Making National Fleet Work

Minster of Transportation, Rotimi Amaechi

Eromosele Abiodun writes that the effort of the National Fleet Implementation Committee in clearing legal and institutional impediments may pave way for the establishment of a sustainable fleet for Nigeria

In May 2016, a few months after he was named Nigeria’s Minster of Transportation, Rotimi Amaechi unfolded the federal government’s plan to float a new national shipping line.

Amaechi, while unveiling the plan at a maritime technical summit in Lagos, explained that the new national carrier (or fleet) of ocean-going vessels would not be funded via the Cabotage Vessel Financing Fund (CVFF).

To this end, in April 2017, the minister constituted a committee to screen shipping operators interested in acquiring part of the 60 per cent holding for Nigerians in the proposed National fleet.

The fleet was expected to have a 40 per cent foreign ownership. Members of the committee were former Chairman of the Ship Owners Association of Nigeria (SOAN) and Chairman/CEO, Starzs Investments Group, Greg Ogbeifun, Executive Secretary of the Nigerian Shippers Council (NSC), Mr Hassan Bello amongst others.

Following the timeline given to the committee, they submitted their report to the Minister of Transportation in June 2017. However, since then, nothing has been hard from the Ministry of Transport, raising fears that the effort may yet be another pipe dream.

On presentation of the report from the Chairman of the committee, Mr. Olu Olusoji, in Abuja, the minister immediately constituted an implementation committee which he said would be headed by the Chief Executive Officer of the Nigerian Shippers’ Council (NSC), Mr. Hassan Bello.

According to him, it has become expedient to constitute the implementation committee immediately because government attaches premium importance to the revival of the national shipping line, adding that it will greatly impact on the socioeconomic development of the country.

Amaechi said international regulator and willing investors in the industry had given Nigeria August as deadline to put all the necessary framework and foundation for viable international maritime activities which will attract foreign investors.
According to him, “Investors have given us August as deadline on this issue. And we have said government is going to use part of the cabotage fund in this direction. We must also advise on how to choose who qualifies to benefit from the fund because the 60 per cent that we have must be accessed from the cabotage as part of their equity contribution.”

He, however, warned the committee members not to allow private vested interest in the utilisation of the cabotage fund jeopardise government’s good intention in the allocation of the fund to ship owners at the detriment of national interest.
“I will leave that to the committee. I don’t want to see your private interest because everybody wants to access the fund. The law states that the minister decides, and that is why I have said NSC should chair the committee,”he said.

Making clarification on how much Nigeria loses as a result of patronage of foreign fleet in international waters, Akinsoji said in 2014, Nigeria lost $2.2 billion because of the absence of national shipping line.

According to him, “If 50 per cent out of the 5,000 ships that landed in Nigeria in 2014 were Nigerian ships and managed by Nigerians, the country would have saved $2.2 billion.”

He said Nigerian seafarers that would have been engaged to work on the fleet would have been earning about $3,000 per month.
He added, “So you can imagine the number of families that would have benefitted from that and these are the kind of loses that we are making by not having ships carrying our cargoes in the international waters.”

Akinsoji said international cargoes generated are carried by foreigners and foreigner ship as the country presently does not have ships in the international waters carrying dry cargo.

While pleading with Amaechi not to allow the report gather dust, he said the roadmap to the successful establishment of a Nigerian fleet is the implementation of the report as well as the repositioning of NIMASA.

He said: “On our part, we have taken a bold step to advise the minister on the way forward on the establishment of a Nigerian Fleet Implementation Committee (NFIC) in flying Nigeria’s flag in international waters.”

Fresh Hope
In his valedictory speech at the end of his first tenure, Amaechi had, at a gathering of stakeholder blamed ship owners and government agencies in the sector for his failure to achieve the dream.

However, there seem to be a fresh hope as the National Fleet Implementation Committee (NFIC) has said it is currently clearing some legal and institutional impediments that would pave way for the establishment of a sustainable National Fleet for Nigeria.
Chairman of the Committee and Executive Secretary/CEO of the NSC, Bello, disclosed this in an interview at the sidelines of the recent ‘Day of the Seafarers’, which seeks to encourage more women participation in the shipping industry.

Bello observed that a total of $9billion in terms of freight on dry cargo was earned in Nigeria in 2015, all of which went to foreign ship owners because of the absence of a vessel on Nigeria’s fleet.

He noted that this has serious negative implications on creating jobs for Nigerian seafarers and cadets including women, the banks, insurance companies, ship building and ship repair yards and the overall national economy, a development that makes it urgent for the country to have a sustainable or enduring national fleet.

But he also observed that in the course of the work of the committee, which he insists is a three-year programme, it has been established that there exists some major impediments in terms of laws, policies, taxes and business practices that must be cleared to create the necessary environment if the National Fleet project must work.

