By Kenneth Jukpor
Alhaji Aminu Umar is the President of Nigerian Ship-owners Association (NISA) and Managing Director of Sea Transport Services Limited. In this exclusive interview with MMS Plus newspaper, he speaks on several pertinent shipping issues ranging from seafarers development to security of Nigerian waterways. He also highlighted the policies stifling shipping in the country as well as the challenges with Nigerian dockyards. Excerpts:
Give us a review of the nation’s economy as it affects shipping?
In terms of shipping, you have to look at the cargo traffic in and out of the country. Using this yardstick, you would observe that in 2015 and 2016 the volume of activities was very low and shipping activities dwindled. Some of the reasons at that time were; the collapse in global oil price, absence of forex and depletion of the foreign reserve. The private sector couldn’t import or export as it used to be. However, from mid-2017 we have observed some percentage increase in the volume of shipping activities and this tail end of 2018 has also seen activities increase but there is a cause for concern as the global crude oil prices are coming down again. Nobody knows if it would continue going down or how long before it goes up. If it continues going down then we are likely to return to the position we were in 2015 and 2016.
Internationally, particularly in the tanker sector, there is high hope that 2019 will be very good for shipping in terms of freight earnings. Worldwide, freight earnings has been very low but the focus for 2019 and 2020 looks promising especially in the area of tanker vessels because of the decrease in the number of vessels in the business today.
Locally in Nigeria, shipping hasn’t fared well under this administration. From 2015 down to this moment there has been no investment in shipping. The banks don’t have the money to fund any maritime asset. We have seen banks trying to support in private sector to enable them acquire maritime assets in the second and third quarter of 2018. This shows a little bit of improvement from 2015/2016 as some companies including mine, have started buying assets but the administration is already coming to an end.
Recently, you told us about NIMAREX coming back next year but I heard Capt. Labinjo talking about the initiative being futile. Is there a disagreement on the issue?
I haven’t heard Labinjo’s position but I think most of the ship-owners want NIMAREX to come back. The reason why NIMAREX hasn’t been held is because there has been nothing to showcase especially in the ship building department. Now, that shipping activities is improving and the international market is looking good, we believe that there would be a positive effect on the Nigerian market. There are lots of activities in the upstream sector as well as the tanker market. In the other sectors of the shipping market, several things are coming up for tank farm operators, dry dock operators, among others. So, we believe we can showcase the development in these areas. We have all agreed to bring NIMAREX back in 2019. We want to showcase the positives.
You talked about coming together by way of reconciliation for the NISA factions. What has happened about that?
We had a division with Capt. Labinjo’s faction and our side and don’t forget we also have the Ship Owners Association of Nigeria (SOAN) and other people in the shipping market. We have been working with SOAN over the years because we are affected by the same problems with regards to the development of the nation’s maritime industry. I think nobody from our side or SOAN has had direct discussion with Labinjo in particular. However, we all have respect for him and some of the ship owners or members of the association, who are with him, have been part of some of the discussions we had. Honestly, I think we are all okay together because as ship owners we are all facing the same market, though issues and difficult government policies.
Last year, you lamented extortion by the government via Sea Protection levy despite high insecurity and incessant pirate attacks on Nigerian waters. What’s the situation with the security in the country?
There has been no change as the problem is still the same. I’m not aware of the mechanisms in place to provide security for vessels on Nigerian waters. Today, all vessels heading to the Niger Delta area have to take security escorts in order to be safe. Most of us who have to deliver cargoes to customers in this region always come back with a negative balance sheet. You have to keep a distance from the coast of Nigeria in order to be safe. So, as a ship owner I don’t know what is going on. I hope to engage NIMASA to look at this challenge and come up with system that would appeal to the ship owners. It’s not only security to terminals that are into oil upstream or exploration. What about the vessels transiting these areas? What kind of systems by way of security plan has been put in place?
