COVID-19: Ship Owners Incurred Additional Cost, Despite Low Patronage – Ogbeifun

By Kenneth Jukpor

Engr. Greg Ogbeifun is the Chief Executive Officer of Starz Group. He is also the former President of Ship Owners Association of Nigeria (SOAN). In this interview with MMS Plus he reveals the effects of COVID-19 pandemic on ship owners, buttresses the need to have a national fleet and a Nigerian P&I club. Ogbeifun also explains how automation could be applied for ship inspection and other aspects of shipping to eliminate human contact, even as he discusses other salient issues in the nation’s maritime sector. Excerpts:

As a ship owner, how has the COVID-19 pandemic affected your operations?

Generally, COVID-19 pandemic was a huge challenge to businesses worldwide and the shipping sector wasn’t left out. The biggest challenge for ship owners around the world was the inability to have the normal crew change. The crews have certain period to stay onboard, when to go on leave and other shifts but the pandemic led to a situation where many seafarers were stranded onboard ships. This led to different kinds of problems as some went into depression, others became ill and another category became home-sick.

In Nigeria, those of us in the upstream segment of shipping had to quarantine our crew two weeks before they go onboard and repeat the quarantine process when they got back. We had to pay them for that period even though they weren’t really working. So, that puts pressure on our cash flow. The implementation of social distancing and other safety protocols to prevent the spread of COVID-19 also became a challenge.

For the period of lockdown which several states experienced, particularly where our company is located in Port Harcourt, we found it difficult to give the necessary support to ships because of the lockdown. We had to send food to them, send spare parts and other essential items but we couldn’t at the time because there was a lockdown.

It was really a challenging time. The pandemic occurred at a time when there was a crash in global crude oil prices. The oil prices fell further and the oil logistics market worsened. Most charterers had to renegotiate charter rates downwards. We didn’t have options but to accept the new rates to hang in there, believing that in the near future things will go back to the good times. So, it’s really been a very difficult time for ship owners and seafarers.

In the upstream sector, following the COVID-19 pandemic there were speculations that some oil wells would have to be closed as there were no takers for the oil explored. How did that affect your business?

That is a very honest observation you made. At a time the oil price really crashed to minus zero. So, most of the off takers had their facilities full of oil that couldn’t be sold. The nation wasn’t generating any revenue from oil at that point because we were producing oil at a loss. We had to reduce the capital outlay by doing discriminatory oil production. If you had production facilities that were already producing, it was easier to process that, than to do new oil exploration. The new exploration was closed and that led to off-hiring of the maritime assets that were associated with new oil exploration.

Some shipping experts posit that Nigerian seafarers don’t have the capacity to operate modern supply vessels for International Oil Companies (IOCs). Do you subscribe to such position?

I wouldn’t say I’m privy to such reports or assertion. Nigerian ship owners have come of age and the percentage of Nigerians involved in ship ownership has increased even in the upstream sector. We have fairly sophisticated vessels. Similarly, the level of skills, expertise and capabilities have also grown. So, I don’t see why anyone should be arguing that Nigeria doesn’t have the expertise to operate such vessels.

I don’t agree with such position and I can use my organization as an example. We have about eleven ships at the moment. Our biggest ship was commissioned two years ago, MV OSANYAMO. The vessel is operated by 100 percent Nigerians. In fact, all Starz vessels are operated by Nigerian seafarers. We also avail seafarers opportunity for seatime and employ Nigerian seafarers eventually.

Starz isn’t alone in this bid to support and promote Nigerian seafarers. There are lots of other shipping companies in the country also operating with 100 percent Nigerian seafarers or majority of their crew are Nigerians. These companies like Starz, also ensure the seafarers are improving on their skills frequently.

I don’t support these sweeping statements that put the nation down. Why don’t we encourage the little efforts Nigerians are making? We can look out for the gaps and see how we can improve them? Nigerian seafarers can build up their capabilities gradually to whatever level the critics are looking at. I take exception to such criticism, especially when it is coming from people who don’t have canoes, let alone ships.

You’re a member of the Fleet Implementation Committee set-up by the Minister of Transportation, Hon. Rotimi Amaechi. Can you bring us up to speed with the latest development by that committee?

Inquiries on the Fleet Implementation Committee should be directed to the Executive Secretary of Nigerian Shippers’ Council (NSC), Mr. Hassan Bello. He is the chairman of that committee and also a good friend of mine. However, I can honestly tell you that the committee is moribund. As a member, I don’t think we have been involved in any discussion for over a year.

