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‘Nigerian maritime laws crippling local investors’

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Twenty-two years after the demise of the Nigerian National Shipping Line (NNSL), Nigeria has not been able to midwife another fleet as the Nigerian merchant shipping act  does not favour  local ship owners. BAYO AKOMOLAFE reports

Unfavourable policies, which have led to the collapse of indigenous shipping lines in the last two decades in Nigeria,  is yet to be reviewed by lawmakers unlike other maritime countries.

For instance, foreign vessels, which do not meet the requirements of the nation’s Cabotage Act, have  dominated Nigerian waters at the expense of Nigerian registered vessels due to  loopholes in Nigerian maritime laws.

Implication

Because of this, many ship owners have gone out of business, a situation which has led to huge loss of jobs.

Today, the tonnage of cabotage fleet in the country has diminished considerably in the last couple of years as most vessel owners can no longer meet their obligations to the financing banks.

In most cases, the ship owners said they had no option than  to go under or have their vessels repossessed by the banks, leading to loss of jobs, training opportunities and failed businesses.

According to the President of Shipowners Association of Nigeria (SOAN), Engr. Greg Ogbeifun, the only thing which could have been the saving grace was the recent Memorandum of Understanding signed  in August 2016 between the Federal Government and a Singaporean firm, Pacific International Lines (PIL), to establish a national fleet.

Issue

However, he explained in Lagos at a shipowners’ workshop and dinner that Nigeria’s tax laws had put  off the firm  from the MoU because of its unfavoufrable terms and policies.

He recalled that “PIL put it in writing that unless the tax laws were reviewed, it won’t be able to fly the Nigerian flag as planned.”

He lamented that Nigerian flagged tankers were already disadvantaged.

Also, the president said that government had failed to review the country’s tax laws and policies with a view to enhancing the growth of maritime industry as it has been done in other maritime countries.

He explained that the country had not been able to midwife the emergence of a Nigerian fleet, whether private fleet or fleet resulting from Public Private Partnership.

Ogbeifun stressed:  “This is despite the fact that 92 per cent of all import/export cargo in and out of our country is via seaborne trade.”

Also, he explained that the country’s flag administration was extremely weak to the extent that the Nigerian Liquefied Natural Gas (NLNG), which owns a large fleet trading worldwide, could not register its ships in the Nigerian flag in other to boost Nigerian tonnage.

The president said that the country lacked the political will to implement the comprehensive report and recommendations made by a committee set up by the Ministry of Transportation to study and make recommendations for the revamping and restructuring of the country’s flag administration.

Instead, Ogbeifun explained that Nigerian maritime administration was interested in  collecting levies and revenues and meting out punitive measures on stakeholders, such as arrests, threats and shutdown of ship repair yards with the accompanying consequences to the industry, which the International Maritime Communities and the IMO were observing.

Challenges

The shipowners said that despite the fact that they contributed  two per cent  of their contract values to the  cabotage Vessel Financing  Fund (CVFF), most shipowners, who  approached the maritime administration  could not benefit from the fund.

He said: “Up till now, a fund that has accumulated several hundreds of millions of dollars has never been used to  finance a single vessel since its inception over 10 years ago.

He noted: “Our maritime administration has now gone into the business of acquiring a floating dock without a clear objective of what to do with it despite the need to support and grow existing shipyards in the country.

“A large number of the vessels in our maritime domain leave the country to foreign countries for their docking and ship repair needs.”

Last line

For Nigerian maritime to move forward, the Federal Government should review the existing laws impeding the growth of the industry.

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Business

Shipping lines at crossroads over private armed guards

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The use of contract armed security guards by shipping lines to deter piracy has been proscribed by the Federal Government despite increased robbery and weak policing of Nigerian waters. BAYO AKOMOLAFE reports

 

As the world’s navies could not control vast area in the high seas to secure all ships sailing to various ports, the International Maritime Organisation (IMO)’s Maritime Safety Committee (MSC) in 2011 approved an interim guidance to shipowners, ship operators and shipmasters to use privately contracted armed security personnel on board ships transiting the high risk piracy areas in the Gulf of Guinea and other zones in the Gulf of Aden.

 

Security cost

The development made ship owners to pay as much as $60,000 to armed security guards to secure and protect vessels and crew.

For instance in Nigeria, shipping lines claimed that they spent over $200 million annually to protect cargoes and their crew by placing armed guards on board merchant vessels because of the menace of armed robbery in the Niger- Delta area.

However, the Federal Government said last week that such practice would no longer be business as usual for liners sailing on Nigerian waters.

