Home / NEWS LENS / Why FG’s Fiscal Incentives Elude Nigerian Ship-Owners

Why FG’s Fiscal Incentives Elude Nigerian Ship-Owners

  • Why FG’s Fiscal Incentives Elude Nigerian Ship-OwnersLeadership crisis,  greed kill indigenous shipping -Omatseye
  • How AMCON can salvage seized vessels – Experts

By Kenneth Jukpor

Nigerian ship owners and the entire maritime industry may be responsible for the continued harsh fiscal environment occasioned by numerous charges such as customs duties on ships, ship parts and the absence of other incentives.

A former Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Barr. Temisan Omatseye made this claim during an exclusive chat with MMS Plus in Lagos, last week.

The shipping expert, however, admonished the nation’s maritime stakeholders to take a cue from the aviation sector where unity has seen the industry attain zero customs duties for aircrafts and spare parts, whilst getting other numerous palliatives.

Noting that the Asset Management Corporation of Nigeria (AMCON) has reached an advanced stage towards launching a multibillion naira airline by pooling together its aviation assets especially planes in debt-ridden airlines, Omatseye posited that such provisions should also be accorded ship-owners.

Although AMCON has seized several ships and maritime assets which were allowed to rot away and become scraps, the former NIMASA boss posited that AMCON and maritime regulators shouldn’t shoulder all the blame as the industry stakeholders haven’t played their roles.

His words: “The reason for the success with regards waivers can be achieved in the aviation sector for aircrafts and it isn’t the case in maritime is a problem of the stakeholders. This is because there is no leadership, no synergy or united front to present these claims.”

“There is also no leadership to drive the need to salvage ships that have been taken over by AMCON. A lot of aircrafts are acquired duty-free but that isn’t applicable in shipping. It is a leadership problem and a failure on the part of those who should be driving issues in the maritime sector. So, you cannot blame AMCON or the Central Bank of Nigeria (CBN). You have to come back to us and ask us why we are not putting our hands together? Are we thinking about personal interests rather than national interests?”

Nevertheless, he expressed optimism that the maritime sector may take a different trajectory as stakeholders have become more intentional about addressing holistic problems since the outbreak of the COVID-19 pandemic which kept everyone away.

In the aviation sector, assets of debt-ridden Arik Air and Aerocontactors Airlines will be salvaged under a new international airline, to be named Nigeria Eagle, that may take to the sky with at least 10 planes as early as June.

It was learnt that AMCON, a Federal Government-owned bad debt manager which owns controlling stakes in both Arik and Aero, chose to establish the new airline as a clever means of wriggling out of the multibillion naira liabilities currently hanging on the two carriers.

The debts are believed to be hindering new buyers from showing interest in the two carriers which AMCON has been willing to sell to new investors.

AMCON was established by the Federal Government in 2010 to buy over bad debts from commercial banks in order to save the banking system from imminent collapse. This followed the 2009 financial industry crisis in the country.

If the debt management corporation could propose such lofty plans to salvage aviation assets, shipping experts opine that the maritime sector should enjoy such perks and more.

Speaking with MMS Plus recently, the Chief Executive Officer, Oceanic Energy Limited, Capt. Taiwo Akinpelumi revealed that his company had been contacted by AMCON to manage seized vessels in the past, but the arrangement never materialized.

“Over the years, we have preached repeatedly that ships and other maritime assets shouldn’t be allowed to rot away. These are investments that cost humungous sums and they are beneficial to the industry in terms of employment and seatime training for cadets.”

“It doesn’t actually make business or economic sense for marine equipment of that magnitude to be seized and allowed to rot away. In fact, this issue has to be part of our proposal to AMCON because we have seen their efforts in the aviation industry,” he told our correspondent.

According to Akinpelumi, who is also a member of the Nigerian Indigenous Ship-owners Association (NISA) steering committee, if a company is bankrupt and AMCON decides to take over assets of the company, the ideal strategy to assist the company repay its loan will be to keep the assets functional.

In a related development, the Secretary General of the Aviation Safety Round Table Initiative and Chief Executive Officer, Centurion Securities, Group Captain John Ojikutu (Rtd) has condemned the fiscal incentives accorded aviation at the expense of other transport modes.

His words: “Government has provided financial palliatives to the domestic airlines; given them concessions on debts owed to the government aviation serving agencies; given zero concessions on custom duties on spares and possibly thinking of zero VAT on their corporate scales earnings on passengers tickets sales alone cargo freight charges even as government goes borrowing externally and internally. Are we really thinking of what we are denying over 100million that are on the road annually compared to the careless lavishness we are providing to just 5million regular air passengers from the commonwealth?”

He argued that the various concessions being given to the airlines such as; zero custom duty on aircrafts and spares, VAT, etc, do not make a national economic sense on the part of the government if airlines are allowed to get away with 100% increase on the passengers tickets sales.

“That is about N150billion or $88million increase annually on their tickets sales given an average of 5m domestic passengers tickets sales alone; has anyone found out how much are they expected to pay for duties on spares every year? How much VAT do they pay every year? Have the government authorities been able to balance these concessions in revenue losses to the government to the unauthorised increase of 100% in air fares?” he queried.

The President General of Maritime Workers Union of Nigeria (MWUN) Comrade Adewale Adeyanju also corroborated Ojikutu’s views as he told our correspondent that the move to salvage airlines by AMCON simply shows that the government is more concerned about the airlines and the aviation sector than ships and the shipping industry.

“I’m concerned about this issue because the seafarers who work onboard those ships are under MWUN. While we aren’t saying that airlines should be abandoned, in order of priority I think shipping should come first. Any nation that doesn’t regard its shipping sector would struggle with economic stability. We can only advise the Federal Government and its agencies like AMCON to have regard for the shipping sector and they should show this by astutely managing maritime assets that have been seized,” he said.

Noting that the role of AMCON in taking over indebted ships is embedded in the agency’s statutory functions, he advised the agency to engage shipping experts on the best ways to salvage ships because they are assets to the nation and the maritime industry.

“The goal should be to get the asset back to a position where it can repay the debt and not to kill it completely. So, this time around, AMCON has to change its system to ensure that indigenous ship owners are being encouraged. We have very experienced ship owners like Chief Jolapomo and others, who could be consulted by AMCON to discuss the headway for seized vessels. AMCON shouldn’t allow its activities to lead to more job losses and failed investments in the country, when they can redeem such investments,” he added.

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