Ogbeifun: How FG’s Proposed National Fleet Can Be Successful

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MONDAY INTERVIEW

Managing Director and Chief Executive Officer of Starzs Marine and Engineering Limited and President of the Ship Owners Association of Nigeria, Greg Ogbeifun, in this interview with Eromosele Abiodunposited that a robust flag administration is necessary for the proposed national fleet to be successful. He also reasoned that NIMASA must engage stakeholders on a continuous basis to avoid rancor. Excerpts: 

Can you tell us about yourself and your role at the Ship Owners Association of Nigeria (SOAN)?

My name is Greg Ogbeifun, I’m the President of the Ship Owners Association of Nigeria (SOAN). On the business side, I am the Managing Director and Chief Executive Officer of Starzs Marine and Engineering Limited, a foremost ship repair yard in Nigeria that has been in existence since 2000. I’m also the Chairman/CEO of Starzs Investments Company Limited; a Ship owning and managing company, marine logistics providers and private maritime security providers. Our ships service the upstream oil and gas sector in Nigeria.

We are in a new year; can you give a brief overview of SOAN’s agenda for 2017?

Our agenda for this year is going to be members and industry focused. We are just coming to the end of the first term of our executive, which ends March 31, 2017, when expectedly a new executive will emerge.

During the course of our first term, we focused primarily on bringing the awareness of our existence to critical stakeholders both in the private and the public sector, – we have successfully done that. At our end of year gala, we had successful representation of government functionaries and industry chieftains. The event was an indication that SOAN has come to be established nationally and internationally.

The next stage that we want to move unto is to look at members, their business, duties, challenges and difficulties and then we will collectively work to reduce the effect of the current economic recession on the business of our members. We also intend to spend this next phase consolidating on the gains and also building for the future.

We need to begin to have a more central focus where activities will revolve and to this end, we have approached the Lagos State Government for a sizeable piece of land where we hope to build a SOAN Center, which will incorporate an administrative office, an event center, hospitality building and training center. The center will be beneficial to SOAN members and stakeholders in the maritime sector.

You will agree with me that at the moment in Nigeria, there is no central point where stakeholders in the maritime sector gather together to hold events. We are following up with the state government and the indices are that there is a possibility that government will give us something sizeable for that purpose.

Our members are hurting just as the economy is hurting. Most of the member’s ships have been laid off because of lack of contracts, while those that are working have their rates substantially negotiated downwards for the international oil companies (IOCs) to also survive.

The result is that most of our members are carrying debts that they are not able to service. We have to brainstorm and think of how to ride the storm like everybody in Nigeria is doing.

We are also looking to diversifying our businesses. Fortunately, the address of the Group Managing Director NNPC at our end of the year gala, which was on “the benefit of a national crude fleet and crude freight to our economy” pointed to the same direction.

The NNPC has invited SOAN for a meeting to discuss how to crystallise the emergence of a tanker fleet. It is an initiative we are going to drive substantially because of the positive impacts it will have on the economy through capital flight reduction, creation of a training platform for training our seafarers and cadets. Instead of relying only on local offshore operations, we are going global. It will be good that Nigeria once again can begin to fly the national flag in international waters.

We are also looking at engaging the government maritime agencies, to ensure that we are not short-changed in the business that is available. If there are foreign vessels improperly engaged in our waters we will like to inform the authorities that we have these vessels lying idle and it doesn’t make sense for you to continue to use foreign vessels.

Another area of focus is the cadetship training berth scheme. At our end of year gala, we inaugurated the 100 cadetship training berth scheme which was performed on behalf of the Honourable Minister of Transportation, Rotimi Amaechi by the Managing Director, Nigerian Ports Authority (NPA), Ms. Hadiza Bala-Usman. The essence of the scheme is that SOAN members have decided to make their vessels available for cadets who are looking for sea time.We are more or less trying to augment the efforts of the Nigerian Maritime Administration and Safety Agency (NIMASA) and Nigeria Seafarers Development programme (NSDP).

We are trying to do it in a very robust manner whereby it is not just a case of making the vessels available for these children; we actually want to mentor them from the college to the sea, back to college up to the point where they get their certificate of competence. This involves quite a lot.

We have coordinators who will follow them through to ensure that even while they are on the ships, what they are supposed to learn onboard the ships to prepare them for their final certification are actually being thought. We found out that sometimes lips services is been paid in the scheme whereby they take the kids and dump them on board a ship and as far as they are concerned, as long as the cadets are onboard the ship and spend 18 months there, they have met their requirements. No, it does not work that way. Every day they spend on the ship, there are certain things they are supposed to learn. We have to follow them up to ensure that they are doing that. We hope that the necessary agencies will support the initiative, so that this gap that has been yawning in our sector can be closed.

