NSL: Nigerians continue to await birth

ABIOLA Seun |

The planned resuscitation of the Nigerian Shipping Line by the federal government has been another white elephant project two years after it was mulled.

The resuscitation of the Nigerian Shipping Line and the National Airline was conceived by the Federal Ministry of Transportation at almost the same time but while the National Airline has been recording considerable amount of success that had led to the unveiling of the name and logo, the Nigerian shipping Line still remains a mirage.

The National Airline which is named Air Nigeria is scheduled to begin operation by December 2018 and designed for government not to be involved in its running or deciding who runs it because investors will have full responsibility for its operation.

But, while the National airline is gathering momentum with date of operation set by the government, uncertainty still beclouds the resuscitation of the Nigerian Shipping Line two years after government’s assurance.

For instance, when the Chairman of the Ministerial Committee on the Modalities for the re-establishment of Nigerian Shipping Lines, Mr. Olu Olusoji, submitted his report two years ago, the minister of Transportation, Rotimi Amaechi immediately constituted an implementation committee, which he said would be headed by the Chief Executive Officer of the Nigerian Shippers’ Council (NSC), Mr. Hassan Bello.

To the minister, the Shipping line had become expedient to constitute the implementation committee immediately because government attaches premium importance to the revival of the national shipping line, adding that it will greatly impact on the socioeconomic development of the country.

Amaechi said international regulator and willing investors in the industry have given Nigeria August 2018 as deadline to put all the necessary framework and foundation for viable international maritime activities which will attract foreign investors.

But, rather than succeed, the resuscitation of the shipping line suffered from withdrawal of would be investors from the shipping line due to government unfavourable policies and archaic fiscal laws to missing out on investors window to set up the shipping line and huge revenue leakages due to lack of functional national shipping line.
It was gathered that in 2014 Nigeria lost $2.2 billion because of the absence of national shipping line.

If 50 per cent out of the 5,000 ships that landed in Nigeria in 2014 were Nigerian ships and managed by Nigerians, the country would have saved $2.2 billion.
Nigerian seafarers that would have been engaged to work on the fleet would have been earning about $3,000 per month so, these are the losses the economy missed by not having ships carrying Nigerian cargoes on the international waters.

Also, one of the investors, a Singaporean shipping firm, PIL shipping Line withdrew from the Memorandum of Understanding (MoU) it signed with the Nigerian government on the formation of the shipping line due to Nigeria’s stale fiscal rules that impose a 14 percent tax on new ships acquired by Nigerians and the seeming lack of willingness to scrap the tax.

Speaking recently, the President, Shipowners Association of Nigeria (SOAN), Engr Greg Ogbeifun frowned at the current Nigerian fiscal policy which stipulates that a vessel owner bringing his ship into the country should first of all pay a duty charge of 14 percent out of the total cost of the vessel to Customs, a practice he noted was not obtainable in other developed countries. He therefore called for the overhaul of the nation’s fiscal law.

“The PIL pulled out because the Nigerian Fiscal Policy does not make an establishment where fleet of that nature will be competitive in global trade, “,Ogbeifun stated.
“The fiscal policies are tax laws, tonnage tax laws, and other laws that affect international shipping, and we had to as a body, appoint a company as consultant to do an international study of what other countries and rulers create. What did they do to be able to establish fleets that are trading globally? That study revealed that most of those countries first of all, declared zero duty.

“If you are a national and you acquire a vessel and you are bringing that vessel into the country, your duty is zero; but in this country, the duty payable on an average if you are bringing in a vessel is about 14 percent of the value of that vessel. So, if you take a vessel of $80 million, a crude oil tanker, you pay $80 million and then you have to pay another 14 percent of the value to be able to import it into your country because you are flying your flag.
“You are going to be competing with the current foreign countries who are carrying your cargo and who didn’t have to pay such duty in their country. Their commercial terms for carrying the cargo will be cheaper than yours. So, you cannot be competitive internationally.
“That is just an example of why PIL said in their writing that Nigeria must review the fiscal policy if they must continue in that relationship”.

He added that the duty charges were being paid to “Customs, NPA, all sort of importation cost when you are coming in.”
“The authorities must create a more enabling environment that would not only ensure a level playing field, but also empower Nigeria’s indigenous operators in the shipping sector to place them in a position to compete with their foreign counterparts unhindered”, he advised.
Also, Nigerian government missed a key timeline put forward by international investors on the path to the establishment of a new national carrier.

While receiving the report from the Olu Akinsoji led committee which was set up to draw up the template for the establishment of a new national carrier in June 2017, the Minister of Transportation, Chibuike Rotimi Amaechi, had stated that investors gave August 2018 deadline.

“Investors have given us August 2018 as deadline on this issue. And we have said government is going to use part of the Cabotage fund in this direction.

“We must also advise on how to choose who qualifies to benefit from the fund because the 60 per cent that we have must be accessed from the cabotage as part of their equity contribution.”

Amaechi’s plan for a new national carrier is anchored on the private sector whereby 60 per cent will be owned by local private investors while their foreign counterparts are expected to hold 40 per cent stake.

He had assured stakeholders of government’s political will at ensuring that the new project gets cargo to carry, adding that the present government was determined to do everything possible to ensure that the new national carrier succeeds.

On presentation of the report from the Chairman of the committee in June last year, the minister had immediately constituted an implementation committee headed by the Chief Executive Officer of the Nigerian Shippers’ Council (NSC), Mr. Hassan Bello.

The committee is to screen shipping operators interested in acquiring part of the 60 per cent for Nigerians and 40 percent foreign ownership in the proposed National fleet.

Ogbeifun, who said the committee has commenced work, also expressed confidence that the new national fleet, unlike the old one, will be a success. He pointed out that Amaechi, had assured of government’s political will at ensuring that the new project gets cargo to carry. He quoted the minister as saying that the present government is determined to do everything possible to ensure that the new national carrier succeeds. Nigeria and Singapore recently reached an agreement to establish a private sector driven national carrier with stake-holding of 60 to 40 per cent respectively.

However, since the report was submitted, nothing has been heard from the Ministry of Transportation, even as the August deadline given by investors have come, thereby raising fears that the effort may yet be another pipe dream ambition.