Few months ago, I learnt that the Federal Government engaged a private foreign company for this issue but we don’t know what the modus-operandi is. How do we contact the company or who do we call when we are in a distress situation? It is really an unfortunate situation.
I’m aware you have related closely with NIMASA recently. Have you brought up this issue; if so, what’s their perspective?
To be honest, I think NIMASA is unaware of some of these things. We would continue to engage them on such issues. We are sending them a letter because of an incident that happened recently.
One of our vessels was in distress and there was no way of getting help to that vessel. NIMASA couldn’t help because they had no way of doing it. No government agency in Nigeria saddled with this responsibility was able to assist. We engaged NIMASA when it happened and they couldn’t do it. We are putting up a letter to the Director General of NIMASA to show up what happened and stress that it is pertinent for them to put in place some of these things. We almost lost a vessel with about twenty-two lives because there was no way to get help across to them. On our own, we had to get a vessel to go there and rescue them. We have discovered that there is no system in place to address such problem. This isn’t the first time such thing happened and there was no way of getting assistance.
Where exactly did this incident occur?
It was at the Agbamu area which is about 80miles off the coast of Nigeria. There are oil activities around the area and Nigeria’s economic zone and maritime domain is upto 200miles from the coast. The agency in-charge of maritime should be able to rescue any vessel within 200miles. Nigeria is a maritime nation with an average annual ship tonnage of 6000 vessels. This means about 15 to 20 vessels are expected in the country daily. There is no reason we shouldn’t plan for such emergencies. Again, Nigerian territory covers 200miles and if something happens at 80miles and we can’t respond then there is a problem.
NIMASA has reported a change in the crude affreightment policy from FOB to CIF. Has this resulted in more indigenous participation in the trade?
I don’t think the change has scaled through. There is significant change in policy and one of the policies that the Nigerian National Petroleum Corporation (NNPC) adopts is the utilization of its subsidiary called NIDAS. NIDAS is the shipping arm of NNPC and NNPC has made it mandatory that anyone taking crude in and out of the country must engage NIDAS. NIDAS is hiring international vessels and not Nigerian vessels to do the transportation. They keep on saying that Nigerians don’t have the vessels that can handle such cargoes. Yes, Nigerians don’t have such vessels but if the market can be guaranteed Nigerians would raise the money to buy the vessels. This issue can be likened to putting the cart before the horse. This is the chicken and egg situation that we are always talking about. So, the truth is that there is a policy change from the past when only international vessels partake. Today, they say you must lift crude or petroleum products through NIDAS but all the vessels NIDAS has been engaging are from foreign owners.
The FOB/CIF trade pattern hasn’t changed; the only change has been NIDAS. FOB is still the practice with the caveat that operators must take vessels through NIDAS. NIDAS hasn’t specified patronage by Nigerian ship owners or Nigerian flagged vessels. What we are pushing for isn’t just for the Nigerian ship owner but to say it must be a Nigerian flagged vessel. Let it be a registered vessel under the Nigerian flag. This is what we are trying to develop. In promoting the Nigerian flagged vessel, we are talking about the Nigerian ship owner and Nigerian seafarers because that is the condition for registering a vessel under the Nigerian flag. We are still moving to that level to see NIDAS take more of Nigerian registered vessels instead of foreign registered vessels.
Does NIDAS also consider the seafaring content in its agreements with foreign vessels owners?
That issue isn’t negotiable because the foreign ship owner is registered under a different flag and you can’t give him such orders to take a Nigerian seafarer. NIDAS needs to sit down and discuss with Nigerian ship owners to understand the conditions and things that need to be put in place in order to make Nigeria benefit from the system. The main purpose Nigerian ship owners are battling to see that the carriage of crude oil is done by companies here in Nigeria, is because the freight earnings is massive. If you look at the freight earnings alone, it is in the region of billions of dollars. Since most of the ship owners are in Europe and other parts of the world, it means the money doesn’t even come into the country. They don’t pay tax in Nigeria, they don’t employ Nigerians or have companies in Nigeria. The money doesn’t even go through Nigerian banks because they receive the earnings right from the comfort of their offices abroad and Nigeria benefits nothing. If the money stays in the country, we would generate employment, generate revenue, empower the banks and generate foreign exchange. These are critical issues that the Nigerian government hopes to address.