We have also engaged some of the IOCs who have come out to say they are very keen on collaborating with us to train our Tug Masters and Chief Officers on special courses that will better equip them to be able to carry out the functions that our ships are doing for the IOCs. We have also been approached by NigerDock to explore areas of collaboration which we intend to do definitively. As you know there is a dearth of adequate ship repair facilities in the country. Up till now most of our ships have had to leave this country to look for docking facilities outside the country. With the challenge of foreign exchange it is going to be more difficult for Nigerians to take their ships from this country to other places to look for docking facilities. We will discuss the Nigerdock initiative with them to see what concession they can give to our members who bring their ships for docking in their facility.

This year, we will be organising some technical workshops, the essence is to look at what our industry statutorily requires of us and help all members to 100 per cent compliance. This workshop will enable the association to bring in resource persons to deal with specific issues that affect members and help them to comply with these issues. For instance, the Maritime Labour Act about Seafarers conditions of service which NIMASA is driving now. In the Act, there is a timeline for compliance.

We are going to ensure that our members are able to comply with this requirement within the timeline. Other areas that enterprises tend to ignore are things that concern financial regulations. Every establishment is required to comply with the Financial Regulatory Council (FRC). For instance, if you’re producing your audited accounts by your external auditors, it is a requirement that the Chief Executive Officer and the accountant of a company sign off on that audited report and these two persons are required to register with the financial regulatory council and have their numbers.

Some of our members don’t know this; therefore we want to bring this to their awareness to ensure that as members we are working towards these compliances so that we can enhance good governance in our business.

In SOAN, one of the commitments of my executive was financial discipline and transparent financial management of the association’s resources. We have successfully presented our first financial report which was audited by the external Auditors in line with the FRC requirements. That is the quality of our audited report.

To achieve all of these, we need to organise ourselves into small sub communities, so that different people are addressing the different things that we want to achieve in the course of this year.

 

Recently, NIMASA shutdown your facility and that of some of your members for not complying with the ISPS code, can you tell us what really happened? Also what effort have you put in place to ensure that your members comply with the code?

 

What happened was rather unfortunate. If you follow the press releases, you will find out that in the case of my shipyard that was shutdown, it was a bad error on the side of NIMASA. When our facilities were shut down, we were all in shock. We were issued our certificate of compliance, which was valid from January 1, 2016 to December 31, 2016. You cannot be issued a statement of compliance by NIMASA unless you comply.

Our facility was shut unceremoniously without notice on December 21, 2016. When that happened and we were approached we presented our certificate of compliance. The certificate provides for three verifications and visits. The last visit to our facility was on October 16, 2016 and a number of items were reviewed for our attention which we were doing.

There was no notice, no information to say that listen if you do not close this gap by a certain time we will shut you down. In any case the ISPS code does not provide for any businesses to be shut down even for non-compliance. What the code provides for is that the regulatory agencies, in this case NIMASA, should walk the company through to compliance. We are actually at a loss why all of that happened. But in any case it has happened and they realized it was an error, they have opened the yard and we have carried on with our businesses. Right now, we are working with their RSO consultant to renew our certificate of compliance for 2017 and if there are any gaps, we will begin to close up. Gaps will always come. As your business grows it requires that you also review some statutory requirements. As long as you are growing you will always need that.

Therefore it is the responsibility of the regulatory agency to continue to work with you at every level to ensure that you are complying with these requirements. It was an unfortunate incidence for the Industry and I will tell you why. The day before the shutdown on December 20, 2016, the Europe Business Assembly awarded Starzs Marine and Engineering Limited the Best Enterprise Award in Oxford, England. This same company that was recognise abroad was shutdown in Nigeria for non-compliance by a regulatory agency. When the company was shut down, I received phone calls from every part of the world. Sometimes because of the actions we take, we shoot ourselves in the foot. It was a bad publicity for our regulatory agency because the same people read in the press that we had the certificate of compliance which was an irony.

 

Given your experience, how will you advise NIMASA to go about enforcement of the ISPS code?

I will not limit it to the ISPS code; I have constantly at every opportunity that I have to speak advised that it is important for NIMASA to engage stakeholders on a continuous basis; the Minister for Transportation is doing that regularly. The NIMASA management needs to constantly engage the people they are regulating to let them know what is expected of them, understand their challenges, so that collaboratively we will begin to work together for compliances in every area. This is not happening, until it starts to happen we will continue to have these unfortunate incidents.

