Is The Cabotage Vessel Finance Fund Untouchable?

While at a forum organised by the News Agency of Nigeria (NAN) earlier this year, the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA); Dr Dakuku Peterside said the agency had concluded necessary documentation needed for the disbursement of the Cabotage Vessel Financing Fund (CVFF). He gave the accruals from the fund at that time to be in excess of US$100 million.

And recently, the DG told journalists that the CVFF is already in the neighborhood of $124million, even as he raised fresh hopes of disbursement of the Fund to qualified Nigerian shipowners.

Already, the Director General of Nigerian Shipowners Association (NISA) Secretariat and former Executive Director of NIMASA, Engr  Nnadi Ogbuagu  had accused the NIMASA DG of telling lies about the actual worth of the CVFF. He alleged that the figure of US$124million which the DG bandied could not have been correct.

We recall that, the CVFF is a part of the Cabotage Act, which was initiated by the then- Nigerian Shipping Companies Association. With a lofty objective of deliberately reserving commercial transportation of goods and services within Nigeria’s coastal and inland for Nigerian-flag vessels and vessels that are owned by Nigerians, the Cabotage Law of 2003 spelt out four pillars upon which its implementation must rest.

The four pillars are that: Cabotage vessels must be wholly -owned by Nigerians; they must be registered in Nigeria, must be crewed by Nigeria and Nigerian shipyards must build and repair Cabotage vessels.

As said earlier, an important annexure in the Cabotage Act is the Cabotage Vessel Financing Fund; a Fund which is derivable from the two percent deductions from all contracts awarded under the Cabotage regime. It was designed to enable indigenous shipping companies acquire adequate tonnage to be able to participate in coastal and inland trade, still  currently dominated by foreigners, who also dominate deep sea shipping.

NIMASA, which is statutorily mandated to disburse the CVFF, at a point appointed four banks: Skye, Diamond, Fidelity, and Sterling as Primary Lending Institutions (PLIs) for the CVFF. 

Under the CVFF guidelines, each beneficiary must submit application need to tie their loan application to a maritime project for which 15 per cent of the project cost must be provided, having been pre-qualified by NIMASA.

Can we then ask NIMASA these questions? How many indigenous ship owning company has it registered since 2004 and how many foreign?  To what extent has the CVFF been useful to Nigerian operators?

The fact is: the CVFF remains an unfulfilled dream of the initiators and drafters of the Cabotage Act.

At some point, there was an announcement of six companies that would benefit from the fund; that was the last was heard of it. If it is true that NIMASA had for a long time conducted due diligence on the six companies and handed over to the Ministry of Transport, if it is also true that it is the Presidency that is delaying the disbursement, then our fears about the insincerity on the part of government may have been confirmed.

If by its claim, (which is even being contested by NISA), the CVFF has grown in excess of US$124Million, why is it still being warehoused with the Central Bank of Nigeria (CBN).

While not subscribing to the allegation that the Fund may have been misappropriated, the non-disbursement of the CVFF is raising questions.

Between NIMASA and the supervising Ministry of Transportation and the Presidency, there is a lot that is going on that is detrimental to the success of Cabotage Act in general and the survival of the CVFF in particular.

Since it accrued significantly, the usual practice is for every DG of NIMASA and the Minister of Transportation to dangle the carrot of disbursement of the CVFF in front of stakeholders, especially shipowners.

We wonder why the Presidency, the Ministry of Transportation, the Central Bank of Nigeria and NIMASA with all their powers are yet to determine what to do with the CVFF.

Perhaps, it is appropriate to ask at this point about what happened to the six companies that were shortlisted as qualified to access the CVFF a few years ago. We think the industry is tired of hearing this same song of; we will soon disburse the CVFF. Both NIMASA and the Ministry of Transportation  are beginning to sound like a broken record.