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Clamour for Cabotage Review Gains Momentum

18 Nov 2012

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Transport Minister, Idris Umar, DG, NCS, Ify Akerele


After nine years of failed implementation, shipping industry operators have renewed their call for an urgent review of the Coastal Shipping Law, otherwise known as cabotage regime, as part of the present administration’s transformation agenda, reports Francis Ugwoke


The flaw in cabotage shipping law has forced industry stakeholders to call for an urgent review of the nine years coastal shipping regime that is aimed at accellerating indigenous shipping development. The call for the review is coming from industry operators who believe that there cannot be a better time than now considering the much acclaimed transformation agenda of President Goodluck Jonathan. Stakeholders who spoke to THISDAY, including the Director-General of Nigerian Chamber of Shipping, Mrs Ify Akerele, argued that the review should be far-reaching to address areas of weakness as far as the law is concerned. For instance, areas where Nigerian shipping companies have no capacity should not be covered by cabotage. Others said the law this time should be strengthened to give a biting teeth where there are breaches as being complained by indigenous shipowners who say that foreigners have taken over the local shipping trade contrary to the provisions of the shipping law.

Cabotage Law
Cabotage is simply a protectionist policy introduced in advanced countries for the benefit of their nationals, mainly companies involved in trading within their territorial waters. Indigenous shipping companies in Nigeria agitated for the policy after studying such laws in the United States of America, Britain and Malaysia. Among groups that championed for the cabotage regime include the Nigerian Shipping Companies of Association (NSCA) and human rights activist, Mr Olisa Agbaokoba(SAN), Mr Mike Igbokwe (SAN), former Minister of Interior, Capt. Emmanuel Ihenacho, between 1998 and 2002. The policy was signed into law in April 2003 when Chief Ojo Maduekwe was Transport Minister under the regime of President
Olusegun Obasanjo. The then Director-General of Nigerian Maritime Agency (NMA) now known as NIMASA, Mr Ferdinand Agu had mobilised all resources to ensure that cabotage was signed into law in Nigeria. NIMASA had worked
with Mr Agbakoba and later with Mrs Mfom Usoro to contribute ideas on the Bill that was presented to the National Assembly. It was a smooth sail in the National Assembly and the Presidency where it received accent.

Objectives of Cabotage
Under the cabotage law, all affreightment of wet and dry cargoes was reserved for indigenous shipping companies. However, waiver provisions were made to take care of areas where Nigerians do not have capacity. For instance, the law provided that even crew on board should be Nigerians. To encourage local industry growth, the law provided that ships operating in the country should be Nigerian flagged, meaning that they were registered in the country.

Weaknesses of the Cabotage Law
The major problem which the law has suffered is the fact that many Nigerian shipping companies did not have the capacity. Many of them who sought for jobs from Nigerian National Petroleum Corporation (NNPC) and oil majors were not successful. However, the bitter experience was that even when Nigerian companies met the requirements, they were denied jobs by either NNPC or oil majors. So, for the past nine years, cabotage has failed to realise its objectives as very few Nigerians have benefited from the policy. Those who were lucky to get contracts were those who simply became sub-contractors to the main contractors of the NNPC and oil majors. Some very powerful Nigerians had to acquire brand new vessels to be able to get juicy wet cargo contracts from NNPC and multi-national oil companies.

Poor Enforcement of Cabotage Law
One of the problems suffered by indigenous shipping companies is the indiscriminate issuance of waivers by the Ministry of Transport through NIMASA. With waivers, the nation’s territorial waters were dominated by foreign firms involved in trading activities that should be for Nigerian companies. The Indigensous Shipowners Association of Nigeria (ISAN) lamented to no avail. Sometime last year and up till date, ISAN decided to join NIMASA to arrest foreign vessels doing business illegally on the nation’s coastal waters. But the cost of fighting such war has not been easy on the part of NIMASA and ISAN. Authough, some vessels were arrested and charged to court, the result is that till date, shipping industry stakeholders maintain that the coastal waters are still filled with foreign vessels who claim to have waivers to do business. This in turn has become a big blow for local firms who have had to acquire modern ships, including double hull vessels as required by International Maritime Organisation (IMO) for safer wet cargo operation on sea. Some Nigerian companies have to spend millions of dollars to turn their single hull Tokunbo vessels to double hulls, yet the foreigners are in control of their trade.

Clamour for Review of Cabotage
Stakeholders who want a review of the law said it is overdue to address the issue of discrimination against Nigerian firms, poor enforcement of the law and indiscriminate issuance of waivers to foreign firms. The other issue is on the requirement that a cabotage ship should have Nigerians on board or that such vessels should be registered in Nigeria. A maritime lawyer, Mr Emmanuel Ofomata, told THISDAY that there is need to review the Cabtoage Law to strengthen the policy for the benefit of Nigerians. Ofomata was of the view that the law must make it mandatory for NNPC to give out contracts on carriage of petroleum products within the coastal waters to only Nigerians. “Waivers for such cotnract should only be given to foreigners where Nigerians demonstrate lack of capacity”, he said. He also called for strict enforcmeent of cabotage provisions in the area of foreign vessels operating illegally on the nation’s waters.

Position of Chamber of Shipping
The Director General of Nigerian Chamber of Shipping (NCS), Mrs Ify Akerele said that Nigerians should live up to expectations as far as cabotage regime is concerned. She made it clear that some Nigerian firms do not really have the capacity for some jobs and this may be the reason they suffer discrimination.
She said : “some shipping companies dont have the right type of capacity. For example, somebody operating in the upstream is given a job and puts his relation as deck hands, he will not employ the right people to work because it might cost him more . Those are the sort of things happening. That is just a simple example. You are told to get a proper certification. You go and get a mushroom certification. How do you expect the company that wants you to deliver to give you a job if you bring fake papers. So these are the sort of things. These are our own problems. We have to sort them out. But this present government is doing very well in the area of ensuring that Nigerians are given first choice of refusal. Nigerians are made to know, look, it is yours, don’t allow anyone to take it from you, but please let us back you, but while we are backing you, don’t go and embarrass

How Cabotage Can Work by Presidential Committee
In a bid to make cabotage work, the Presidential Committee on Maritime headed by the Transport Minister, Senatgor Idris Umar and assisted by Mr Olisa Agbakoba, wants NNPC and multinational oil companies to provide their projected vessel requirements for the next five years to enable indigenous ship owners invest and plan better in order to be in a position to participate in such trade. The view of some industry stakeholders is that this position by the Presidential Committee should form part of the review of Cabotage as vital to improve on the number of Nigerians involved in NNPC, oil major wet contract jobs.

Tags: Business, Nigeria, Featured, Cabotage Review

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