I know some important stakeholder bodies that have been waiting to have a meeting with the management for months. These are critical stakeholders that NIMASA needs to succeed in the performance of their function. The Association of Marine Engineers and Ship Surveyors have been waiting for three months to meet with the management of NIMASA, they have been posting them. That is the body that consists of Chief Engineers with international qualifications. They are the body that can help NIMASA provide the surveyors to keep their class functional. I don’t understand the reason responsible for this reticence to meet with the critical stakeholders.

There must be continuous stakeholder engagement. NIMASA needs to have an engagement with the Shipowners Association of Nigeria, until that happens we will continue to have challenges. If for instance there was a need to start shutting down jetties and ship yards, you call a meeting of these people and tell them they are not complying in certain areas, give them time to comply. That was not the case, all we saw were soldiers shutting down our facilities in Gestapo style. It was embarrassing. At the time of shutting down the yard, we had two Navy ships in our yard undergoing repairs. If the Navy didn’t think that the yard is safe and secure enough for them to come, they will not bring their ships to our yard for repairs and during the period of shut down, the two navy vessels could not be deployed to the field if there was an emergency. There are so many challenges and consequences. But these are gaps that we hope the relevant people will take necessary steps to close up for the benefit of the country because the way they are going about it is not helping the industry in any regard.

 

How has the decline in crude oil price affected ship owners given that IOCs cannot give you many contracts as a result?

I began by stating that our members are hurting just like the different facets of the economy are hurting. The first thing that happened when the oil price began to drop was that the IOCs were not able to meet their projected revenue, so any responsible organisation in that situation should think of cutting cost to survive. One of the things they did was to rationalise their needs for vessels, so that affected us. In the meantime, the Nigerian National Petroleum Corporation (NNPC) through NAPIMS directed all the IOCs to reduce operating cost by 30 per cent. The IOCs transferred that instruction to their sub-contractors that we reduce operational cost by 30 per cent.’ In other words, if they were paying you $100 a day it will come down to $70. That directly impacted those who had the desire to continue work because their revenue is reduced, operating cost has not changed, they have to pay salaries and what have you. Most of us are operating our assets with bank facilities. At the time the bank gave us these facilities, it was based on the charter rate at the time. When the rate was reduced, our ability to service these facilities was affected. We have to face reality, same with the IOCs. Even the government that budgeted based on a particular benchmark of dollar per barrel of oil is already having a deficit budget.

Therefore everybody is affected so what we need to do is to put on our thinking caps and begin to diversify our thoughts. What else can we do under the circumstances to remain relevant and active? I think for SOAN one of the ways to diversify is this opportunity to establish the Crude Tanker Fleet where we are all investors. From the Group Managing Director NNPC’s speech at the SOAN Gala, in 2015, the money spent on crude freighting from Nigeria was over $6billion and not one cent of that money was retained by Nigerians.

 

The federal government is planning to establish a national carrier, how desirable is this project?

I like to make a clarification between the national carrier and national fleet. You’re aware that I’m a member of the committee setup by the Hon. Minister of Transportation to see to the re-emergency of a fleet. National carrier is a status that is bestowed on a fleet or a company that has met certain requirements and the benefit of that is cargo guarantee. A national fleet or a Nigeria fleet can be general cargo, multi-purpose, crude oil tankers, products carriers, ROROs, ferries and all arrays of shipments by ships.

So the idea of the committee’s assignment is to help the emergency of various types of fleets. All Nigerians who have a desire to go into any of these will benefit from the incentives that this committee is recommending to the Nigeria government to help these companies emerge. So as it is, SOAN has chosen to work on crude tanker fleet because of the experiences we have garnered in our business as ship owners and operators upstream and downstream of the oil and gas industry.

There are some Nigerians who are interested in general cargo, container shipment etc. We are encouraging them from the committee angle to begin to crystallise that initiative. We also recognise that on our own, we don’t have what it takes to solely establish this fleet that could enjoy international recognition because cabotage trade is different from international trade. International trade will involve your ship flying the Nigerian flag and going to different countries and having agents in different countries. Therefore, we are recommending that as much as it is practicable, emerging companies that want to participate in any of these fleets should look for technical foreign partners who are already experienced and carrying out such trade to partner with them in an agreement where the Nigeria company has the higher stake, so that the company fleet will be a Nigerian registered vessel. There are challenges coming. One of these challenges is that if we are going to operate Nigeria fleet vessels operating internationally, it means that our Flag Administration must meet minimum international standards.