Nigerian coasts have already been labeled as the hotbed of piracy and sea robbery.

The Government said that it was illegal and against Nigerian constitution for private armed guards to operate onboard vessels.

Attorney General of the Federation (AGF), Abubakar Malami, in Lagos, said that there were reasons to be worried about armed guards.

He noted that the private armed guards would not perform their anti-piracy duties in a way that does not escalate violence, involve unlawful use of force or cause international incidents.

 

Although Malami acknowledged that Nigeria’s waters was an alluring area for criminal activities such as piracy, armed robbery at sea, maritime terrorism, and a host of other vices, on the other hand, he explained that under the Nigerian law, armed guards were not permitted on merchant vessels within her waters.

 

The AGF, who was represented by the Special Assistant to President Muhammadu Buhari on Financial Crimes, Biodun Aikomu, at the  recent Lagos International Maritime Week, said that security on Nigerian waters remained the prerogative of the Nigerian Navy and the Nigerian Maritime Administration and Safety Agency (NIMASA).

 

He said that the National Assembly had enacted laws to address specific issues relating to maritime security and operations including the NIMASA Act, Cabotage Act among other international conventions, which Nigerian is a signatory to.

 

He noted: “The question as to the legality or otherwise of armed guards on merchant vessels in Nigeria is quite straight forward, under Nigerian law, armed guards are not permitted on merchant vessels within the Nigerian waters.”

 

In considering the legality or the use of armed guards on Nigerian flagged vessels, he said that important consideration had been given to the legal regime of the Flag State (Nigeria) vis-a vis the legal regimes of other states in a given situation.

 

Malami explained that there should be no express authorisation of vessel owners to have private armed guards on board.

 

He said that in Nigeria, individuals were not permitted to own or use fire arms except licence is sought and obtained in respect of such firearms.

 

The AGF said that giving such permit was expressly prohibited under Section 17 of the Private Companies Guard Act.

 

 

Anxiety

 

Despite his explanation, the Nigerian Ports Authority (NPA) said that the attacks on vessels berthing at the Lagos Port Complex were worrisome.

 

The Managing Director of the authority, Hadiza Bala Usman, said at a stakeholders’ meeting in Apapa, Lagos that the management was considering a number of strategies to check the attacks.

 

The managing director noted such strategies when reinforced, would bring to book those behind the attacks on vessels berthing at the Lagos Port Complex.

 

Usman noted that more patrol boats would be acquired to patrol waterfronts.

 

 

Remedy

 

The Director General of NIMASA, Dr. Dakuku Peterside, explained that the Nigerian maritime domain requires the commitment of all stakeholders to ensure optimum safety of investments in the sector.

 

He stated that there were a lot of factors that had contributed to the cost of products coming into the country through the seas, which makes it very important to tackle insecurity in the waterways.

 

He said: “The only way we can tackle maritime crime is for all of us to work together. There have been several regional initiatives in that respect to tackle maritime crime.

 

“Apart from the ECOWAS Integrated Maritime Strategy, you have the Africa Integrated Maritime Strategy, you have the Gulf of Guinea Commission dealing with the same thing there are several sub-regional and regional initiatives to tackle maritime insecurity so I see a lot of potential in regional collaboration and integration.”

 

Last line

 

Government should invest in maritime security, domesticate international conventions it ratified and enforce them in order to boost shipping in the country.

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Business

Bonded terminal operators lose 90% workforce

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About 20 bonded terminals in Lagos have sacked 90 per cent of their staff due to lack of job, Bonded Terminal Operators of Nigeria (BTON) has said.

 

It was learnt that each terminal employs up to 500 staff aside the 10,000 auxiliary workers.

 

Executive Secretary of BTON, Mr Haruna Omolajomo, said in Lagos that bonded terminals were operating below three per cent.

 

He noted that facilities worth about N3trillion in the terminals were wasting.

 

Omolajomo noted that bonded terminals in Lagos were not allowed to function very well due to lack of cargoes from the main port.

 

The executive secretary urged the National Assembly to enact a law to recognise bonded terminal as an extension of ports in Nigeria in order to remain in business.

 

Omolajomo explained that the legislation was necessary to reduce unemployment and to save their N3trillion investments.

 

Omolajomo explained that lack of cargoes had demoralised some of the bonded terminal operators in the country, saying some of them were indebted to banks.

 

 

 

He said salaries of workers had not been paid for a year in some terminals.

According to him, “some terminals have sacked about 95per cent of their staff. Where they are supposed to have about 500 staff, they have only seven and the seven are just overseeing the property on ground so that people will not steal them.”

