Industry stakeholders have continued to express concern at the near absence of active indigenous participation in the Nigerian shipping industry, amid legal provisions intended to achieve 100 per cent local content. More so, as the Federal Government continues to delay the disbursement of the Cabotage Vessel Financing Fund (CVFF), designed to empower indigenous shipping operators acquire new vessels.
But more suggestions that would ensure the sustainability of the programme have emerged. Some stakeholders who spoke with Daily Independent want the Federal Government to involve the security agencies in scrutinising the beneficiaries and the four primary lending institutions (PLIs) or banks appointed to disburse the fund.
This is in addition to calls on NIMASA not to give funds directly to ship owners, but instead should facilitate a tripartite agreement with banks, shipyards and the shipping companies prequalified to benefit from the fund. This is part of measures to ensure the fund is used for the purpose it was meant for.
CVFF, established under the Coastal and Inland Shipping Act 2003, is derived from the two per cent deductions from all contracts awarded under the Cabotage regime designed to enable indigenous shipping companies acquire adequate tonnage to be able to participate in coastal and inland trade currently dominated by foreigners, who also dominate deep sea shipping.
NIMASA is the statutory secretariat mandated to disburse the fund. The agency has since 2008 appointed four banks as Primary Lending Institutions (PLIs) for the CVFF. They are Skye Bank, Diamond Bank, Fidelity Bank and Sterling Bank. A PLI is a financial institution that meets the requirement of NIMASA to participate in on-lending, monitoring and management of loans under the CVFF scheme.
Each beneficiary need to tie their loan application to a maritime project for which the applicant must provide 15 per cent of the project cost, having been pre-qualified by NIMASA that would be made to guarantee repayment.
A competent source at the National Assembly told Daily Independent under condition of anonymity, that “All the security agencies involved in the issue of pension scheme, should also be involved in scrutinising the banks and whoever that will benefit from it.”
He said the House of Representatives Committee on Marine Transport has finished work on cabotage, adding that if the Minister of Transport takes an action without due security diligence and anything happens to the funds, it would be scandalous.
A maritime expert and former president of Nigerian Association of Master Mariners (NAMM); Captain Adewale Ishola, urged NIMASA not to give the CVFF funds directly to the beneficiaries. He called for a tripartite arrangement between NIMASA, the ship building companies, and the benefiting ship owner so as to ensure that the right vessel specification is met.
This is in anticipation of the eventual phase out of single hull vessels by 2015 as required by the International Maritime Organisation (IMO). To this end, NIMASA has been advised to monitor the funds closely and ensure it is used for the acquisition of vessels that meet specification.
Ishola, who spoke at the sidelines of a capacity building programme organised by the Maritime Reporters Association of Nigeria (MARAN) in Oron, Akwa Ibom State, said that the CVFF fund must be tied to a ship building company, especially those that has docking facilities so that the money is not released directly to the beneficiaries.
“This is necessary so that we don’t fall into the same trap we had with the Ship Building and Ship Acquisition Fund (SASBF), where people bought rust buckets, some people never even bought ships. Let there be a concrete agreement between the ship building facility, the ship owner, and NIMASA husbanding everything, NIMASA will approve what kind of vessel they are going to buy or build, this is part of its function, it’s not just to give them free hand to do what they like with the money,” he said.
He added that “What type of vessels do the beneficiaries want, we have to know what they intend to buy; in the oil gas sector they use all kinds of vessels, it doesn’t have to be tankers, it can be supply vessels, it can be crew boats, we don’t know what these six companies have applied for.”
The House of Representatives had earlier in this month of October constituted an ad-hoc committee to probe the management of the fund which the Transport Minister said had grown to N40 billion as at April 2013. They are miffed that since 2008, the funds have been lying at the banks instead of being used to enhance the participation of Nigerian shipping companies in coastal shipping trade, currently being dominated by foreigners despite the existence of cabotage law.
Politicians not qualified for it have allegedly long begun frantic moves to hijack the process. Some politicians have been accused of moves to use phantom shipping companies to access the fund. Director General of NIMASA, Patrick Akpobolokemi, acknowledged this much when he raised alarm recently that some politicians were jostling to benefit from the fund and vowed not to give in to their pressures.
Senior Special Assistant to the President on Maritime Matters, Olugbenga Leke Oyewole, told Daily Independent that the Federal Government was being careful in disbursing the fund, so as not to give money to people that will misappropriate it. This is in a bid to avert a reoccurrence of the SASBF saga.
It will be recalled that in the 1980s and 1990s, the National Maritime Authority, now known as NIMASA, administered the Ship Acquisition and Ship Building Fund (SASBF) through which it gave loans that were intended to encourage ownership of ships by Nigerians. While a few number of genuine Nigerian ship owners benefited from the SASBF and bought ships, though old and rusty, several politicians, ‘briefcase ship owners’ and cronies of the then military junta also dipped their hands in the till and diverted the money to other uses.
The SASBF fund was suspended in the late 1990s but most of the money was never recovered and no one was prosecuted. In less than 15 months after SASBF was activated, more than $100 million had been given out as loan. The loans were not secured and when the beneficiaries developed cold feet in repaying, the then National Maritime Authority (NMA), could not recover much of the loans. Eventually, the facility was cancelled.
NIMASA has completed appraisal of some pre-qualified companies and since submitted report to the federal ministry of transport, which is finding it difficult to disburse due to undisclosed circumstances.
The Minister of Transport, Senator Idris Umar, also confirmed that six firms have long been penciled down as beneficiaries of the CVFF. “Out of the several applications received for the CVFF facility, six applications have been processed and endorsed by Primary Lending Institutions (PLIs) and accordingly recommended by the management of NIMASA to the ministry and are being evaluated for approval.”
He added that, “Realising the importance of the participation of the indigenous operators in the achievement of sustainable development and enhancement of indigenous capacity, the Cabotage Act was enacted and provides for the establishment of the Cabotage Vessel Financing Fund. This is intended to assist indigenous operators to acquire vessels. For purposes of disbursements, four primary lending institutions namely Diamond Bank, Fidelity Bank, Skye Bank and Sterling Bank have been appointed.
Information from Daily Independent was used in this report.