· Nigerian insurance firms lack capacity to insure assets
· Shipyards not eligible for CVFF participation
Nigerian ship-owners have tacitly rejected the 96 days stated as the minimum application process timeline to access the Cabotage Vessel Finance Fund (CVFF).
They staged what could be described as a mild protest at the one-day stakeholders’ interactive forum on the operationalization of CVFF held in Lagos on Monday, last week, which was greeted with mixed feelings amongst maritime industry stakeholders and real ship-owners.
The forum came after 22 years of unsuccessful attempts at disbursing the loan as statutorily stipulated in the Coastal and Inland Shipping (Cabotage)Act, 2003.
The Law which prohibits foreign-owned vessels from engaging in domestic coastal trade without a waiver, established a CVFF to support the acquisition of Nigerian vessels for Cabotage operations.
The event monitored by MMS Plus via the scheduled Zoom meeting link showed that the organizers, the Nigerian Maritime Administration and Safety Agency (NIMASA) and the financial and legal consulting team declined to address some key concerns of stakeholders.
The Director-General NIMASA, Dr. Dayo Mobereola had confirmed that the applicants’ applications would be processed within 96 days from the day of formal application by the ship-owner while emphasizing the need for transparency in the process.
This agitated some ship-owners who protested the over 3 months application process timeline at the venue, asserting that it is too long in shipping acquisition business that requires closing a transaction in less than a month in a trasparent bidding process.
Those who spoke include: A former Director-General of NIMASA, Barr. Temisan Omatseye; former President of Ship-owners Association of Nigeria(SOAN), Dr. MacGeorge Onyung; former President of Nigerian Indigenous Shipowners Association(NISA), Alhaji Aminu Umar,now President of Nigerian Chamber of Shipping(NCS) and Mr.Sola Adewumi, current President of NISA.
Omatseye who applauded the efforts of the current leadership at making moves to realize the objective of the CVFF, said however that 96 days is too long a period to consummate purchase of a vessel.
Seeking a downward review of the timeline to make it shipping-friendly, he observed that the unofficial sum of $700million was meagre in the face current prices of ships in the market today, citing example of a type and size of a vessel sold for $260million lately, adding that the Nigerian Liquefied Natural Gas(NLNG) Ship Management Limited had just added six of this type in its fleet.
Meanwhile, NIMASA had said that an applicant could only access $25million from the CVFF in a market where a 15 -year-old tanker vessel now goes for $41million.
Concerned about shipping development, Omatseye advised that 25 per cent of the Internally Generated Revenue (IGR) from NIMASA can be channeled to support international shipping and Cabotage trade.
NIMASA collects the Sea Protection Levy, Maritime Fund as IGR in addition to the CVFF proceed which is the two per cent contribution from every carriage contract from shipping operators.
The ex-NIMASA boss challenged the current management on effectively driving shipping trade by sourcing sustainable cargo for the emerging Cabotage fleet by engaging the Dangote group and the International Oil Companies (IOCs) to disclose their marine plans for next ten years, to guarantee sources of cargo.
Calling on ship-owners to reduce their focus on supply vessel contracting for shipping trade, he muted that the CVFF could be used to finance or obtain 80 per cent ship acquisition fund in Nigeria Export and Import (EXIM) Bank.
Dr. Onyung who expressed some tinge of cynicism about the genuineness of the process and disbursement in his opening speech, suggested that the 96 days be reviewed downwards to 45 days, reiterating that the application process was long and shipping business-unfriendly.
He repeated that the available CVFF proceed could not do much for shipping business given the international market prices of vessels.
Exercising his own share of skepticism at the size of funds and application process, Mr. Adewumi asked:“How many of you here have acquired a vessel in real life? A ship is not a bus or a car! 96 days is too long for a ship acquisition.”
Alhaji Umar in his intervention wanted to know the amount of funds accessible, the tenor and the shareholding structure of the prospective or eligible Nigerian company for the CVFF loan.
Curiosity and disbelief raised concerns and expectations from both the online and physical participants of the CVFF forum, who enthusiastically asked numerous critical questions bordering on the feasibility, sustainability and industry realities and operationalization of the loan.
Both the legal and financial consulting team and NIMASA CVFF team evaded questions on the shareholding structure of the beneficiary /applicants’companies; whether the fund is accessible to only the contributors of the two percent Cabotage levy; how long is the applicant expected to have operated in Nigeria to be eligible for the loan?; are applicants expected to have a running contract to be eligible?; How operators can pay insurance premium when the asset’s depreciation sets in; among others.
While the financial consultant to the CVFF, Mr. Yusuf Buhari ruled the participation of Nigerian insurance companies from participating in the renewed move to build new tonnage capacity for the industry on account of lack of capacity, he also said that “CVFF is not for shipyards. The law is specific on Cabotage trade, encompassing the carriage of goods and services as well as passengers; it has to be amended to include them.”
The seeming exclusion of shipyards from the Cabotage law by this linear interpretation, has raised the concerns of industry observers on the ultimate objective of the intention because the act reserves the transportation of goods and services within Nigeria’s coastal waters for vessels built, registered, and owned in Nigeria, and manned by Nigerian citizens.
They argued that patronizing foreign shipyards would compromise the real essence of creating job opportunities which presupposes developing the base for indigenous capacity.
According to him, boat operators operating in inland waterways are eligible to apply since it is within the cabotage precinct, as he disclosed that NIMASA had started working on getting waiver to transfer the CVFF proceed to the pre-qualified Primary Lending Institutions(PLIs).
Successful applicants of the CVFF, according to Dr. Mobereola will repay their loans to their various PLIs within eight years.
He also disclosed that the PLIs have been increased from five to 12 in order to give the ship-owners various options.
“To ensure transparency and accountability, we established a dedicated Secretariat Cabotage Unit, developed clear eligibility criteria, and partnered with 12 Primary Lending Institutions to facilitate access to the fund.
“I urge all prospective applicants to follow the established procedures through our partner financial institutions. The CVFF is not a grant program but a strategic investment in Nigeria’s maritime future. It is a loan with single-digit interest. We will monitor fund utilization to ensure they achieve the intended objectives.” He added.
He noted further that despite nearly two decades of regulatory challenges and bad experiences of the past, “I am delighted to announce that under President Bola Tinubu’s leadership and with the support of the Minister of Marine and Blue Economy, Gboyega Oyetola, we have secured the necessary approvals for disbursement.
“This disbursement will be transformative for our industry as it stands to empower indigenous shipowners to compete favourably, boost local content in the maritime sector, create employment opportunities for Nigerian seafarers and strengthen ancillary maritime services.”