Nobody says an expatriate can not have a shipping company in Nigeria; they can but they have to set up their offices in Nigeria, employ Nigerians, keep the monies in Nigerian banks, thereby contributing to the growth of the nation’s economy. This is what we want NIDAS to do so that there would be development in sector.
There has been inconsistency in the amount currently available in the Cabotage Vessel Finance Fund (CVFF). How much is there right now?
Honestly, I don’t know. Nobody knows! The last time we got an estimate of about $130 million as announced by the Director General of NIMASA. However, there is no clarity as to the amount at the moment. I think there are lots of misconceptions about CVFF and ship-owners have not created sufficient awareness not only to NIMASA but also members. CVFF is money for ship-owners, NIMASA is just a custodian. It is not like it is government’s money or NIMASA’s money.
From inception, CVFF was looked at as if it was part of the revenue of NIMASA. If you look at the Act closely, it says NIMASA is just the custodian. Nigerian ship-owners need to discuss this issue in details with NIMASA management and the government because the secrecy and confidentiality in CVFF doesn’t make sense. It makes it look like the money isn’t for ship-owners. If the revenue is for ship-owners, then it should be declared at the end of a month or quarter or end of the year. NIMASA should be able to disclose what ship-owners have been able to contribute at specific times because it is a contribution and not revenue tax. We should know the people who contributed to the fund and part of the conditions for access the funds should be that the interested party actually contributed to the fund.
The Minister of Transportation, Hon. Rotimi Amaechi organized a committee to look into the issues hindering the disbursement of CVFF and you were part of that group. What has happened since then?
What I realized is that most of the top government officials in Abuja aren’t given sufficient information about issues to enable them take decisions. The information available to them is limited and the misconception about CVFF makes them feel that it is revenue for the government. This explains why it seems to be a major problem when an operator expresses interest in getting that fund. They feel like you just want to get government money and waste it. The government says before the Transport Ministry endorses any party to get the fund the Ministry must get approval from the President. However, this money is the contribution of ship owners; it is like the Pension Fund.
You can’t say someone isn’t entitled to know the amount in a pension fund. You can’t deprive people access to that fund because they are entitled to it. The mere fact that the person contributed to the fund qualifies the individual to access the fund. It is like the popular local contribution known as ‘Esusu’. We can’t all contribute to such fund and someone tries to deprive the contributor off access or tell any of the contributors that “You no go know how much dey the purse”. I think it is a big misconception that needs to be resolved.
The Minister asked NIMASA to develop a document that would be sent to the President for his assent so that the document would ease the access to the fund. Although I don’t know the current stage of that document; I’m aware that it has been sent from NIMASA to the Minister and the Minister has to follow it up to get the Presidential assent. However, you know that the campaign season has started and I don’t think anything will happen until after the elections. Nevertheless, we ought to clear the misconception for the benefit of future ship owners because the money isn’t government’s revenue. At NISA, we agreed to take this matter up with NIMASA. We are asking them to give us an update of the account from 2015 to date. Let us even know how much CVFF has generated from the inception of Cabotage. We just want to know how much and what it has been applied for, because that it is when we can begin to have accountability. We want to engage them and not to audit but it is our contributions and we have a right to know. They should let us know how much was generated from inception to 2015 and what was disbursed. Since the present administration started in 2015, they should also tell us how much has come in since 2015. If there have been mistakes or mismanagement in the past, we ought to know so that we prevent them from reoccurring in future.
What is the next move on the national fleet?
