Stakeholders kick as Transport Ministry moves to take over CVFF


Civil societies demand probe of Amaechi’s $195m maritime security contract
Minister of Transportation, Rotimi Amaechi


The Federal Ministry of Transportation has moved to take over the disbursement of the Cabotage Vessel Financing Fund (CVFF) from the Nigerian Maritime Administration and Safety Agency (NIMASA), SHIPS & PORTS findings reveal.

Maritime industry stakeholders have, however, kicked against the move, describing it as illegal.

Usually reliable sources informed SHIPS & PORTS that the Ministry has opened a special CVFF account at Fidelity Bank and directed NIMASA to move USD50million from the accrued cabotage fund into the account.

The directive to create the special account and move the money does not have presidential or National Assembly approval, contrary to the provisions of the CVFF guidelines, which was established under the Coastal and Inland Shipping (Cabotage) Act, 2003.

Section 3 of the CVFF guidelines provides that the fund “shall be utilized by the Agency to offer financial assistance, create access to funding by financial institutions with the sole aim of increasing indigenous ship acquisition capacity”. It authorizes NIMASA to disburse the fund to successful applicants “subject to the approval of the Minister of Transportation”.

Section 7.5.1 of the guidelines reads: “Applications for credit facilities under this Fund should be routed to NIMASA through any of the participating PLIs. Upon receiving an application for a loan request or guarantee under this Scheme, NIMASA shall determine the applicant’s or operator’s eligibility to access the Fund. This shall be evidenced by a duly authorized certificate issued by NIMASA to the applicant and the certification shall be duly notified to the PLIs by NIMASA. NIMASA may disapprove the loan request or guarantee based on the assessment conducted in line with this Guideline and sound commercial principles.”

While it is not clear why the Ministry wants to take over the function of NIMASA in disbursing the fund, operators are concerned that the move might lead to politicsing the disbursement process and could deprive genuine ship owners, who are the sole contributors into the fund and who have waited for several years for the disbursement, the opportunity of accessing it.

Nigerian ship owners, under various groups, have severally expressed anger over their inability to access the cabotage find, which is believed to have accumulated to more than USD200million since inception in 2004. Several promises made by government officials in the past on the disbursement of the fund were not fulfilled but the Minister of Transportation, Rotimi Amaechi, had in December 2019 said that the Federal Government had approved the disbursement.

The Minister, who disclosed this at the 2019 Stakeholders’ Appreciation Night organised by the Nigerian Shippers’ Council (NSC), had said that he would meet with relevant government agencies under the Federal Ministry of Transportation as well as indigenous ship owners to work out the modalities and process of disbursement.

The Minister had assured stakeholders that the CVFF would be disbursed by January 2020, a promise he failed to keep. Instead, he set up a committee in January to “work out modalities” for the disbursement of the fund.

Addressing newsmen shortly after a closed door meeting with stakeholders including indigenous shipowners in Lagos, Amaechi said the committee would determine the interest rate to be applied on the CVFF.

“What we have agreed is to set up a committee chaired by the DG of NIMASA with other stakeholders as members that will come forward with proposed guidelines which the Minister will take to the National Assembly.

“It is the committee that will determine whether it will be single digit or not. The essential element in it is that the responsibility will be transferred to the lending institutions so nobody will just walk away with the fund.

“It means that you must be held responsible for the funds that are accrued to you. That risk will be borne by the lending institution. The lending institution will give the guidelines necessary for borrowing the money so if you don’t have it, you can borrow the money.

“There must be rules by which anybody will qualify to borrow the money. After that you approach the lending institutions that in turn will put their own expectations in place because if you just allow people to go and take the money and walk away, we will not get it back.

“The idea is to enhance the development of the maritime industry and to do that, people must borrow and return for others to be able to borrow and that will grow the economy,” Amaechi had said.
Members of the committee include Mrs. Margaret Onyema-Orakwusi; a former Director General of NIMASA Temisan Omatseye; and former President, Nigerian Shipowners Association (NISA), Aminu Umar, among others.

However, a member of the committee told SHIPS & PORTS that no meeting has been held since its inauguration.