 

Omolajomo said that certain percentage of cargoes should automatically be assigned to bonded terminals as the extension of ports.

 

He said: “We have about 20 bonded terminals and each of them have sacked 90 per cent of their staff. Today, no bonded terminal operates more than three per cent, they operate below three per cent.”

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Business

National fleet: Ship owners fret over slow pace

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Following the demise of the Nigerian National Shipping Line (NNSL) in 1995, a new national fleet being conceived to boost shipping in the country is still crawling as the Federal Government failed to amend the Maritime Act. BAYO AKOMOLAFE reports

 

Shipowners are at crossroads over the establishment of a national fleet to boost domestic and international shipping in the country largely dominated by foreign liners.

The plan to float a national fleet was mooted in 2016, when the Federal Ministry of Transportation set up a National Fleet Implementation Committee, headed by the Executive Secretary of the Nigerian Shippers’ Council (NSC), Hassan Bello.

Past records

 

This idea came to fruition 23 years after the demise of the Nigerian National Shipping Line (NNSL).

The shipping line was established by the Federal Government in 1959. Despite heavy investment and subsidies, the company with its 24 vessels was unable to compete with European and Asian lines.

However, Malaysia, which started its shipping line almost the same time with Nigeria, survived with 245 ships of various sizes and types. As at 1995, all the 24 fleet under the defunct NNSL had disappeared.

Presently, the country has no national fleet to boost local and international trade despite the fact that 92 per cent of all import/export cargo in and out of the country is via seaborne trade.

Excuses

Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dakuku Peterside, said the inability of local investors to raise funds for equity participation stalled the establishment of a national fleet and licensing of private national carriers.

 

He said that the recession had also made it difficult for Nigerian ship owners to raise funds to take up the 60 per cent equity under the new arrangement with a Singaporean liner, Pacific International Lines (PIL).

Nigeria and Singapore had reached an agreement to establish a private sector-driven national carrier with stake holding of 60 to 40 per cent respectively.

Peterside also blamed shipowners for not coming forward to apply for the national carrier status.

He said: “There is no 60 per cent of the equity that can be picked up anywhere and so that is why the process seems fairly long.”

Impediment

However, it was learnt that the only saving grace was the recent Memorandum of Understanding (MoU) signed in August 2016 between the Federal Government and PIL, but the Nigerian maritime laws obstructed the process as the government was reluctant to amend the loopholes in the Maritime Act, which could enhance the growth of the industry.

For instance, President of Shipowners Association of Nigeria (SOAN), Engr. Greg Ogbeifun, said at a shipowner forum in Lagos that Nigeria’s tax laws had put off PIL from the MoU because of its unfavorable terms and policies.

 

He recalled that the firm put it in writing that unless the tax laws were reviewed, it won’t be able to fly Nigerian flag as planned.

 

In the MoU, Ogbeifun said that PIL had initially wanted to provide the Joint Venture (JV) or Special Purpose Vehicle (SPV) that was more of expertise, where it would provide the managing director/ chief executive officer, chief operating officer and Nigeria would provide the chief executive officer.

 

Divergence

 

He said: “We said no, and that became the subject of further discussion and negotiation. At the end, it was agreed that PIL would bring the managing director /chief executive officer; while Nigeria will bring a deputy managing director; they will bring a chief operating officer and Nigeria will bring a deputy chief operating officer and chief finance officer, while they will bring a deputy chief finance officer. You may be aware that the PIL is a large international shipping company with a lot of experience internationally and in Nigeria for long.

 

Ogbeifun said that Nigeria saw benefits in leveraging on the company ’s worldwide experience, noting that the company had over a hundred ships in its fleet worldwide.

 

Dilemma

 

But the president noted that Nigeria lacked political will to implement the comprehensive report and recommendations made by a committee set by the Minister of Transportation, Rotimi Amaechi to study and make recommendation for the revamping and restructuring of the country’s flag administration in order to make it more attractive for international patronage.

 

For instance, Ogbeifun said that the government had failed to review the country’s tax laws and policies as it has been done in other maritime countries.

 

He explained that Nigeria had not been able to midwife the emergence of a Nigerian fleet, whether private fleet or fleet resulting from public private partnership.

 

Ogbeifun lamented that Nigerian flagged tankers were already disadvantaged.

 

The president explained that Nigeria’s flag administration was extremely weak to the extent that the Nigerian Liquefied Natural Gas (NLNG), which owns a large fleet trading worldwide, could not register its ships in the Nigerian flag in other to boost Nigerian tonnage.

 

Last line

 

Government should amend the laws impeding maritime business as done in other countries in order to boost shipping and earn more revenue.

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