17 Years After: FG Recovers Only 34% Ship Acquisition Loan

17 Years After: FG Recovers Only 34% Ship Acquisition Loan *CVFF disbursement procedure will take over 1 year- NIMASA

* Shippers’ Council to revoke ICD licences

Over 17 years after millions of dollars as valued then were disbursed to the indigenous shipping operators in Nigeria under the moribund Ship Acquisition and Ship Building Funds (SASBF), only 34 percent of the debt has been recovered by the Federal Government.

The Minister of Transportation, Rt. Hon. Rotimi Amaechi represented by the Director- General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dakuku Peterside, who stated this last week while condemning the attitude of some Nigerian entrepreneurs to accessing and repaying government’s intervention funds, compared the rate of SASBF debt recovery with that of the Aviation intervention fund which he put at 51 per cent.

Amaechi spoke at the maiden edition of the Nigeria Ship Finance Conference and Exhibition (NISFCOE) with the theme: Financing Sustainable Maritime Development in Nigeria, which took place in Lagos.

The SASBF was a special intervention fund introduced by the government in the 1980s and 1990s through the defunct National Maritime Authority (NMA) to promote and develop the indigenous shipping industry through the acquisition of ships. Some of the genuine indigenous shipping companies who were given the loan could not pay back, as some bought old and rusty buckets while others got the sum considered so small for a barge not to talk of a vessel.  Several politicians, briefcase ship owners and cronies of the then military government who got the fund diverted it to other uses.

Some of the beneficiaries of the SASBF were: Fymak Marine Shipping Company Limited which got 5million dollars in 1998; Daddo Maritime Services; Genesis Worldwide Shipping; East West Coast Marine Services.

Responding to a speaker who had called on NIMASA to ensure that the Cabotage Vessel Finance Fund (CVFF) was disbursed in two months time as operators had waited long enough for its usage, the Minister said, “the process of disbursing the CVFF will take a minimum of one year no matter how you handle it. However, we are currently reviewing the process with the support of the Ministry and at the end of it all those who are qualified will get.”

According to him, the Federal Government is also examining the South Korean model of indigenous tonnage development for possible adoption, explaining that they have a dedicated fund domiciled with the South Korean EXIM bank which has the capacity disburse to private sector operators and manage it.

He said that a joint committee with members from NIMASA and the Nigerian Content Development Management Board (NCDMB) was being set up to ensure that Nigerians participate in the Cabotage trade.

CVFF, which replaced the SASBF has a different disbursement guidelines as issued by the government in 2007. The funds, according to the guidelines, would be managed by a select Primary Lending Institution (PLIs) already appointed by NIMASA. The beneficiaries will have to apply to the PLI and tie their loan application to a maritime project for which 15per cent of the project cost must be provided having been prequalified by the agency that would guarantee the loan repayment.   The PLI would then prepare a bankable feasibility report of the project to be subjected to NIMASA’s verification.

The Ministry of Transport, which released the guidelines, had said that only Nigerian citizens or firms wholly owned by Nigerians would be qualified to benefit from the loan scheme. They would however be made to show evidence of managerial ability and acceptable equity in the project in the case of joint venture project.

The guidelines further stated that all agreement under the fund would be signed with the PLI even when parties to the fund would include NIMASA, Federal Ministry of Transport, the banks and the applicants. The success of the fund, it said, would depend on the PLI, while NIMASA was mandated to publish qualification criteria for the banks to ensure that only bank with enough capacity and competence were involved in the scheme.

Section 42 of the Coastal and Inland Shipping Act made it mandatory for NIMASA to establish a fund known as CVFF to provide financial assistance to Nigerian operators in the domestic coastal and inland shipping.

The Cabotage Act also spelt out sources of the fund when it said:”There  shall be paid into the fund a surcharge of two per cent by  any vessel engaged in coastal  trade; a sum  as shall from time to time be determined and approved by the National Assembly ;monies generated under this Act, including tariffs, fines and fees for licences and waivers and such further sums accruable to the fund by way of interests paid on and repayable of the principal sums of any loan granted from the fund.”

The revenue so collected, according to the Act would have to be kept in commercial banks and to be administered under guidelines that “shall be proposed by the minister and approved by the National Assembly”.

However, the N120 billion Central Bank of Nigeria (CBN) intervention fund released to the aviation industry in 2011 was carted away by the operators, most who have declined to repay their loan obligation. 10 airlines were said to have benefitted from the fund through loans with tenure of 10 to 15 years. Out of the 10 airlines, Air Nigeria and Chanchangi  Airline, Aero Contractor, Kabo Air, Odengene, have folded up, while Arik, Dana, Overland, First Nation,  are still in operation.

As at May 2016, only N39 billion was recovered, leaving N81 billion as outstanding balance, even as the Minister alleged that one of the beneficiaries diverted the fund to establish an Energy Bank in Ghana.

Speaking at the conference, the Chairman of Shipowners Forum, Mrs. Margaret Orakwusi, called on the government to establish an intervention fund for the shipping industry, while observing that the indigenous ship owners have been working for the banks who do not understand the business of shipping.

“Banks have not understood that there is difference between interest and investment, we pay so much interest and so it is wise we think about intervention fund because we cannot continue to rely on foreign ships to export our agricultural produce. We need to step out of the mentality of shipping and begin to create jobs”, Orakwusi said.

 

She called for a change in international  trade policy from Free On Board(FOB) to Cost, Insurance and Freight(CIF), saying the Nigerian banking and insurance industries would benefit immensely from this, adding,” Most of these contracts are not drawn in Nigeria, and this makes it more exigent for us to develop our national fleet.”

 

Mr. Peter Olorunfemi, a ship finance expert, who had called on NIMASA to begin the disbursement of the CVFF in two months time, noted that “Any ship finance that is above a single digit will be difficult to pay.”

 

Meanwhile, the Nigerian Shippers’ Council (NSC) is to  revoke  the licences of some Inland Container Depots(ICDs) concessionaires over lack of commitment to the development of the dry ports whose licences were issued 13 years ago. MMS plus gathered that this has become necessary so as to give  serious investors the opportunity to make the projects a reality for the benefits of consumers and the economy.

 

The Council lamented a situation where concessionaires have declined to meet  the conditions of the financing institutions whom they have approached not because the conditions are not attractive but for some selfish reasons inimical to the vision of the project and the transport industry.

 

Realizing this, the Minister of Transport had severally called them to meetings  to know their challenges and how to facilitate the construction of the ICDs across the country under the present government.

Another meeting where the revocation news may be announced has been fixed for this week, as  the Minister has instructed, because the sector needs a drastic change for results

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