In the beginning, our first approach was to get an international shipping company to partner with indigenous companies. We got PIL at one time and we signed an agreement. However, the company looked at the Nigerian environment just like the indigenous operators are facing and they said the environment isn’t conducive to support a Nigerian shipping company. They highlighted some of the problems that we already knew and they stated that if these issues were addressed; the company would be able to operate successfully. After we looked at their submission and told them how long it would take some of the policies to be changed; most of them, particularly PIL backed out because they said until those policies were changed, they weren’t interested in starting up a project that they knew wouldn’t work.
We have made several submissions. The Chairman of the committee, Mr. Hassan Bello has met with the top management of NNPC as well as those from the Central Bank of Nigeria (CBN), Nigerian Investment Promotion Council (NIPC), Nigerian Import-Export (NEXIM) Bank, the Ministry of Budget and Planning and even the Vice President and the Chairman of the Economic Council. All these crucial stakeholders have keyed into this and they have looked at it and agreed that some of these policies have to be changed so that the nation’s shipping sector would develop.
There is a development as the government has developed a paper that it intends to push through next year in order to make the shipping environment conducive. The policies in Nigeria for a ship-owner are one of the toughest in the world. For example, every ship-owner in Nigeria pays duty for his ship. In most countries the ship owner doesn’t pay because the ship is an equipment that is floating and delivering cargoes that pay duties. The ship cannot be made to pay duties; but all the ships brought into Nigeria pay duties which are really expensive as it is about 12.5% of the cost of the ship. In addition to this excessive cost, it is very difficult to get the approvals for registration. There’s nowhere to get any spare parts for ships in Nigeria; even bolts and knots have to be imported. These are some of the reasons PIL pulled out. They said they couldn’t invest so much when they knew that the investment would collapse because of the policies. They would have to pay import duties for the vessels; numerous taxes, expensive port authority charges compared to other countries in West Africa.
Just I like told you earlier, support vessels to rescue a distressed ship aren’t available and there are no cargoes. So we are fighting for the cargoes, yet when we get them we have to pay more as duties and taxes. We believe if the committee would be able to change some of these policies, then there would be lots of investments in the shipping sector.
This brings us to the issue of floating dock. NIMASA has launched a floating dock. While the country has the potentials to service a floating dock, do we have the capacity to manage such facility?
I don’t fully understand what NIMASA intends to do with its floating dock. However, in my opinion I would advice that they have an agreement with a private sector person who has experience in maintaining and managing a dockyard. They can recover the money from the facility by allowing a private operator manage it. Nigeria really needs dockyards for ship repairs because the number of dockyards available that are standard in the country is minimal.
In terms of vessels that have the beam of over 33 (the width of the vessel) there is no dockyard in Nigeria that can take that. Hence, we have to take most of our tankers to Ghana. I have just sent two vessels to Ghana this week. Over 75% of the vessels in Tema shipyard in Ghana are from Nigeria. NIMASA’s floating dockyard is smaller than Niger Dock and the others in the country. It can only facilitate for boats and operators like my company can’t patronize NIMASA’s floating dock because it can’t carry our vessels.
Last year, we made an analysis of dockyards in West Africa. We looked at the cost charged by the dockyard, bunkers that would be required to get to the dockyard and back to Nigeria, business time that would be lost within the period of going to the dock and coming out as well as the efficiency of the dockyard’s service. Based on these issues we rated the dockyards on the Alantic side of Africa. Namibia is number one on that rating and it takes a vessel ten days to go To Namibia and another ten days to return to Nigeria. So one is losing twenty days of earnings and bunkers of steaming for twenty days, yet is cheaper than Nigerian dockyards. The second dockyard is Dakar and it takes eight days to go to Dakar and eight days to return to Nigeria burning bunkers for sixteen days and losing revenue for those days plus the time to be spent in the dockyard; but when it comes to efficiency and the cost it was number two in the ranking. Tema port is number three and the Nigerian docks came last in number four. So you can see the situation.