To achieve this, it was gathered that the NFIC is working with the National Economic Management Team headed by Vice President Yemi Osinbajo, Department of Petroleum Resources (DPR), Federal Ministry of Finance, the Nigeria Customs Service (NCS), Nigeria Investment Promotion Council (NIPC), Federal Ministry of Budget and National Planning, Federal Inland Revenue Service (FIRS) and the Nigerian Maritime Administration and Safety Agency (NIMASA) to achieve this objective.

Investigations also showed that among the policies and laws that may need to be tinkered with is the carriage of the nation’s exports and imports on the basis of Free On Board and Cost, Insurance and Freight (CIF), respectively, both of which are injurious to the nation’s economy as well as the high import duty rate on the importation of vessels and vessel spare parts, which make the Nigerian shipping lines uncompetitive with their foreign counterparts, who acquire vessels with less than three per cent interest and less than two per cent import duty rate.

“The establishment of the national fleet is a three-year programme, we want clear some impediments both subjective and objective that would create the right atmosphere for the National Fleet to thrive. Mind you the Federal Government is not putting down a kobo and so we want to make the environment right for the private sector both local and foreign to put down their money.

“It is not just enough to say that we want more women to take interest in the shipping industry but where are the ships? When we create the necessary environment that would make the fleet to thrive, we also create incentives that would be attractive to the investors because it is not just acquiring ships that would shut down tomorrow but we want a sustainable National Fleet that would stand the test of time,” Bello said.

While lamenting the low level of shipping activities among the indigenous operators in Nigeria, he noted that shipping contributes a paltry 0.1 per cent to the nation’s Gross Domestic Product (GDP, which is far less than the contribution of the Nollywood industry, which is an aberration, given the vast maritime endowments at the disposal of the country, most of which are untapped.

He also disclosed that with the involvement of NIMASA, the national fleet, when fully operational, would be given a national carrier status, which implies that it would carry all government cargo, which would include crude oil, various materials for rail and power projects as well as other sundry cargo belonging to government agencies.

FG advised
Former President Olusegun Obasanjo had while reacting to the matter recently advised the federal government against resuscitating the defunct Nigerian National Shipping Line (NNSL).

Obasanjo blamed the demise of NNSL on the lack of professionalism and high level corruption at the time.

He said: “NNSL had been liquidated. They tried Nigeria Unity Line, it collapsed. Nineteen new ships were specially built for Nigeria and we did not take delivery of some of them until I left office in 1979. When I came back in 1999, NNSL had been liquidated with all 19 ships and the five already in existence gone. Two of the ships were missing for almost two years and it was discovered that one military man was using them all over the world without accountability.”

Obasanjo urged the present administration to ‘think out of the box’ and come up with what should be done to grow the maritime industry.

Amaechi, however, promised that the federal government was ready to create an enabling environment for steering the maritime industry to its rightful position.

He said government would provide safe environment for both foreign and indigenous investors to reap returns on their investment without compromising the nation’s economic benefits.

The fall of NNSL
Meanwhile, Obasanjo and other stakeholders’ fears may not be out of place given what happened to the NNSL in the past. The company was established by the Nigerian government in 1959. Despite huge investment and subsidies, the state-owned company was unable to compete with European lines. Much of the investment went to enriching the political elite. Deeply indebted, the NNSL was liquidated in 1995 and all 21 of its vessels were sold.

At inception in 1957, 33 per cent of the capital was held by the Elder Dempster Line and 16 per cent by the Palm Line, both British companies, while the Nigerian government held 51 per cent. In 1961, the Nigerian government acquired all the shares. The NNSL started operations in 1959 with three vessels. Nigerian seamen who had been employed by British shipping companies in the colonial era moved to work for the Nigerian Line. By 1964 it had grown to a total of 16 vessels. The public company was assisted by private businessmen. The Sir Louis Ojukwu was an early member of the board, dying in 1966. The chairman from 1967 to 1973 was Oloye Adekunle Ojora, formerly of the United Africa Company (UAC), who later became a highly successful businessman in his own right.

During the Nigerian Civil War the army made free use of the NNSL for transport of troops. The ships played a key role in the advances along the coast in 1969. With the end of the Civil War in January 1970, General Yakubu Gowon announced an extensive programme to revive the economy. In place of expensive hired vessels two new ships were bought for the NNSL and the ports at Calabar and Port Harcourt were rehabilitated. In 1977, the government ordered the construction of 19 new vessels to replace the aging fleet. By 1979 the company had 24 oceangoing ships. The NNSL was an important source of training for seamen of the Nigerian Merchant Navy (NMN).