Nigerian Ship Owners Losing Hope in CVFF?

Tayo Oladipupo I

The Cabotage Vessel Financing Fund (CVFF) initiative was introduced in 2004 as a pool of fund meant to empower Nigerian ship owners to grow and nourish their shipping businesses.

The fund basically is the two percent (2%) freight deductions made from the freight rate of ship owners solely for the benefit of the contributors.

The fund however, is warehoused by the government regulatory agency in charge of the shipping sector, the Nigerian Maritime Administration and Safety Agency (NIMASA) but has recently been transferred to Treasury Single Account (TSA).

Good as the initiative seems, fourteen years after the commencement of the contribution by over four thousand (4,000) vessels owned by Nigerian ship owners, the approximate total fund accrued so far is unknown to the contributors and there has not been a beneficiary of the fund since inception.

Meanwhile, the 2% collection continues despite not having disbursed or selected any company or ship owner for benefits from the pool of funds.

The nearest attempt at accessing the fund was under the administration of President Good luck Jonathan through the then minister of Transportation, Idris.

Six beneficiaries were selected after due diligence and the minister who had the sole power to disburse the fund, for no reason, took the list to the President and the President was astonished to see such huge sum was hidden somewhere in NIMASA and pronto, the process died a natural death.

The present Minister of Transportation, Hon. Rotimi Amaechi was said to have agreed to disburse the fund but was concerned about the process of repayment.

Even though some supposed beneficiaries claimed to have met the requirements, the minister refused to bulge or do anything towards releasing the fund to the owners.

To ship owners, NIMASA is not ready to part with the money for the purpose it was originally meant.

In fact, some indigenous ship owners said they suspected that the pool had been depleted by government or had been diverted for other purposes.

The Nigerian Content Development Board (NCDB), another government agency saddled with development of local Content, began collection of Nigeria Content Development Fund in 2010 and the money has grown to $700million within the period with six beneficiaries so far.

With NIMASA and Ministry of Transportation being discreet about the total amount of the CVFF and not having any ship owner penned down to benefit from it, is apprehensive.

Engineer Greg Ogbeifun, CEO of Starz Group lamented the migraine incurred Nigerian ship owners in trying to access the fund they contributed for their own benefit.

According to him, it is worse how the total amount so far collected has been a mystery thereby expressing fears that there may be no hope of anyone eventually benefitting from the pool.

At different times, different figures have been bandied. Unofficial information said the fund was 100 billion dollars while some others said it was 400 billion dollars but no official statement was received concerning the actual amount.

Ogbeifun said, “Cabotage operators revenue are contributed into this esusu (contributions). Two percent of ship owners’ earnings goes into that fund and the essence is that the fund should be used to grow the business, to help the ship owners maintain their tonnage, their fleet, stay in business, create enabling environment.

“Then also we have the subsequent one, the logic Act which provided for the Nigerian Content fund whereby one percent of industry players. This time around, not only ship owners but oil and gas industry, service providers including ship owners one percent of their earnings is collected by Nigerian Content Board and put in the fund to help their businesses.

“So, there are sources of funding and we also have the bank credit and I think this is very clear to us but I need to go beyond all these explanations.

“After all these sources of funds, why can’t we access one. The contracts are no longer coming, the FOB/CIF challebge, the CVFF and the NCB fund and the funds that we think can help the industry to maximise their business out of the situations we find ourselves in ship ownership, ship acquisition and ship operations.

“The nearest we got to disbursing CVFF was in the last administration. Six companies went through the process and were recommended to the minister then for approval for disbursement.

“Instead of the minister to carry out the function that he was empowered to carry out, he took the file of the six companies and went to the President and the President said what! You mean we have this amount of money lying somewhere and he called the DG of NIMASA and said what are you doing with all this money over there? The rest is history because we all saw it on television and that was the end of the nearest attempt to disburse the fund.

“So, the new dispensations came in and the minister looked at it and said I am not going to disburse this money unless you tell me how you are going to pay it back.

“In the last dispensations where six companies were selected, my company was one of them, the vessels we commissioned in couples of weeks were vessels that we applied for in 2011 so there was a gross amount that can be used to pay back so the credit analysis was right in recommending it but now, under this new dispensation, and that time, the bank guaranteed NIMASA that if anything happened we would pay because the bank has the two percent in their kitty.

“Now listen to this, all the CVFF fund have now been moved to the Treasury Single Account (TSA) account under Central Bank control .

“So we ship owners became emotional
So that is where they are on cvff and this may be the first time if you hearing me saying it this way but having said that, the minister may not have the time to explain to you the way I am.

“Where are the contracts, who is going to do the credit analysis, how are we going to pay back the money if they release it out? That is where they are on cvff.

“But we believe that no situation that cannot be changed, if I were the minister, what I will probably do invite financial experts and sit them with NIMASA and the ship owners and banks and ask the way out of the present scenario. You give out to grow the sector and protect the money and that is what ship owners association are engaging and saying look we appreciate where you are coming from but you cannot just let it be and if the funds cannot be disbursed for good reasons, is it possible to recommend that they stop taking our two percent?

“The NCDB that is collecting one percent of our revenue has been able to support six industry players and we happen to be one of them, have been able to access the fund, use it wisely and have the money paid back. That has a process where they engage the service of a consultant .