There is need to revive our Flag Administration to make it as attractive as the Panamanian, Maltase and others. It is not about the size of your country, but it is about the structure of your Flag Administration. The Hon. Minister for Transportation realising this after engagement with stakeholders setup a committee to reorganise NIMASA as well as the Nigeria flag administration. We hope that in the process of progressing and establishing this fleet, efforts will be made to strengthen our Flag Administration. I give you an example, in October, last year I was invited by the government of Malta as a speaker in the first Malta Maritime Conference. In the process of that, I engaged their flag administration because Malta as small as it is, has the number one flag administration in Europe and number five in the world. So I said to them, “how did you do it when you have no fleet? How did you do it?” I told them, “You have to come and help Nigeria.” One thing I took away is that their Flag Administration has 81 surveyors of international certification; master mariners and chief engineers who have first class Certificates of Competency all trained in their Maritime Institutions. They are the ones driving the country’s flag administration. The implication of this is that if you buy a ship in The Netherland for example, and you flag it in Malta because there is an advantage in flagging it there and your ship is trading in the far east and due for survey, which is supposed to be carried out by Flag Administration, Malta will simply jet out one of their surveyors to the far east to go and attend to your ship. Do we have that in Nigeria? No. That is why International ship owners will have nothing to do with Nigeria because we don’t have the surveyors. They have bilateral agreement with the classification society, but here we are depending on other people. Therefore their availability to service you depends on their convenience. My company just built a new ship in China to service a contract here, from inception till now we have been asking NIMASA to send a surveyor to China to do what they are supposed to do or a representative and up till now nothing has been done. These are the challenges, until they begin to engage those who know how to help them get it right, we will just be drifting. These are things that I say that do not make me very popular before certain people.

At the world maritime day held in Lagos, I told them that our Flag Administration is not ready to compete in the international domain; this is why the Nigerian Liquefied Natural Gas (NLNG) ships are not classified or registered on our flag. However, whatever the gap is it can be closed up but there has to be a genuine desire to close that gap, to attract NLNG and Nigerian owned ships registered outside this country.

Given what you have highlighted, what can the federal government do to remedy the situation?

Addressing this issue is very simple. The Hon. Minister of Transportation has setup a committee to make a recommendation on how to address the issues of flag administration and NIMASA. The committee comprised of sound professionals and technocrats who have come out with recommendations and the Minister has passed it back for implementation. All they have to do is implement the recommendations of that report.

Take us through the process in your organisation; tell us really why you are not what NIMASA claims you are.

The way you will know that we are not what they say we are, is that the ship yard has been operating since the year 2000 and has never been found wanting.

Let’s take Starzs Marine and Engineering Limited, for us to be recognized internationally in Oxford, it means a lot. We are constantly engaging the relevant agencies asking what we are supposed to do and we are doing it. We are embarking on an expansion programme and the challenges why we have not been able to actualize it are internal bottlenecks. To date we have carried out over 800 dockings since inception, some from within Nigeria and some outside the country. In recent months, the Nigerian Navy had been docking their ships in our yard satisfactorily. They have given us commendations, if you go to our yard now you will find some Navy ship there. This is 100 per cent Nigeria Company that needs to be encouraged and supported, not be discouraged and killed. We are creating job opportunities. The moment we were shut down, we had 150 workers who were sent home. Is that what the government needs now? It is not right to be shutting down enterprises that employ people; even if the enterprises have any lapses help them to close it in order to solve the economic and unemployment problems. We are doing our best and we don’t have any quarrel with anybody in NIMASA, I think it is a system problem because by the time we engaged their consultants, we saw a huge gap which is very embarrassing.

 

When can you say you have achieved your company’s vision?

We have been able to invest in assets worth over N15 billion-that is the assets of Starzs Investments Company Limited. These assets are creating job opportunities, training and services that are paid for and the money is retained in the country. We are adding tremendous value; we are operating to international standards. We have satisfactorily operated in the international scene such that we have been appointed by the commonwealth as a Strategic Trade Partner of the Commonwealth Enterprise and Investment Council. We are achieving a lot, we are not resting on our oars, and we intend to grow. Every day, we are fine-tuning and developing the quality of service not for anybody, but for ourselves. That is the only way for clients to take us seriously. Fortunately, all our vessels are working even at a time like this and our stakeholders are happy about it.

 

 

Where do you see your company in the next 10 years?

Our dream is strategic growth. It is not everything that looks enticing that you go for. You don’t compromise the quality of your service delivery, over trade and begin to have a negative impact on your cash flow and fail to service your debt. You have to strategically grow the human capacity to support that growth. We are growing slowly. It has taken us 30 years to get to a point where we have only five ships. That may not look like much but 30 years of digging solid foundation that is not likely to be shaken by anything. Even the recession has not shaken us. As a promoter of this business, I always tell my staff that the business is not for my generation, ours is to lay the foundation, and the next generation will take it to the next level. We were recently invited by the Sierra Leone Ports Authority to participate in a bid to provide tug services for their port. Even if we do not win, for Sierra Leone to search the horizon and see a Nigerian company, Starzs that they want to bring on board is a glorious achievement for our company.