Local Content Vs Tugboats: Which Guarantees Nigeria’s Maritime Hub Status?

Local Content Vs Tugboats: Which Guarantees Nigeria’s Maritime Hub Status?By Kenneth Jukpor

Maritime activities are expanding; bringing benefits to people across the world. The merchant navy, offshore oil subsector, commercial fishery and cruise companies have added impetus to the growth of the industry. The sector has become a major catalyst for socio-economic development and international competitiveness in an ever-changing world.

The maritime industry is of huge importance in terms of natural resources and energy, trade and industry, as well as sciences and leisure activities. Hence, it is an essential part of trade which demands innovative solutions and careful management systems to ensure its long-term sustainability. It is difficult to quantify the total value of the world’s maritime industry, and the economic relevance of a sector that affects a wide range of aspects of modern societies and their development.

Nigeria as a nation is endowed with a vast coastline as well as navigable inland waterways and is strategically placed on the Atlantic Coast of West Africa. Over 76% of shipping business that takes place in the whole of West Africa is done in Nigeria alone, which means that Nigeria is very important in the West African coastal area.

Nigeria is also one of the largest producers of crude oil in the world and also has most prolific gas reserves in the world which have only been recently exploited. The country is also rich in many natural resources and agricultural produce and most of these products are exported to international markets by sea where they are sold and foreign currency earned to ensure the country’s developmental objectives.

Despite the geographical advantage and abundance of natural resources, the nation is yet to enjoy the benefits of a well organized maritime industry. Neither the government nor its indigenes have benefitted from nation’s international trade as Nigeria has no area of comparative advantage. Foreign companies are dominating the freight forwarding business in Nigeria (even on the nation’s import and export of crude oil) all in the name globalization.

At the recent commissioning of four new tugboats which cost the nation over $30billion, the Managing Director of the Nigerian Ports Authority (NPA) Ms. Hadiza Bala-Usman said that, “As a result of the new tugboats, our ports have started receiving larger vessels of 232.3 meters vessel that carries up to 3500 tonnes, 20ft equivalent units and these vessels require approximately 11.5 meters depth. In addition, Maersk’s 250 meter long vessel requiring 13.5 meter draft has commenced its call to Lagos port already.’’

Usman said: “The authority is fulfilling this obligation through its joint venture channel management company that carries out capital maintenance dredging of the channels. This partnership has significantly improved our channels. The Lagos channel is up to 13.5 meters deep and more that 100 critical shipwrecks have been removed from the channel through the partnership.

Usman posited that the acquisition of these $30 billion tugboats; MT Daura, MT Uromi, MT Ubima and MT Majiya, would lead to increased patronage by large ships and enhance the revenue of the nation. She maintained that the new development takes the nation closer in its modernization drive and its bid to have more competitive ports.

However, one can argue that the place of local content by empowering indigenous operators, shipping companies, freight forwarders, building ship scrapping yards, etc., all backed up with incentives could help to create competitive prices capable of attracting patronage from other countries more than acquisition of tugboats.

Although the towage service rendered by tugboats is significant, such services can’t directly attract extra vessels to Nigeria or extra revenue. It can’t give Nigeria the competitive advantage over neighbouring seaports.

Towage is the deployment of one ship by another to speed up their voyage or to expedite it away from restricted areas into the sea; this becomes necessary for vessels without engines such as batches and help to move large vessels to sea. This is because the waves generated by the propellers of these large vessels when they are on could damage small boats, fishing vessels and jetties around. These tugboats can also be used as fire-fighters, pollution control and to salvage ships when they go aground.

However, Nigeria does not have any edge in global maritime transport and this led to development of the Local Content Act and Cabotage Act for the maritime industry and these issues pose a greater problem to the maritime sector than tugboats.

Despite the country’s large export of crude and import of over 100 million tons of general cargo, no Nigerian flagged ship is currently plying international routes. The country is the only oil producing nation without a national fleet, whereas, Angola, which joined the ranks of oil producing countries in 2002, has a fleet for her oil deliveries.

