…Losses to foreign shippers hit $100bn annually

By Steve Agbota

The federal government’s failure to release the $700 million Cabotage Vessel Financing Fund (CVFF) as promised in August has reignited frustration across Nigeria’s maritime industry.

Stakeholders are lamenting that the delay continues to hand billions of dollars in shipping revenues to foreign operators while undermining the nation’s quest for maritime independence and better economic invigoration.

The Nigerian Maritime Administration and Safety Agency (NIMASA) had promised to begin the disbursement of the Cabotage Vessel Financing Fund (CVFF) in August, following the directive of the Minister of Marine and Blue Economy, Adegboyega Oyetola, for immediate action.

In preparation, NIMASA held meetings with shipowners, Primary Lending Institutions (PLIs) and other stakeholders to fine-tune the disbursement process.

However, as the month drew to a close without any release of funds, shipowners who spoke with Daily Sun expressed deep scepticism, insisting that the Federal Government may never disburse the CVFF, citing flaws in the process from the onset.

Stakeholders who spoke with Daily Sun earlier reported that Nigeria is losing over $10 billion annually in freight charges and a staggering $100 billion in shipping agency services to foreign operators, largely due to the absence of a functional national shipping line.

The development, stakeholders note, remains very disheartening, as Nigeria earns nothing from the transportation of its own crude oil and other cargoes, leaving the nation sidelined in a trade it should naturally dominate.

Speaking with Daily Sun on the delay in disbursing the Cabotage Vessel Financing Fund (CVFF), the President of the Nigerian Indigenous Shipowners Association (NISA), Sola Adewunmi, said the Nigerian Maritime Administration and Safety Agency (NIMASA) had from the outset made it clear to shipowners that it was not a lending agency and had shifted the responsibility to the Primary Lending Institutions (PLIs).

According to him, the current arrangement requires the PLIs to analyse and recommend a shipowner for financing, but their approval still depends on NIMASA.

“NIMASA has 50 per cent of the loan, while the primary lending institutions will have 35 per cent, and the prospective shipowner is required to have at least a minimum of 15 per cent,” he explained.

Adewunmi criticised the process, stressing the complexity of ship acquisition compared to ordinary consumer loans. “I told them, the very day NIMASA had a stakeholders’ meeting with us, that we are not saying people should not analyse loans, we are not saying they should start giving out people money anyhow, but the problem we are having is that there is a difference between the process of acquiring a ship and the process of buying a car. A ship is not something you go to the market and buy overnight. Even common passenger boats take about a year to get built… Before you pass through all those steps, you will have lost whatever you said you have, and I’m not sure there is a shipowner today that will say he has gotten that loan.”

He noted that he personally did not apply because he believed the procedure made it impossible to buy a vessel. “Someone has to get their own funds somewhere before they can acquire a new ship if they need one. I think the major problem is that when NIMASA calls us for a meeting, they will ask for our input, but whatever you tell them, they’ve already made up their mind on what they want to do,” he added.

He advised that the process should be redesigned to reflect industry realities, stressing the need for joint ventures. “They should encourage people to have a joint venture and let them come up with a procedure that would be suitable for ship acquisition. We are not buying a car. There is a process by which you buy a ship, and if you go ahead, maybe after the signing of a memorandum of agreement, you pay a certain percentage, and you are not able to meet your obligation, then your money is gone.”

Also speaking, a shipowner and member of NISA, Prince Ayorinde Adedoyin, expressed doubts about the government’s seriousness in releasing the fund. “Don’t let us deceive ourselves. The issue is so deep that sometimes I worry if this thing will ever be disbursed. You know, and I will tell you why — there’s so much clarification that needs to be done for us to even have a lead way to where we want to go. Because the government keeps on saying something like “we will disburse, we will do this and that.”

Adedoyin argued that the CVFF is not government money but contributions from shipowners. “Does the money belong to the government at all? It’s not the government’s money. The government is just the custodian of the money because the money is contributed from contract proceeds of shipowners, whether local or international. And to date, I don’t think the contributors have seen what is in that account, especially in the last 15 years. We only go by what they tell us.”

He also raised concerns over interest rates and multiple charges. “Now, you want to disburse our money to us, but you are going to charge interest. I think NIMASA is charging about 6 per cent or 6.5 per cent. And you now say the bank that will disburse has the right to charge another 3.5 per cent. So automatically, the money you want to disburse, the interest alone is going to be about 9 per cent, right? Then NIMASA is going to charge another 1 per cent as a management fee. It’s going to charge another percentage for another fee. Then the banks will charge another 1 per cent. And you say you are giving this money out… They’ve gotten that whole thing wrong.”

He explained that the burden on shipowners was unsustainable. “If I want to buy a vessel for $20 million, where am I going to get 15 per cent of that money from? Because the 15 per cent will be about $3 million. Where can an average shipowner in Nigeria get that 15 per cent from? Is the person going to go back to the bank that is already contributing 35 per cent on your behalf to NIMASA? So, it’s not going to work. Don’t let us lie to ourselves.”

Adedoyin further described the conditions as unworkable. “They also said that you must have a contract. Yes, if you bid with the IOCs, you can have an understanding with the shipowner that if and when you win the contract, you will buy that vessel to execute the contract. But for you to even get that vessel later, you still need to contribute 15 per cent. So, that means that that transaction is dead on arrival.”

He concluded with frustration: “The whole thing is tiring because it is becoming more like a joke as they continue to promise to disburse the money.”