Indigenous shipping companies groan as $124m Cabotage funds idle

Abiola SEUN |

Indigenous shipowners have been worried over the non-disbursement of the $124million Cabotage Vessels Finance Fund (CVFF) being administered by the Nigerian Maritime Administration and Safety Agency (NIMASA) despite challenges facing shipping companies in Nigeria. Abiola Seun writes.

In the last 15 years, the most talked about policy in the nation’s maritime industry by indigenous shipowners is the disbursement of the maritime intervention fund also known as Cabotage Vessels Finance Fund (CVFF).

The CVFF had grown over the years to over $124million when the Cabotage and Inland Shipping Act 2003 was enacted by the National Assembly.

The fund which was created solely to empower indigenous operators in the shipping sector to enable them complete favourably with the foreign counterparts, but, till this moment, there is still no hope in sight that the fund will ever be disbursed soon, in spite of the several promises by successive NIMASA Management on the disbursement of the fund.

For instance, in 2013 during the administration of Dr Patrick Akpobolokemi, the agency and the ministry of Transportation said it had shortlisted 14 companies to benefit from the fund.

The 14 firms which were not mentioned were recommended by the primary Lending Institutions’ (PLIs) selected by the agency for the disbursement of the fund but the disbursement of the fund was never done till Akpobolokemi was removed from office.

But, three years after Akpobolokemi, the fund is yet to be disbursed to neither the 14 shortlisted companies nor any other company in the shipping sector.

The non-disbursement of the fund had however led to shutdown of indigenous shipping companies due to lack of funds to acquire modern vessels, compounded by poor implementation of the Cabotage Act, and lack of implementation of the fleet maintenance and repair subsidy by the Nigerian Maritime Administration and Safety Agency (NIMASA).

Due to this, no fewer than 90 per cent of shipping companies owned by Nigerians have either completely shut down their operations or are barely struggling to survive.

In the last six years, over 10 indigenous shipping companies have shut down operations while those operating are struggling to survive due to non-availability of subsidized funds to augment their business.

Shipping companies such as, Equatorial Energy, Oceanic Energy, Morlap Shipping, Peacegate, Pokat Nigeria Limited, Al-Dawood Shipping, Potram Nigeria Limited, Joseph Sammy, Genesis Worldwide Shipping and Multi-trade Group all in Lagos have collapsed and out of business for over six years!

Visits to the business premises of some indigenous shipping companies in Apapa during the week revealed that the once thriving ventures have completely lost their glamour, lay off their staff, under lock and keys while others have their properties seized by banks.

Describing the state of shipping companies in Nigeria, former President of the Nigerian Shipowners Association (NISA), Captain Niyi Labinjo had told journalists that companies are heavily indebted to banks and are mostly unable to service the loans they took to buy ships.

Labinjo, who is also the President of Al Dawood Shipping, one of the collapsed shipping companies said that most of the ship owners have resorted to selling their landed properties to enable them service their bank loans, while others have lost prime properties to the banks.

The companies also owe their crew arrears of salaries while some have sold off their vessels.

Genesis Worldwide Shipping, which was once seen as a thriving indigenous shipping company just four years ago, has completely gone under with not a single ship to operate.

The company, at its peak less than 11 years ago, had six ships.

The same fate has befallen Joseph Sammy Nigeria Limited. The only vessel left in the company’s fleet, MT Kemepade, was stolen six years ago. The ship was taken to a ship breaking yard in Ghana and the breakers were about to commence work on it before the owners found out!

“The situation is pathetic. We are not only struggling, things are very bad for Nigerian ship owners. It has never been this bad. Most of us are selling our personal properties to meet our financial obligations,” Labinjo had said.

However, the challenges bedevilling the sector is yet to be solved though the current Director General of NIMASA, Dr Dakuku Peterside recently gave Nigerian shipowners fresh hope of disbursement before the end of the first quarter of 2019.

According to the DG, while delivering a lecture on “Effective Policy Implementation: A Panacea for Sustainable Participation and Growth of Nigerian Maritime Sector” at the Shipowners Association of Nigeria (SOAN) revealed that the agency will begin the disbursement of the CVFF in the first quarter of 2019.
He noted that the disbursement of Cargo Vessel Financing Fund (CVFF) would crash the interest rate to single digit.

He said the effective utilisation of the CVFF will also create more jobs in the country. There is also the Cabotage 2003 policy which enables indigenous operators to dominate coastal trade by building and manning of ships, port reform policy and others,’’ Peterside said.

But, a frontline master mariner and owner of Genesis worldwide shipping, one of the collapsed indigenous shipping companies in Lagos, Capt. Emmanuel Iheanacho urged NIMASA to ensure that the CVFF is disbursed to only experienced indigenous ship owners who would use it judiciously to grown the shipping business.

Iheanacho in an interview with journalists in Lagos advised that new entrants into the ship acquisition and ownership business should be given limited amount of funds to acquire 5,000 tonnes tankers or general cargo vessels, pending when they would garner the needed experience in ship management.

Iheanacho, a former Minister of interior charged the NIMASA management to release criteria for disbursing the accrued fund to indigenous ship owners to boost the sector.

The former Minister of Interior, advised NIMASA to rank people in terms of their experiences in ship holding before they can disburse the funds.

“I don’t really know what particularly I wish to expect but I really wish that we can get ourselves together. We have accumulated quite a bit of funds for developing shipping indigenous capacity; we should be bold enough to define the criteria for letting those funds go, so that those who deserve and who have experience can have access to these funds to buy ships.
” I think that what should be done is that NIMASA has to device a means of ranking people in terms of experiences in ship holding.”

Explaining further, he said that those who have successfully operated ships internationally should be empowered very well to be able to acquire bigger and better vessels while the new entrants should also be empowered adding that it will help the sector to grow.

“Those of us who have successfully operated ships will be ranked to be empowered and given the ability to borrow money to buy big and better ships. While the new entrants of course you give them limited amount of money to buy 5,000 ton takers or general cargo vessel and over the time of maybe 2-3years they will master ship management and once they master to the point you think they can operate well, you then lend them money to buy bigger and better vessels. So the thing will continue like that until you have Nigerians who own very big ships”.

Also speaking, the President of NISA, Alhaji Aminu Umar had asked NIMASA to release the CVFF fund for the growth of the industry.

According to Umar, there is no improvement in shipping business in the country, adding that they are still engaging NIMASA over the fund.

“We hope that NIMASA will come up with the intervention fund for ship owners because the fund is already there. We want to see improvement in our operations.

“There is need for government to make the CVFF fund transparent so that our members will have access to it.

“So far, we do not know why the CVFF has not been disbursed and government through NIMASA has not told us why it’s not being disbursed’’.