$200million CVFF DISBURSEMENT, FG RELEASES GUIDELINES

Abiola Seun

Following the decision of the federal government to disburse the Cabotage Vessel Finance Fund (CVFF) in the first quarter of 2020, the contribution which was begun in 2003 has hit $200million (N72billion).

This was even as the minister of transportation has revealed that part of the guidelines put in place for the disbursement of the CVFF is that lending institutions will be accountable for fund disbursed.

Recall that the Federal Ministry of Transportation had last year revealed that President Mohammadu Buhari has approved the disbursement of the CVFF funds in the first quarter of 2020.

But, the Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr Dakuku Peterside has said that the CVFF is about $200m (N72billion).

Speaking after a meeting over the disbursement of the CVFF which was convened yesterday by the Federal Ministry of Transportation in collaboration with NIMASA, the Honourable Minister of Transportation, Rotimi Amaechi stated that every penny disbursed to shipowners will be accounted for by the lending institutions.

Amaechi said, “We have agreed to form a committee that will draw up guidelines for the disbursement of the CVFF. It is the guideline that will be drawn up that will be taken to the National Assembly for ratification.

“That Committee comprising of some stakeholders will be headed by the Director-General of NIMASA, Dr Dakuku Peterside and they will decide if the interest rate that will be attached to the CVFF will be single-digit or not.

“Essential elements in the expected guideline is that the responsibility of monitoring the funds will be transferred to the lending institutions, that is the commercial banks. Nobody will just walk away with the funds. Every shipowner that gets a chunk of the CVFF will be held accountable by the lending institutions.

“The commercial banks will first and foremost give criteria to access the funds, so any shipowner that does not meet up with banks guidelines will not be a beneficiary. So, in this case, the risk will be borne by the lending institutions.

“If we just allow people to take that money without a proper framework to service their loans, then we won’t achieve our aim of developing the maritime economy. People must borrow and return the money borrowed so that others can benefit from the CVFF.”

Speaking earlier, the Director-General of NIMASA, Dakuku Peterside revealed that the funds currently stand at about $200m.

In his words, “the committee set up will come up with a draft guideline which the Honourable Minister will study and then pass on to the National Assembly for ratification. It is after this that we will go to the next stage where we will use the commercial banks to disburse the funds.

“The CVFF is currently about $200m and the guidelines will determine the manner of disbursement.”

The CVFF was derived from the two percent of the revenues of shipowners which has remained undisbursed since its creation in 2003, despite cries and efforts by industry operators to access the fund which is under the custody of the NIMASA. But, the Federal Ministry of Transportation which supervises the agency had cited fears of insincerity on the side of shipowners as reason for not disbursing the fund.

Also, according to the Act establishing the fund, the Minister of Transportation is empowered to establish guidelines for the disbursement of the fund to eligible operators. After approval from the National Assembly, the fund can then be disbursed.

The Act also stipulates that selected applicants will send in their companies’ applications for the financing of the procurement of ships to NIMASA who will send the applications to the banks warehousing the fund.

The banks are in turn required to carry out a credit risk analysis on the projects of the applicants and if the applicants are creditworthy, the banks will make recommendations to NIMASA that the transactions are worth funding. NIMASA will then forward the recommendations to the minister to review, approve and send for disbursement.