No nation that has the opportunity of coastal assets and trade for the global market, should allow the advantage of national fleet go by. I believe that it is only a matter of time before someone sees this as a top priority for the nation and achieves it. This may not happen in our generation, but the truth is that Nigeria needs national fleet. It is too important to the shipping sector of the nation’s economy to be abandoned. My impression is that the political will to get this done has been missing.

Last year, ship owners in Nigeria initiated plans to float a Nigeria P&I club to support themselves and possibly utilize that to acquire vessels. Are such plans still in the offing?

Ship acquisition and P&I club are two different things. P&I is about insurance and there were talks about floating a Nigerian P&I. Protection and Indemnity (P&I) is insurance against cargo damage or theft. Every ship owner in Nigeria already does this insurance but it is done with insurance companies abroad. The idea was to form a Nigerian club where we pay our insurance to keep the money in the country rather than taking it abroad.

The P&I arrangement had nothing to do with ship finance or ship acquisition. The plan to float the Nigerian P&I club slowed down few months before the outbreak of the COVID-19 pandemic. We still believe that it is very important to actualize that P&I club in Nigeria.

Nigerian Maritime Administration and Safety Agency (NIMASA) has been anchoring that programme and I hope it continues after the pandemic.

COVID-19 taught the Nigerian maritime sector lessons of automation and re-emphasized the need to eliminate human contact which usually leads to corruption. NLNG has started inspecting vessels without going onboard. How can agencies like Nigerian Ports Authority (NPA) emulate such innovation?

Honestly, I don’t want to dwell on that. I would rather speak on how COVID-19 has led to virtual platforms of running businesses. As I speak, I’m in Benin and I’ve been here for over four weeks. My office has been closed for almost three months but we have been running our fleet of eleven ships via virtual platforms. I’m in Benin, my team is in Port Harcourt, some others are onboard ships, yet, every Monday morning we have devotion with about 35 people in attendance.

We found COVID-19 to be a blessing in disguise. With an office that has been shut down for almost three months, the savings in terms of overhead is enormous. People are off the streets, yet they are driving their jobs efficiently. We always had a powerful Information Communication Technology (ICT) platform at Starz but we never tapped into this advantage. Today, we have deployed technology to work seamlessly and with speed. In fact, I have just developed a policy that after this pandemic Starz would only spend three days each week at the office. We would work from home on the other days.

I sign all my documents from Benin, my secretary is with her family in Asaba and we use virtual platforms to do meetings. She develops letters and I sign using DocuSign and business goes on as normal. I think this innovation is fantastic.

My shipyard company had to make a presentation to NLNG recently on our shipyard expansion plan. There were nine officials from NLNG some in Port Harcourt, my consultant from Australia, technical partners from South Africa and we had a powerful presentation looking at each other and sharing documents. We need to take the quality of work in Nigeria to that level where a lot can be achieved. Now, I don’t have to travel so much to Lagos and Abuja for several meetings because I can do them on virtual platforms. Going forward, technology would make businesses more efficient and cheaper; Starz intends to take advantage of that.

The inspection of ships shouldn’t require human contact anymore. You can use drones to inspect the ships. Drones can record what they see and send images back to you. Underwater cameras can be utilized to do the hull inspection of the vessels. The onus is on the regulatory agencies to acquire this skill and requisite technological gadgets. Since NLNG has done it, other agencies of government should be able to emulate them.

There is a new leadership at NIMASA. What agenda or expectations would you set for the new Director General and his team which recently clocked 100days?

I never liked the idea of setting an agenda for people because I don’t like others setting an agenda for me. However, I expect that the new leadership would have understood the issues on ground. I don’t think 100 days is too long for them to set an agenda for themselves, but we must also note that their initial 100 days included the period of lockdown. Technically, it is not really 100 days. I want them to understand the burning issues and come up with an agenda and how they intend to achieve it. It is better that way, than for those of us outside to set an agenda for them.

It may sound good to set an agenda for the new team and it may seem right to read such expectations on the media but I don’t think that’s a practical way to do things. They should come up with something and subsequently engage stakeholders to fine-tune what they have. We can share ideas and work together to develop a viable roadmap.

Do you think it is an advantage for the industry to have the Director General of NIMASA, Dr. Bashir Jamoh who has decades of experience at the agency?

I think it is a good idea to have Dr. Jamoh there. While this is a good development, don’t forget that he may not enjoy full support of those at the agency. The reason is that some people still have the notion that he should not be their superior because he was junior to them before his appointment. This leadership challenge is real and we can’t sweep it under the carpet. How much he is able to carry this category of people along is important and it could determine the level of success his administration would enjoy. It is very important he realizes this and works towards developing a leadership style that wouldn’t see others pulling him down.