs.  As a shipyard owner, I would say that the country loses about $500m annually to foreign yards. For a government that sees this level of capital flight, deciding to reverse the situation would simply mean providing incentives to those who are interested in establishing shipyards in the country and I believe this is not too much to ask for.

 

Let me make a clarification because a lot of people are saying we want to start building ships and some of us are saying it is not enough to build a ship but we must have an appropriate classification society willing to classify the ship or bring the ship you build in your yard into their class. Therefore, what I think we should be doing is for government to develop joint ventures with indigenous players and put in place the infrastructure as is done in South Africa, Qatar , Bahrain, etc. In those countries, the Government came out to build the shipyards and the accredited shipping companies like Samsung and Hyundai came in to partner with the yards and it became easy for the classification societies to class ships built in such yards. This is common practice in Qatar, Bahrain and Dubai to name a few. These companies will not bring their money to invest until we put our money on the table first. If government says they want to wait for the private sector alone to invest in this, they should first ask:  how many of the private sector players have the money to put on the table especially knowing that this is usually a capital intensive project and the returns are usually long term. Shipbuilding is a generational investment that can sustain any government in the long term. So I think Government should take the initiative through the appropriate agencies to engage the appropriate private sector players and brainstorm on how to establish more shiprepair yards and new shipbuilding yards in the country.



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