NIMASA’s ‘basket of incentives’ to ship owners

Shipowners tag NIMASA industry forecast ‘extremely unrealistic’ 

Dakuku Peterside. PHOTO CREDIT: SHIPS & PORTS archive.

In a recent interaction with journalists, the director-general of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dakuku Peterside, said his agency was working on ‘a basket of incentives’ for Nigerian ship owners. These incentives, he said, would solve the problem of foreign domination of Nigeria’s shipping business, as it will enable indigenous ship owners to compete favourably with their foreign counterparts.

Top on the list of the incentives, he disclosed, are downward review of customs duty on imported vessels and change of Nigeria’s crude oil trade terms from Free on Board (FOB) to Cost, Insurance and Freight (CIF). Responding to questions from journalists in Benin, Edo State, Dakuku said that NIMASA was engaging the office of the Vice-President order to convince the federal government on the need to have a special tariff regime for Nigerian ship owners.

“I am sure you are aware that NIMASA is pursuing a set of incentives for ship owners in the country. Tariff is just one of the many things we are pursuing in the basket of incentives. We have opened engagement with the Federal Ministry of Finance and Nigeria Customs and their position is that the decision on that is to be made by the highest level of government and so we have commenced engagement with the Office of the Vice President.

“We try to explain to them that if the Nigerian ship owners are going to compete with their peers and the rest of the world within the cabotage regime and the industry, then they must have a special tariff regime. Those who bring in vessels to work for short term must have a different tariff regime from those who are bringing vessels to the country. So it is not going to be competitive for the Nigerian ship owner, and I think that it is receiving attention and they now appreciate the point. We are making progress and very soon there will be some good news for all of us,” he said. On the vexed issue of Nigeria’s trade terms, the NIMASA DG added:

“We are also pushing for the change of trade terms and we have addressed the issue to the point that a technical committee has been set up by NIMASA and when the committee has submitted its report, we will advance to engaging the presidency and I know they will support the change of trade terms.”

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The NIMASA DG once again also raised the hopes of ship owners on the disbursement of the Cabotage Vessel Financing Fund (CVFF), declaring that the fund will be disbursed this year. He explained that the fund could not be disbursed in 2018 because the President raised some issues over the disbursement which the agency has responded to. He expressed optimism that as soon as the President reads the response, he will be favourably disposed to the disbursement of the fund.

“It will be disbursed this year and the ship owners will benefit from reviewed interest rate in terms of facility to acquire assets in the country,” he assured.

To the average maritime observer, the issues of vessel financing, trade terms, high cost of duty on vessels importation and cargo rights constitute the major obstacles to shipping development in the country. Nigerian ship owners really operate in a very harsh business environment. They lack access to funding in a sector that is capital intensive, pay outrageous duty to bring in vessels, and are denied freight contracts because of unfavourable trade terms and preference for foreigners by policy makers.

Over the years, they had clamoured, clawed and fought to have the right things done to no avail. They had fought without success the policies that are stacked against them, keeping their businesses running down the slope. They had watched with utmost despair as the jobs statutorily meant for them were given to foreigners, while leaving them to struggle for the crumbs that sometimes are not available. From one administration to the other, they had hoped for a change that never came –even when strong promises had been made.

Foremost shipping operator and founding chairman of Nigerian Ship owners Association (NISA), Chief Isaac Jolapamo, after reviewing the situation of the sector over time to Ships & Ports last year, threw his hands up in despair, and declared that he had lost hope on shipping development in Nigeria.

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“We seem not to be serious about developing our shipping industry. I have already lost hope in shipping development in the country,” he snorted. This is the prevailing mood of ship owners in the country.

NIMASA and the federal government should demonstrate seriousness and sincerity in tackling the problems of the sector as it prepares for a second term in office. Changing the country’s trade terms from FOB to CIF will help to settle the problem of cargo rights and compel agency executives, especially NNPC and its subsidiaries who have been collaborating with foreigners to keep ships owned by indigenous operators idle, to consider them in freight contracts.

Available statistics show that an average traffic of about 152 metric tonnes of both oil and non-oil cargo worth over $5 billion in freight earnings is generated annually in the country. Because of very low participation in the freight business, over 90% of this income is earned by foreign shipping companies. Foreign domination of shipping business in the country, including cabotage business should be brought to end by this administration.

NIMASA and the present administration in the country should, therefore, demonstrate seriousness and sincerity in tackling the problems of the sector as it prepares for a second term in office. Changing the country’s trade terms from FOB to CIF will help settle the problem of cargo rights and compel agency executives, especially NNPC and its subsidiaries who have been collaborating with foreigners to keep ships owned by indigenous operators idle, to consider them in freight contracts.

The basket of incentives being touted about should not end up as mere rhetoric or political gimmicks. Concrete and result-oriented actions should be taken to convince the indigenous ship owners who had since lost confidence in government promises and utterances that the basket of incentives are real and not mere basket of apples in the sky.