A Review of the Nigerian Energy Industry

Why cabotage is not working

Nigeria Shippers10 March 2014, Lagos – Indiscriminate issuance of waiver, lack of political will and skill personnel have been identified as the causes of the poor implementation of the Coastal and Inland Shipping Act 2003.

The Act which is popularly called Cabotage was fashioned after the Jones Act in the United States of America (USA) and it makes specific provisions to protect indigenous ship owners in coastal and inland trade.

Its core thematic provisions set out the limitations on foreign operations of cabotage shipping, as well as conditions under which exceptions can be allowed. These provisions are set out in sections 3 to 6 of the Act, which prohibit coastal carriage of cargoes and passengers except by wholly Nigerian owned, manned, built, and registered vessels.

It also restricts towage by tugs or vessels to those wholly owned by Nigerian citizens just as it limits carriage of petroleum products and related oil and gas shipping services to vessels of Nigerian ownership. Furthermore, the Acts prohibits domestic trading in the inland waters of Nigeria except in vessels wholly owned by Nigerians.

It was in a bid to drive the implementation of the Act that the federal government initiated Cabotage Vessel Finance Fund (CVFF). The management of the Nigerian Maritime Administration and Safety Agency (NIMASA) is saddled with the responsibility of managing the fund.

A Lagos based shipping practitioner, Mr. Gideon Nwachukwu told THISDAY that there was nothing fundamentally wrong with the provisions of the Act which is hinged on four pillars as the Act made it clear that only indigenous ship owners have the mandate to carry out coastal trade and inland shipping.

Nwachukwu however noted that many factors have combined to rob Nigerians of the benefits of Cabotage over the years.

According to him, these include indiscriminate issuance of waiver, lack of political will and skill personnel to drive the full implementation of the provisions of the Act.
He argued that the same factors were responsible for the delay in the disbursement of the CVFF in spite of repeated assurances that it would be disbursed.

Many stakeholders have wondered why the federal government is yet to commence the actual disbursement of the funds, nearly a decade it promised to do so.
Already, the umbrella body of Nigerian ship owners, the Nigerian Ship owners Association has continued to flay the federal government for not doing enough to harness the enormous potentials in the maritime sector of the economy.

Describing 2013 as a disastrous one for local shipping operators, the association which has the Managing Director and chief executive officer of MORLAP Group, Chief Isaac Jolapamo as its Chairman, said its members are not expecting anything good to come out of President Goodluck Jonathan’s administration this year in terms of developing the shipping sector.

General Secretary of the association, Mr. Niyi Labinjo, had in a report accused the federal government of deliberately taking actions that continue to stifle the growth of maritime, resulting in diminished investments and collapse of over eighty per cent of indigenous shipping companies.


– John Iwori, This Day

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