Time For A National Carrier For The Maritime Sector Too 

It is almost certain that Nigeria Air which was unveiled recently in London will soon start flying Nigeria’s flag all over the word. 

According to the Minister of State for Aviation;   Hadi Sirika, to actualize this, the Federal Government is committing an initial US$55m upfront grant in order to ensure the take-off of the airline this year.

He said recently that, “in order to ensure the take-off of the airline in 2018, government will provide $55m upfront grant/viability gap funding to finance start-up capital and pay commitment fees for aircraft to be leased for initial operations and deposit for new aircraft, whose delivery will begin in 2021.

When Nigeria had Nigeria Airways, she also had Nigerian National Shipping Line (NNSL). Both died at different times.  While NNSL died in 1995, the Nigerian Airways died in 2003.

But the push to revive both has been revved up in recent time, and from all indications, the aviation national carrier is already a done deal, why the push for its counterpart in the maritime industry appears comatose.

Since 1995, when the then-minister of transport, Major General Ibrahim Gumel (now deceased) supervised the liquidation of the nation’s national carrier; the Nigerian National Shipping Line (NNSL), Nigeria has been plummeted from a nation of almost 25 publicly - owned ships to a nation that can not at the moment boast of any national carrier.

A couple of years ago, Indigenous Shipowners Association of Nigeria (as they were then called) toyed with the idea of floating a mega shipping company. This remained only an idea since it was mooted more than six years ago. 

We recall that, in 2011, and after a long period of silence, the then-minister of transport; Alhaji Ibrahim Bio gave a hint that the Federal Government had given approval to the Nigerian Maritime Administration and Safely Agency (NIMASA) to float a new national carrier; albeit, in partnership with the private sector.

We are often told that Nigeria has more than 1000 ships in her registry, but we dare ask: how many of them are actually owned by Nigerians and what is the deadweight of each of the ships? For those who have also had to ask the question about the current status of Nigeria as a maritime nation without a ship, the answer should start from the foray which Nigeria made into shipping and ship ownership with the birth of NNSL, the subsequent death of NNSL, the creation of an interventionist policy called Ship Acquisition and Ship Building Fund (SASBF) and the abuses which the scheme was subjected to and its subsequent scrapping.

 The birth of a successor company to NNSL; in the name of Nigerian Unity Line (NUL) and its death will offer a good thesis on how and why government businesses fail in Nigeria. While the defunct NNSL (at a time) had a fleet that is in excess of 21 bulk cargo carriers, beneficiaries of the SASBF could only account for only one or two vessels that could not stand the test of time. None of the few ships that were bought with the SASBF sailed for more than three years. 

And since the failure of both the NNSL and the SASBF, the challenge has been - how does Nigeria get back on track as a ship-owning nation.

 

While some may argue that government’s direct participation in shipping through tonnage ownership is no longer in vogue, especially as most African nations have done away with the idea, it is also arguable that government can not completely divest from this core sector of the nation’s economy. 

We note that there have been feeble attempts on the path of the Nigerian Maritime Administration and Safety Agency (NIMASA) to galvanize the finance sector, especially the banks to embrace ship financing. Very few banks have shown interest in funding ship acquisition, majority of the banks prefer to fund acquisition of service vessels in the oil and gas sector. Acquisition of container ships and bulk carriers is understandably out of it. Not until the Cabotage law came into the centre stage, there was little or no interest on the part of the financial institutions to be a part of efforts that were aimed at boosting indigenous fleet. We recall that when government threw its weight behind fleet expansion through the SASBF, there was no Cabotage. 

Although, it is more than one decade since Cabotage law came into effect, it has not enhanced ship acquisition, neither has it enhanced the fortunes of indigenous ship owners. We had thought that since one of the core functions of NIMASA is improvement of Nigeria’s participation in sea borne trade, it should have begun to fashion out a workable and sustainable way to boost our indigenous fleet, even if it is centered on acquisition of Cabotage vessels.

But, the lot has fallen on the shoulders of the Executive Secretary of the Nigeria n Shippers Council; Mr Hassan Bello, who is the Chairman of the Implementation Committee for the new national fleet. It is an all-encompassing body made up of stakeholders from both private and public sectors.

It is gladdening to read him recently while speaking on the form of shipping line that the committee is midwifing. According to him, it is not in the mode of the government-owned Nigerian National Shipping Line or its successor; the Nigeria Unity Line.

“It is a private sector-driven business venture; it is going to be driven purely as a business enterprise with equities and structure totally spelt out. You can now see that it can not be a national carrier in the mode of the NNSL, it’s a totally different arrangement”, he was quoted as saying.

We agree that Nigerian banks are very relevant, but since they are still largely reluctant and also lacking in the liquidity that will be required to acquire the type of ships that the committee has in mind , it is our candid opinion that the option of offshore partnership  with a Singaporean shipping line; PIL is a commendable feat.

Of course, a new Panamax bulk carrier from a shipyard in South Korea may cost as much as $50Million excluding costs of fuel, crew, food & supplies, entertainment equipment, stores, etc. The same goes for a crude carrier.

We are aware that the national carrier whenever it is formed can go into leasing or charter (bareboat, voyage or time). But, it must at least boast of one or two of its own.

It is commendable that Nigerian investors (not government) will control 60 per cent equity in the new business, which is clear departure from previous templates in which government holds controlling shares in such businesses under the guise on Pubic Private Partnership (PPP).

But, it is becoming increasing impossible to secure local financiers for the   60 per cent Nigeria equities, a development that may have scarred the Singaporeans away.

As much as we have consistently strongly advocated that government should leave ship acquisition for the private sector, more so since two previous experiences (through NNSL and NUL) failed.

It is no longer in doubt that the Nigerian Government can no longer fund or even own equity in ship ownership. It is also in doubt if the current approach of sourcing private sector funds can help out. So what option does Nigeria have? We think that what is good for the aviation sector should also be good for the maritime sector.

Just as the government has provided a seed fund for Nigeria Air, maritime sector stakeholders should also demand a seed fund of $55Million, which can at least buy one new dry or wet cargo carrier. 

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