Despite the cost, time lost in going to these dockyards, it is cheaper comparatively when you look at the cost, efficiency and accessibility to equipments, spares and expertise which we don’t have in Nigeria. The government needs to create an enabling environment and encourage investments so that people can invest in shipyards. The government could provide the land as part of its contribution. It can be a partnership between NIMASA and the Nigerian Ports Authority (NPA). Tema shipyard is owned by the Ghanaian Ports Authority but they are planning to privatize it.
Over 60%-70% of ships in Dakar’s dockyard are coming from Nigeria while over 75% of ships in Tema are from Nigeria. If you go to Namibia, over 25% of the vessels there are from Nigeria. So you can see that the ship repair yards in the entire Atlantic coast are being fed by ships in Nigeria. Imagine the employments that these yards would have availed Nigeria. These yards have three shifts of people working and these investments should have been in Nigeria.
NIMASA continues to sponsor thousands abroad under the Nigerian Seafarers Development Programme (NSDP) with few opportunities for them to get the requisite seatime experience. What does the future hold for Nigerian seafarers?
In a recent forum organized by the Nigerian Content Development and Monitoring Board (NCDMB) in Lagos, I said that Nigeria’s approach with regards the training of seafarers is wrong. The way the government goes about the process is like imposing the seafarers on Nigerian ship-owners. If NIMASA would put in only 50% of the energy they put in training seafarers, on Nigerian ship-owners there would be more Nigerian ship-owners in the country and these ship-owners would engage Nigerian seafarers. We don’t need NIMASA or the Nigerian government to force us to take Nigerian seafarers. We want to employ Nigerians. If I have ships, I must employ crew. I don’t need NIMASA to tell me to employ crew. I would be keen to get them, interview them and put them on my ship because I need them to work. When you came into my office you saw a receptionist but nobody asked me to employ him. I wanted the services of a receptionist so I employed him. So, NIMASA’s approach is wrong.
Let us draw an analogy to the media parlance, if you set up a newspaper you don’t need anyone to tell you to employ journalists because you need their services. However, if there’s no newspaper should anyone force you to employ a journalist? The government should focus on empowering the ship owners, more ships would mean more opportunities for seafarers. This is the right approach.
Another approach is to look at other countries that are leading in seafarers. Today, one of the leaders in terms of professional seafarers is Philipinnes, followed by India. How many ship owners are there in Philippine? They are imposing Philippino seafarers of the ship owners but they have standardized the shipping institutions to make them the best to enable them bring out the best cadets. The ship owners in America would come and employ Philippino seafarer because of the quality. Today, Nigeria ship-owners travel to Philippine and India to employ seafarers but their governments didn’t impose them on us. We go there because they have the capacity and the standards. If Nigerian seafarers are trained well particularly in the Maritime Academy of Nigeria (MAN) Oron, the cadets would market themselves. Nobody would tell ship owners in America to fly to Nigeria in order to employ Nigerian ship owners; they would come because they want the best workforce.
NIMASA should sit with the Nigerian ship owners to know why we choose to employ Indian and Philippino seafarers, so we can tell them the challenges of employing Nigerian seafarers. Merit counts and people would be employed based on merit and their capabilities and not NIMASA’s demands. I can’t borrow millions of dollars as a ship owner and put the lives of everyone onboard and the property at stake because I want to employ someone I can’t guarantee his capacity and capabilities, that isn’t possible. I’m sure that NIMASA’s policy isn’t to destroy the Nigerian ship-owner but to develop the Nigerian ship-owner, hence they should put more energy in developing the Nigerian ship-owner. If they do so, there may be no Nigerian seafarer unemployed because everyone would be employed and NIMASA wouldn’t have to worry about training them because we would begin to train them in order to get the best for our organizations. Many of us would even go and invest in MAN Oron and they wouldn’t need NIMASA’s money anymore. No government anywhere in the world is spending so much money on training seafarers, it is the ship owners who are doing it and this is what we want to do in Nigeria.