At last, facts have emerged on how the Nigerian Maritime Administration and Safety Agency (NIMASA) in collaboration with the National Assembly members depleted the N36.5 Billion Cabotage Vessel Financing Fund (CVFF) meant to empower indigenous capacity in the maritime industry.
Consequently, there is a raging discontent among indigenous ship owners who have a grand plan to discontinue the payment of 2% surcharge of Coastal Contract Levy where the CVFF accrues from.
According to the 2015 approved budget of NIMASA, a copy of which was made available to MMS Plus Weekly, the management of NIMASA made a proposal to both the Senate Committee and House Committee on Maritime Transport seeking the approval to deplete the fund. The approved budget showed that it was graciously granted.
In defense of this action, the management of NIMASA stated thus: “We propose that the agency be allowed to spend N36.5 billion of the monies in the CVFF fund. In line with its mandates, under its enabling laws, the agency has recently established a number of capacity development projects and programmes including the ship building and ship repair yard, the Nigeria Maritime University, the National Seafarers Development Programme (NSDP), establishment of maritime institutions in six Nigerian universities amongst others; all of which are steps towards providing the much needed social and physical infrastructure for indigenous shipping development.
“The agency makes this request bearing in mind section 7.1 of the CVFF implementation guidelines which requires that consideration for financial assistance under the fund shall include the need for: The development of ship yard/ maritime infrastructure to facilitate vessel construction, repairs and maintenance; and other shipping ancillary projects relating to the development of tonnage capacity and ship yards; among other things,” NIMASA further stated.
A breakdown of the approved budget showed that NIMASA is to spend N144, 315, 108, 388. 34, in 2015 with N8 billion to be expended on Cabotage operations as special intervention fund; N17, 510, 488, 748. 08 earmarked for personnel emolument; N15, 955, 166, 223 to be spent on capital expenditure. While N3, 356, 038, 625. 80 is dedicated to the 5% Maritime Academy of Nigeria (MAN), Oron fund, only N8, 390, 096, 564. 49, representing 25% of the agency’s revenue is remitted to the nation’s consolidated account, even as its projected income from sources order than project funds and intervention funds is put at N67, 120, 772, 515. 95.
The CVFF is funded through the 2 percent surcharge of the contract sum performed by any vessel engaged in coastal trading and monies generated under the Cabotage Act, including tariffs, fines and fees for licenses and waivers.
CVFF was created by Cabotage Act 2003, as an annexure to promote the development of indigenous ship acquisition capacity by providing assistance to Nigerian operators in domestic and coastal shipping.
Section 42 part VIII of section 44 of the Cabotage Act empowers NIMASA to collect, deposit and administer the funds under the guidelines proposed by the Ministry of Transport and approved by the National Assembly, even as the Act limits beneficiaries of the funds to Nigerian citizens and shipping companies wholly owned by Nigerians.
To disburse these funds, NIMASA had selected four Primary Lending Institutions (PLIs) with the subsequent short-listing of six expected beneficiary shipping companies but the fund never got disbursed.
Recall that the PLIs, banks had blown the whistle that the fund had been depleted.
Displeased, however, with the way the fund was depleted, some indigenous shipping operators are making wide consultations on how to stop their contributions to the fund, arguing that their collective wealth kept in trust with NIMASA has been frittered away.
Operators from both the Ship Owners Association of Nigeria (SOAN), and the Nigeria Ship owners Association (NISA), spoke with MMS Plus Weekly.
According to a front line shipping operator, “we have to reconsider our contributions to the CVFF because we cannot continue to aggregate funds which we hope to draw from tomorrow only for a group of people without scruples to dip their hands and squander it.
It is meaningless then, to embark on this journey. I had thought it was all rumours until a friend confirmed the Senate approved of it.
Another stakeholder who is an executive member of one of the ship owners’ associations, said, “some of us are currently in dire need of capital to expand our businesses, as many other people have identified opportunities in the sector but lack funds to drive their vision. Is it not why the CVFF was established? Now, they are building a shipyard and maritime university. Don’t you need vessels to operate a ship yard? And when a student leaves the school does he or she not need employment? Can NIMASA employ all the graduates?”