Stakeholders kick, warn against illegality

Industry stakeholders have kicked against the Federal Ministry of Transport’s plan to move the Cabotage Vessel Financing Fund (CVFF) to a special account created by the ministry from where the money will be disbursed.

The stakeholders, who spoke with SHIPS & PORTS on the development, described the move by the Transport Ministry as illegal.

Founding President, Nigerian Shipowners Association (NISA), Chief Isaac Jolapamo, who described the move as strange said it is against the CVFF guidelines, which provides that the money be managed and disbursed by NIMASA.

Jolapamo called for an immediate audit of the fund to ascertain the actual amount, which has been shrouded in secrecy.

He said, “We are at a cross road as far as maritime or shipping development is concerned. Whatever they do whether it is right or wrong, I think it is time now to ask them (NIMASA) to account for all the CVFF money they have received. We are not fools. You don’t shave people’s head without asking them. Most of us have contributed immensely to that fund and I think we should know what has happened to the fund from the beginning.

“How much have they spent from the money? The fund is hidden in so much secrecy that the people who contributed to the money do not know what they have contributed or whether it is there or not.

“The legal thing is that the money be kept by NIMASA. We have been paying into the account since 2006 and there is nothing anybody knows about it. We only heard of plans that they want to divert part of the fund, we don’t know the ones they have diverted even before now.”

A former Director General of NIMASA, Temisan Omatseye, also corroborated Jolapamo’s position saying that the agency would be culpable of an illegal act if the management made any attempt to move the money to the ministry.

“There is a law and there is a process and a guideline and that guideline should be followed strictly. Any attempt to move any money from that account to somewhere in the ministry for disbursement as far as I am concern is illegal.

“These funds are shipowners’ money and if shipowners are aware of this, they should begin to make noise about it. The law is very clear on the CVFF fund and the law said that fund is to be managed by NIMASA in line with guideline as approved by the National Assembly.

“If the National Assembly does not put in a process that an account should be created in the ministry, what is the money being put there for? The money belongs to the shipowners so why should it be moved to the ministry? Those are the questions we should be asking. Even if it is a ministerial directive, under what law will they move the money? If this is true, then it is quite amazing and shocking to me.

“If NIMASA moved that money, they themselves are perpetrating an illegal act. Let us see under what directive the Minister will give to them to move the money and whether they are able to do that,” he said.

On his part, maritime lawyer, Emeka Akabogu, said the 2006 CVFF guidelines do not give the Ministry of Transport any role to play in handling the CVFF adding that the guidelines do not also make provision anywhere for the husbanding of the CVFF by the Ministry or under the control of the Minister.

He said, “The purpose of the CVFF under the Act is the promotion of indigenous ship acquisition capacity for domestic coastal shipping, which is right within the exclusive remit of NIMASA. NIMASA is specifically mentioned to house the enforcement unit “charged with the responsibility of enforcing the provisions of the Act” by section 2 of the Act. NIMASA is also mandated to collect monies accruing to the fund under section 44 of the Act and deposit same in commercial banks.

“The powers of the Minister under the Cabotage Act include grant of waivers (section 11) issuance of guidelines and regulations on waivers (section 14), licenses (section 20), approvals, documentation, fees, vessel tender requirements and the like (section 46), in addition to making orders for the requisition of vessels (section 48). None of the powers of the Minister relate to administration of the CVFF, neither does the Ministry of Transport have any role play in respect thereof.

“The administration of the CVFF is meant to be under guidelines proposed by the Minister and approved by the National Assembly (section 44), and the last known approval was in 2006. It is true that the Minister was reported to have set up a guidelines committee sometime this year for the disbursement of the CVFF, but any amendment of the guidelines as provided in the Act must be with the approval of the National Assembly.

“Even though the Minister has power to give the agency written directives for the performance of its functions under section 25 of the NIMASA Act, it is expected that such directives must be within the ambit of the law. The Director General of NIMASA is the accounting officer for the agency and will be responsible for final decisions relating to funds of the agency. He must therefore be careful and act advisedly in ensuring he does not breach the law in complying with directives of the Minister.”


Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to as the source.