Statistics from the Nigerian Ports Authority (NPA) on ship calls to Nigeria revealed that between 2009 and 2012, Nigeria’s tonnage grew from 82 million tons to over 150 million with an estimated freight payment rising from $4.1 billion to  above $7.5 billion annually, but participation of Nigerians was zero. The four years import freight payment estimated at $22.53 billion was all paid to foreign ship owners with no benefit to the Nigerian economy. Some other shocking statistics indicate that foreign vessels earn the freight of about $2.25 billion a year exporting the country’s crude with no freight earning benefit to Nigeria.

Angola has successfully created a platform that gives jobs to their indigenes via 100 percent.  Angola owns firms in the oil and gas, merchant marine and all port related industries. Nigeria aims to attract cargo by investing in tugboats and floating dockyard for better service delivery.

Speaking to MMS Plus at his investiture, the President of the Nigerian Chamber of Shipping, Mr. Andrew Isichei lamented that foreigners have dominated the off shore businesses in Nigeria.

“One of the major problems in the maritime sector is the low utilization of the local content which is about 8 per cent. Foreign expatriates come into Nigeria and dominate without any succession plan to transfer the knowledge to Nigerians. Look at the Angolan model of local content, you can’t own a company in the oil and gas or other port related sector if you are not and Angolan. The Expatriates who can’t transfer their skills to indigenes are also refused visa renewal after two years. These are very strict steps that Nigeria can take to grow the maritime sector.”

“Look at the Jones Act of the USA that was replicated in Nigeria as the Cabotage Act. The ship must be built in America, owned by Americans and operated by Americans. This creates massive employment for the citizens. In Nigeria, if we can’t build ships now, we must put the right policies in place. Things have to be done orderly; if it would require a revolution then there must be a revolution. Things must change for the benefit of Nigerians,” Isichei added.

As Isichei rightly pointed out, Angola’s regulatory authority for ports, the Port and Maritime Institute of Angola (IMPA), the Decreto Presidential nº50/14 (Presidential Decree number 50 of 2014), published in February 2014, establishes the new Statute for Navigation Agents.  This law requires shipping agencies to be exclusively owned by Angolan nationals in order to be granted a license to operate in the country.  This legislation implements Law on Merchant Marine, Ports and Related Activities (Lei nº 27/2012, published in August 2012) requiring that port concession activities be reserved for 100% Angolan-owned firms.

On her part, Hadiza Bala-Usman said that the new tugboats which makes it nine in NPA’s fleet, would be fully operated by Nigerians in few months but the Angolan local content already stipulates that each company should have 70 per cent of its workforce as indigenes.

While speaking at the commissioning of the new tugboats, the General Manager, Compliance and Monitoring, Western Ports, Capt. Ihenacho Ebubeogu noted that the tugboats are coming at a time the country was expecting one of the biggest Floating Production Storage and Offloading (FPSO) vessels in the world and another Giant Maersk Shipping Line 250 meters long vessel, which has already commenced its journey to Lagos.

Capt. Ebubeogu said, “In September, we are expecting the FPSO Engina and these new tugboats would surround the Engina to bring it to Samsung jetty at LADOL. At times, ship engines breakdown and they have to be towed, these tugboats would do the job. The tugboats can also be used as fire-fighters and they can be used to salvage ships when they go aground.

“They are also used for pollution control because the  NPA maintains a tier-2 status in pollution prevention and control. We ensure that if there is any pollution within our territory, we arrest it before it goes to other jurisdiction. Tugboats are also used for search and rescue and they have an added advantage because they can carry more people than the speed boats which could reach the scene faster.” He said.

Nigeria may have had tugboats in the past but as a result of technological advancement and change in transportation demands, the need to get the more advanced tugboats arose. However, the Federal Government should encourage indigenous operators through the local content provisions to develop areas of comparative advantage in maritime transport to scale up our competitiveness in the West Africa, Africa and global maritime community. It takes more than tugboats to make Nigeria a maritime hub.

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