”I always say that the problem is not that we don’t have business in Nigeria, last quarter, NNPC imported over 4 billion liters of products, and if we translate that one into N3 per litre which is the cost of literage, that will give Nigerian ship owners over N12 billion naira per quarter. This at the moment is enjoyed solely by foreigners”.
That was the valid observation of the director general, Nigerian Maritime Administration and Safety Agency (NIMASA), Mr Temi Omatseye at a recent joint press briefing with the executive secretary, Nigerian Local Content Board, Engr Ernest Nwapa.
Speaking in the same vein, Nwapa had asked rhetorically: “Why has the Jones Act been used successfully in the United States to develop and empower American marine business and technology, while the Nigerian Cabotage Act remains largely underplayed after seven years?
“Why has the Local Content Policy been used successfully in Brazil and Malaysia, while the Nigerian Content Policy is still to meet targets? There may be several answers to these questions, but the incontrovertible fact is that in the successful countries, a common thread that runs through these jurisdictions is a deliberate insistence on implementation of the provisions of the laws and policies of government.”
The landmark event which held in the boardroom of NIMASA and which probably symbolises the beginning of a new era of implementation of Cabotage was equally attended by the chairman, Indigenous Shipowners Association of Nigeria (ISAN), Chief Isaac Jolapamo.
Underscoring the fact that indigenous shipowners have not reaped the intended benefits of Cabotage and expectant that the burgeoning relationship between the two federal agencies will usher-in a new vista of hope, chief Jolapamo had remarked that: “The time for crying is over. We indigenous shipowners have absolute confidence in the leadership of NIMASA and the Nigerian Content Monitoring Board to effectively implement the provisions of the Cabotage Act and the Local Content Act effectively. You people want to drive it. And you have started on the right footing and we shall support you”.
It is already a common agreement within the shipping community that the Cabotage Act has been a failure, largely abused by foreign shipping interests. It is also a fact that stakeholders have been clamouring for a review of the Act for more than two years.
It is in the midst of the clamour that the ‘Local Content’ issue came up as another avenue to ensure a more equitable participation by Nigerians in the lucrative oil and gas sector.
The passage into law of the Nigerian Local Content Bill is arguably one of the most daring efforts of the government to significantly domesticate the oil industry through local value additions.
The bill which was assented to by President Goodluck Jonathan (albeit in acting capacity) on April 22, 2010 provides for the development of indigenous content in the Nigerian Oil and Gas Industry and for a Nigerian Content Plan to manage the coordination, monitoring and implementation of the local content.
Nigeria is the world’s eighth-biggest oil exporter and relies on crude as its main foreign exchange earner. The industry account for over 40% of Nigeria’s GDP and is associated with over a billion dollar worth of investments annually. There is a markedly absence of indigenous players involved in these transactions, where about 90% of goods and services used in the industry are actually imported from overseas. The law seeks to increase indigenous participation by prescribing minimum thresholds for the use of local services and to promote the employment of Nigerian staff in the Industry.
Cabotage (which is coastal movement of goods and persons) is an integral part of the Local Content Act and this probably accounts for why the chief executives of both NIMASA and the Nigerian Local Content Board have agreed to collaborate in the interests of Nigerian business in the two sectors.
The fact is that indigenous shipowners have been sidelined by the Nigerian National Petroleum Corporation and its subsidiary; the Petroleum Products Marketing Company (PPMC) in the affreightment of petroleum especially within the Nigerian coastal waters. It is thus a welcome idea that the two chief executives are now working together.
It is expected that the emergence of Local Content Act will rub off positively on the Cabotage Act; especially as it concerns lifting of petroleum products and carriage of crude.
However, indigenous shipowners will need to stop the grumbling and the lamentations of marginalisation. The time to expand their corporate profiles of being a one-man business outfit is now. Good enough, the two Acts explicitly allow for partnership with foreign interests. So, rather than lament exclusivity, Nigerian shipping companies should make themselves attractive to investors and also strive to be competitive.
The comments of Engr Nwapa at NIMASA, Local Content Board joint press briefing to the effect that foreign vessels are patronised at the expense of Nigerians is a pointer to the extent of abuses which Cabotage has been subjected to.
We agree with him that: “ It is a sad commentary that daily, we are inundated with complaint, pleas and requests from Nigerian indigenous investors and companies who have marine vessels and equipment built to specification and with evidence of debilitating loans hanging around their necks and being denied of work at the expense of foreign owned vessels and equipment.”
It is also true that Nigeria’s inability to implement policies in the maritime, oil and gas industries will continue to stunt the growth of these two very important sectors of the economy.
While his Local Content Board counterpart laments, the domination, Omatseye admits that NIMASA has “not been able to implement our policies and have consistently allowed excuses and waivers to lock down our potential to transform our national endowments in the maritime and Oil and Gas sectors.
Omatseye’s promise that his agency is inn the process of institutionalizing indigenous cargo carrying rights and cargo preservation should not be taken with a pinch of salt. It remains a promise that must be kept and in doing this, the two agencies must work together.
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