By Joshua Yousouph
The Minister of Transportation; Mr. Mu’azu Sambo has promised to see to the disbursement of the Cabotage Vessel Financing Fund (CVFF) to eligible applicants by March. This is even as he disclosed that barge operators who are qualified will also benefit from the fund.
Speaking during a working visit to the Nigerian Shipper’s Council (NSC) on Friday, the Minister said that the Nigerian Maritime Administration and Safety Agency (NIMASA) has been given all the freedom to operate in accordance with the law and regulations guiding the disbursement.
He also added that barge operators who meet the requirements of the CVFF as contained in the Coastal Inland Shipping Act otherwise known as the Cabotage Act of 2003 would have access to the fund.
While addressing the concerns of the Primary Lending Institutions (PLIs) who have been shortlisted to administer the funds, the Minister noted that the CVFF is set out to avoid the mistakes of the Ship Building and Ship Acquisition Fund where beneficiaries did not pay back and that is why all the three parties which include the applicant, Banks and NIMASA will be involved on the contribution. According to him, everything is in place this time around to make sure that people who borrow will pay back.
Sambo stated that the payment of the CVFF will be guaranteed not only because the Bank is a stakeholder in the loan, but also because the banks will carry out detailed Credit Risk Assessment before they recommend the application through NIMASA, who will then recommend to the Minister for approval. He also added that for applicants with existing contracts, there is going to be a domiciliation of payment directly from the Contractors PLIs and the applicants PLI’s in order to adequately recover the loan.
In his words: “Another milestone that we have made within the short time we have been here is Mr President’s approval of the CVFF fund. I would like to call on the Shippers Council to get together your stakeholders, indigenous owners of vessels with the Cabotage trade and encourage as many of them that are qualified to apply for this money. Let me see which agency will be the first recipient of the cheque. We are going to go live and tell the public that it is a reality. I hope we will be able to do the disbursement in the month of March.
“I have given NIMASA all the freedom to operate in accordance to the law and regulations guiding the disbursement. Mine is to approve once I am satisfied with the regulations. The banks have a role to play because they are not only the Primary Lending Institutions, but they are also participatory agents because they will contribute 35 percent of the amount of the applicants and the person will pay 15 percent of equity and NIMASA pays the balance.
“The CVFF is set out to avoid the mistakes if the past where beneficiaries of the past didn’t pay back and that is why it is now all the three parties that contribute. The applicants of the vessel will contribute 15 percent, the banks 35%, while the NIMASA fund will 50 percent. The banks will also do their Credit Risk Assessment and if I was a banker, one of the major criteria for my risk will be, has the applicant got an up taker, in other words does he have an existing contract. If he has a contract, he can attach it as part of his submissions.
“For example, if he has an IOC who is hoping to take this vessel for 5 to 10 years and there is going to be a domiciliation of payment directly from the IOC’s to the applicants PLI. There is no PLI that would not be happy to lend money when they know that this money will be paid back because they earn interest on such monies. So the payment will be guaranteed not only because the banker is a stakeholder in the loan, but also because they will carry out a detailed Risk Assessment before they recommend the application through NIMASA who will then recommend to the Minister for approval.
“If you look at the Coastal Inland Shipping Act, otherwise known as the Cabotage Act of 2003 and the regulation thereof, you will be able to decipher those who have access to the CVFF. If barge operators are qualified, I will be the first to put them forward to make sure they get the fund. I will not encourage the movement of cargo to and from Lekki Deep Sea Port by road”, Sambo concluded.
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