PIL, Asian giant, dumps National Shipping Line project

—says venture not competitive

The desire of the Federal Government to float a national carrier suffered a set back when a major investor in the proposed national shipping company, the Pacific International Lines,(PIL)pulled out of the project.

The PIL is a shipping company incorporated in Singapore in 1967 and founded by a Chinese entrepreneur, Chang Young Chang and it is one of the largest ship-owners in Asia.

The Company has decided to partner with the Federal government to float a national shipping line .

It was however gathered that the Asian shipping giant later pulled out of the agreement, citing the current Nigerian fiscal policy on the importation of vessel which the investor said would make the joint venture uncompetitive and highly unprofitable.

Giving an insight into the controversial policy which led to the pull out of the foreign investors, the president, Shipowners Association of Nigeria (SOAN), Engr Greg Ogbeifun, explained that the current Nigerian fiscal policy on vessels importation 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 is not obtainable in other developed countries.

“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”.

He advised that 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.

However, the Executive Secretary of the Nigerian Shippers’ Council (NSC), and the Chairman of the committee facilitating the berth of the proposed national carrier,

Hassan Bello, has downplayed the decision of PIL to pull out of the agreement.

He assured that the National Shipping Line is on course and will deliver in record time as the committee has what he described as option B.

Although, Bello confirmed the pull out of the major investor from the project, he disclosed that there are many options open to Nigeria as the Asian shipping giant was not the only option.

He stated that the committee on the re-establishment of the National Shipping Line was working assiduously despite the withdrawal.

He stated that for Nigeria to have a sustainable national shipping line, a lot of stakeholders including the banks, insurance companies, flag administration, nautical colleges needed to be involved even as he pointed out that policies and laws needed to be reviewed to meet the current realities.

In his words,” We have had many options; PIL was not the only option. There are many options, now establishing national fleet is not buying “akara” or bread from the market, it has to be sustainable.

“That was why I said don’t build a fleet, we could do that, just gather a few people and there are ships everywhere, christen them Nigerian name, have them have Nigerian flag and then we have a national fleet but we are not going to do that, we are going to go about it in a very economical way and in a very sustainable way and we are moving so much but it is not a talk shop. The committee is working day and night to see that we have national fleet.”

“We have to involve our banks, we have to involve our insurance, we have to look at our flag administration, we have to look at nautical colleges, we have to look at the policies and laws to be changed- FOB to CIF and many other things including of course ship building and ship repair yards”.