Stakeholders in the coastal trade and activities are worried that the absence of indigenous ship owners’ participation is affecting crude oil transportation, writes AISHA COLE
The operators in Nigeria’s coastal trade believe the country loses about N10 billion daily because indigenous ship owners are not participating in the crude oil transportation business and lifting of other cargoes. They also claimed that the ship owners on their part lose about N5.4 billion monthly to foreign ship owners who have over the years dominated the lighterage.
Lighterage, also called lightering is the process of transferring cargo between vessels of different sizes, usually between a barge and a baulker or oil tanker. Lighterage is undertaken to reduce a vessel’s draft in order to enter port facilities which cannot accept very large ocean-going vessels. In this case, it has to do with transportation of refined petroleum products from anchorage to depots in smaller tankers, usually calculated at N3 per litre.
The President, Nigerian Ship Owners Association, NISA, Capt. Niyi Labinjo, who gave the figures, said their non-participation in crude oil transportation business has not only denied the country of huge revenue but also jobs for indigenous seafarers. “That can be calculated. Nigeria imports about 1.8 billion litres of petroleum products every month and that gives you N5.4 billion every month, so, that is what Nigeria is losing monthly,’’ he told News Agency.
It is apparent that with the influx of foreign vessels, most of them operating illegally in the coastal trade, the country suffers not only huge financial losses but also unemployment of many Nigerian seafarers. Many of the vessels which could not work in Europe and Asia, where there are stiff enforcement of regulation of Cabotage trade (coastal shipping) are found in Nigeria.
The operations of these foreign vessels are in violation of the Cabotage law passed to among others; restrict trade along Nigeria’s coastal waters to indigenous operators. The law, ordinarily, should have boosted indigenous ownership of ships but the reverse is the case. Over the years, foreign vessels still dominate over 80 per cent of the Cabotage trade due to misapplication and abuse of its waiver clause.
The Cabotage law was patterned after the U.S. “Jones Act’’ of 1938, which has helped to develop that country’s indigenous capacity in shipping. The Jones Act of 1938 does not give room for any foreign ship to transit between ports in America. The result is that by not engaging Nigerians in the transportation of refined petroleum products, the nation is losing severely. Sometimes, many of the indigenous companies do not do a job in months.
The situation of indigenous ship owners was worsened by the cancellation in 2000 of Cargo Allocation Formula of the National Maritime Authority by the then Minister of transport, Mrs. Kema Chikwe. The formula which offered protection to Nigerian ship owners who apparently were still alive, if not doing relatively well, was cancelled because of what the then President Olusegun Obasanjo’s administration termed corrupt practice.
It was learnt that the cargo being allocated to Nigerian companies ended up being resold to European carriers at a commission either because the Nigerians didn’t have ships to carry them or because the traders were not even in the business of shipping at all. But prior to the precarious situation, the country had a booming shipping industry that promoted seafarers training and offered employment to Nigerians.
The country also had private ship owners then though they were obscure because of their inactivity and also because some of them misapplied the Ship Acquisition and Ship Building Fund, SASBF, offered to them by government in 1995. Some of the ship owners bought rickety ships with money with the excuse that it was not enough to acquire new ships while some spent in dribs and drabs.
Things were further confounded in 1995 when the Federal Military Government liquidated the Nigerian National Shipping Line, NNSL, which once had over 20 sea-going ships in her fleet. The liquidation of NNSL was said to be due to the shipping line’s inability to fulfil its obligations to both staff and other shipping stakeholders due to a combination of corruption and excessive intervention of the government in the day to day running of the firm.
For now, the government has given the Nigerian Maritime Administration and Safety Agency, NIMASA, the task of refloating the defunct shipping line. The Chairman and Chief Executive Officer of Starzs Investments Company Ltd, an indigenous shipping firm, Mr. Greg Ogbeifun,explained that the demise of the NNSL with the attendant disappearance of all ships in her fleet had given rise to influx of all kinds of foreign vessels into the country. Ogbeifun, who is the President, Ship Owners Association of Nigeria, SOAN said: “If nothing is done urgently to checkmate this trend, these foreign ships might pose a great danger to the already worsening security situation in the country.
“Our (Nigerian) maritime boundaries have become exposed to massive influx of foreign ships and foreign seafarers from different parts of the world with seafarers of different nationalities’’. According to him, this jeopardises national security and limits Sea-time training opportunities for indigenous seafarers.
Presently, many indigenous shipping operators are indebted to banks to the tune of over N500 billion which could not be paid and had led to business collapse. The division among indigenous ship owners is not helping matters as they are no longer speaking with one voice.
Some former members of the Nigerian Ship Owners Association, NISA, formerly known as Indigenous Ship Owners Association of Nigeria, ISAN, formed another group named Ship Owners Association of Nigeria, SOAN. ISAN was formed about 13 years ago and led by a shipping magnate and the Managing Director of Morlap Shipping Company Ltd., Chief Isaac Jolapamo.
ISAN was established for the sole purpose of boosting participation of its members in the nation’s shipping sector by acquiring more ships. To ameliorate the plight of indigenous ship owners the government instituted Cabotage Vessel Financing Fund, CVFF, in 2004, now running into billions of Naira. The CVFF, established by the Coastal and Inland Shipping Act 2003, is derived from the two per cent deductions from all contracts awarded under the Cabotage regime.
It is designed to enable indigenous shipping companies to acquire adequate tonnage to be able to participate in coastal and inland trade currently dominated by foreigners. Shipping experts have also suggested that the removal of the waiver clause in the Coastal and Inland Shipping Act of 2003, otherwise known as the Cabotage law, will go a long way in addressing the plight of Nigerian ship owners.
Jolapamo said that many indigenous ship owners had been forced out of business and that others who chose to remain were weighed down by huge debts. To boost indigenous participation in the shipping sector, Nigerians should be engaged in transportation of refined petroleum products.
If indigenous ship owners are allowed to participate effectively in the coastal trade, about five million Nigerians can be employed as seafarers. For Labinjo, President Muhammadu Buhari should kindly consider using the CVFF, believed to be running into billions of Naira to activate the Regional Maritime Bank for effective management. The ship owner said this would be better rather than leaving the fund in the custody of NIMASA which has not disbursed it for many years now.
The mariner said the CVFF should be used as “seed money to establish the Regional Maritime Bank to represent the Federal Government’s share in the bank. “A maritime bank is more competent and better qualified to deal with maritime issues than commercial banks because of their diversity,’’ he said. On the whole, since the government has specialised banks for Industry, Agriculture and Mortgage, having a specialised bank for the maritime industry should be the right step and necessary to fast-track the sector’s development.
Adequate funding and implementation of the relevant laws would boost participation of indigenous operators in shipping and in turn increase the revenue profile of government and the private shipping companies. (NAN).


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