PIL Pulls Out of Deal with Nigeria to Establish Shipping Line     

There is an indication that international shipping company based in Singapore; Pacific International Lines (PIL) has officially pulled out of an agreement it signed with Nigeria for the establishment of a private sector-driven National Carrier with stake-holding of 60 to 40 percent between it and Nigeria, respectively.

This indication was given yesterday by President of Shipowners Association of Nigeria (SOAN) Engr. Greg Ogbeifun while addressing journalists at a maritime exhibition in Lagos.

Ogbeifun faulted claims by the Minister of Transportation, Rotimi Amaechi that the deal has failed to sail through because Nigerian shipowners were unable to provide their 60 percent equity required for the national carrier. 

Ogeifun revealed that PIL pulled out soon after the deal was signed. According to him, the shipping line pulled out of the deal because of unfavourable fiscal policies of the federal government and cut-throat duty payments being collectable by the Nigeria Customs Service, the Nigerian Ports Authority (NPA) among other agencies.

Shipping Position Daily recalls that the minister had charged Nigerian ship owners to come together under one body or set up an equity holding company to be able to receive the Cabotage Vessel Financing Fund (CVFF). He was also reported to have said that the inability of the players to come together frustrated the PIL deal.

On this, the SOAN President said that: “I don’t think the minister was quoted rightly on that issue because I am a member of the committee that he sets up for fleet establishment and we did not get to the point at all for equity to come on the table because PIL pulled out of the whole arrangement after we came back from Singapore so we haven’t gotten to that point at all” 

“In any case, I am a member of that committee and this committee has not gotten to a point whereby they have to put together Nigerian investors, rather their shipowners or non-shipowners who are supposed to fund the 60 percent equity, they have not galvanize that group, so how can he be talking about we not putting money on the table? So I think the minister was quoted out of contest”

“PIL pulled out of the deal because the Nigerian fiscal policies do not make establishment of a fleet of that nature where they would be involved competitive in global trade. Our fiscal policies, tax laws, tonnage tax laws and other laws that affects international shipping, and we had to as a body appoint a consultant to do an international study of what other countries like Angola, Kuwait, what did they do to be able to establish fleets that are trading globally? That study revealed that most of those countries first of all declared zero duty”

“If you are a national and you acquire a vessel and you are bringing that vessel into the country, your duty is zero, but in this country (Nigeria) the duty payable on an average if you are bringing in a vessel is about 14  percent of the value of that vessel, so if you take a vessel of forty million dollars, a PANAMAX crude tanker, you would have to pay another 14percent of it in order to be able to import into your country despite flying your flag”.

Speaking further , he said: “You are going to be competing with foreign countries that are carrying same cargo that didn’t have to pay such duty in their own country; the cost of carrying the cargo would be cheaper than yours, so you cannot be competitive internationally”“So this is one of the reasons PIL pulled out and they said that Nigeria must review the fiscal policies if they must continue in that relationship”, he said.