A Review of the Nigerian Energy Industry

NIMASA and the national carrier project

NIMASA logo01 June 2014, Lagos – A recent statement by the Nigerian Maritime Administration and Safety Agency, NIMASA, on the establishment of a national carrier in the shipping industry appears to have jolted members of the Nigerian Shipping Companies Association (NISA) as the apex maritime regulatory agency is reported to have ruled out their shipping line for consideration as possible carrier over capacity issues, reports Francis Ugwoke

For maritime stakeholders, it is cheering news that after about 19 years when the first national carrier, the Nigerian National Shipping Line (NNSL) was liquidated by the military administration, a new national carrier is set to take off. The apex maritime body, the Nigerian Maritime Administration and Safety Agency (NIMASA) had recently given this indication, and was clear that the national carrier would be established in the next six months, probably in the next five months. It would be recalled that this has been the wish of industry stakeholders who feel that the liquidation of the NNSL was wrong.

Many believe that only a highly capitalised national carrier could compete with multinational shipping agencies who are dominating in both local and international trading environment. Many indigenous shipping companies appear to have been mere spectators in some cases as they were denied certain lucrative jobs on allegation of lack of required capacity. The cabotage shipping regime which provides that certain cargos within the nation’s territorial waters be reserved for local shipping firms has failed as operators have accused the Nigerian National Petroleum Corporation (NNPC) and oil majors of failing to give them contracts. It has been lamentation by the Nigerian Indigenous Shipowners Association (NISA) in vain as the argument has remained that considering the nature of the consignment, wet cargo, only a sound and fully certified seaworthy tankers would be required.

This situation, among others, have weakened the cabotage law. Not even the local content law could help the situation. What many of the local shipping companies have done was to simply remain sub-contractors for lucky firms who get the main jobs. Apart from some of the few firms that were able to acquire new tanker vessels, majority of the shipping companies in Nigeria could only afford to acquire fairly used vessels or refurbished ones owing to the capital intensive nature of the bottoms. Some have remained charterers, which is a popular option in shipping trade.

But this status on the part of indigenous shipping operators has remained worrisome to many of them, who have also called for government intervention. Incidentally, it is estimated that the nation loses about N5billion as a result of the domination of foreign firms in both local and international shipping. The federal government appeared to have come close to addressing the issue recently when it approved the participation of local firms for crude oil affreightment. But again, many members of NISA have lamented that they were left out in the selection. Many therefore see the plan to establish a new national carrier as coming at the right time since it is expected that the national carrier will have all the required capacity to compete both in the local and international shipping environment. This way, part of the huge revenue that has over the years gone to foreign firms would come to Nigeria.

The statement credited to the Director-General of NIMASA, Mr Patrick Akpobolokemi, about the establishment of a national carrier was greeted with mixed reaction. And this was for obvious reasons. Akpobolokemi was quoted to have while announcing the plan for the national carrier allegedly said that Nigerian shipowners lack the capacity to operate a national carrier. This was reported by some of the shipping industry papers. The DG, according to the report, had challenged the local shipping companies to show evidence that any of their ships has up to 5000 metric tonnes capacity, among others. The DG was also quoted to have referred to the application for national carrier status by the NISA before throwing the challenge. This became an issue for discussion (murmuring) at a national discourse on 48 hour cargo clearance at the ports.

But sources close to NIMASA said that the statement credited to the DG was wrong. Some said the DG may have been referring only to NISA’s shipping line which applied for national carrier status. However, what the DG was reported to have said may not be far from the reason why oil majors and even NNPC have been reluctant in giving jobs to some indigenous shipping firms. On the other hand, the DG could not have really said that no Nigerian shipowner has the 5000 tonnage capacity considering that he was present when the Ocean Marine Tankers (OMT), launched two brand new tanker vessels for crude oil transportation.

Each of the vessels has the capacity to carry 45,000 metric tons (mt) of crude oil. The names of the two vessels, MT Abiola and MT Igbinosa, as at last year were used to supply crude oil to Warri and Kaduna refineries. The company apparently sure that it had met the necessary conditions applied for national carrier status. This was confirmed by the DG who had on the day of the launch praised the management of the company of doing Nigeria proud. Akpobolokemi who was excited about the acquisition of the two tanker vessels assured that with this, OMT has positioned itself to be accorded the status of a National Carrier. He also said NIMASA would support the approval of the company’s application.

Akpobolokemi said the two tanker vessels were coming 18 years after the NNSL was liquidated by the government. In his words, this was a demonstration that Nigerians could do what has been dominated by foreign firms. He said on the occasion, “We want OMTS to be given National Carrier Status. NIMASA will support this. The company has demonstrated love, commitment and we shall give them support to succeed. We need more of these developments to come in the maritime industry. With 1,000 jobs, it means with more tankers being acquired, more jobs will be created. This is the best way to reduce crime and illiteracy in our country”.
Chairman of the company, Capt. Idahosa Wells Okunbo, disclosed that before acquiring the new vessels, the company had relied on foreign vessels to carry out its supply services to the refineries. Apart from OMT, there could be other Nigerian shipping companies that may be qualified for the national carrier status. Sources said that some of these companies may be operating quietly without being members of NISA.

Ownership Status of National Carrier
As against what was reported in some sections of the media, the NIMASA boss could not have meant that the federal government would set up a national carrier. Rather, NIMASA plans to partner the private sector investors to float a new national shipping carrier. Besides, officials in NIMASA told THISDAY that the apex maritime regulatory agency could not be talking of setting up a national shipping line when the law setting up the agency does not provide for that. This is apart from the clear understanding that government has been withdrawing gradually from full scale business. Even as the DG disclosed that President Goodluck Jonathan wants NIMASA to ensure that the national carrier takes off in its administration, officials said that the best the agency can do is to recommend one of the applicants as a national carrier. Akpobolokemi explained that a Public Private Partnership (PPP) initiative would be the arrangement in order to avoid the mistakes of the past when NNSL was liquidated.

Indigenous Firms, NIMASA and Indigenous Fleet Expansion
The anger being expressed by some local shipping companies about NIMASA’s position on them is quiet understandable. NIMASA indeed cannot be blaming the local firms for lack of capacity when the federal government itself has not helped the situation, at least in the past 17 years when the Ship Acquisition and Ship Building Fund (SASBF) was suspended. Both the local shipping firms that benefited from the Fund and NIMASA would be blamed for the failure of the fund.

First, while 90 per cent of the firms defaulted in repayment of several millions of dollars, NIMASA officials were said to have failed to carry out due diligence on the beneficiary firms. Some of the firms did not buy ships. Those who did failed to give account of the loan. NIMASA which introduced Cabotage Vessel Financing Fund (CVFF) does not appear to be ready any longer to disburse the fund, more than $180 million. There has been concern about the state of the fund. Only the management of NIMASA and the Presidency can tell better.

NIMASA had passed its recommendation on the fund to the Transport Ministry which in turn took the issue to the Presidency. It is about two years that some firms were selected to be given the loan, but it does not appear that this would be real after all. So, with this situation, NIMASA should not be bold enough in blaming NISA members for lacking in fleet capacity, just as the association should equally blame former beneficiaries for defaulting in repaying the SASBF loan. But the default situation has been addressed by the strong conditions spelt out for those that will benefit from the fund. Disbursement of the fund is necessary if the local shipping capacity is to be improved, more so with the fact that it is the responsibility of NIMASA to champion indigenous shipping development in the country.


– This Day

In this article

Join the Conversation