The first part of this interview was published last week and we received commendation and were forced to answer some questions. As expected, it elicited mixed reaction, considering the fact that Engr Greg Ogbeifun is not your typical loud, publicity- crazy businessman. In fulfilment of our promise, we published the concluding part which (as you will soon find out) is more inspiring, revealing and explosive than the first.
Let’s have an insight into who Engineer Greg Ogbeifun is, how you started and how you climbed the ladder.
Since my higher school, Edo College in Benin I was lucky to win a Shell/BP scholarship of those days to go and study marine engineering which was in 1972. I was with Shell tankers in UK until I got my second class ticket and I went to Kuwait to work for another company, but Shell wanted me to come home, so after my ‘chiefs’, Shell offered me a job which I didn’t like, I thought I was not being exposed enough so I went back to Kuwait, but in 1982, a British firm then recruited me, basically I did marine engineering, I came back and worked for three years and during that period I was accredited as a surveyor by registrar of shipping, I did this until 1986, when I started my own business, I started buying old crap tugs and refurbished them myself and I use to lease them out, this was how I started, I had some falls; ups and downs in the business , one thing I saw happening when Nigerians started getting involved in this business is that we are beginning to acquire old bottoms. The process of getting into the league of a new vessel is a long one and the system makes it a disadvantage to be a Nigerian. Talking about me, I have eight children; my first daughter is a lawyer ;she is 28 years old and she is practicing in the United States, my first son is a marine engineer, he was trained by NLNG on scholarship, he is an engineer with them and is doing well, my second daughter just got her masters degree in the UK after her first degree in the USA, my second son is graduating this year as a naval architect and marine engineer from the State University of New York; maritime college. We are a Christian family, my wife is a minister of God and I think we are just an average ordinary family.
Thank you very much for that insight into you, let’s move back to shipping. Would you say Cabotage is a success or a failure?
The idea of Cabotage is good, everybody in this country knows that Cabotage is a failure; I don’t think Cabotage has helped any Nigerian. It comes back to the same issue, you can’t begin to implement things that you don’t understand, first of all why establish an Act and include a requirement in that Act that you know is not achievable; you include requirements that are not achievable and you provide waivers, there is something that is not right there. Out of the four cardinal point of Cabotage, namely that: it must be built in Nigeria, it must be owned by Nigerian, it must be flagged in Nigeria and it must be manned by Nigerians, manning is achievable, flagging is mandatory, ownership is easy because people are manipulating that. I think that the provision that Cabotage vessels should be built in Nigeria should be removed for now, the requirement should be removed from the waiver, the implementation of the Cabotage, in my opinion has been the problem. Like I said, you can build up the issue of crewing in a short time, if you have a ship for instance and the compliments of your ship is 13, maybe you only need a foreign captain and a foreign chief engineer, so you have already achieved a large percentage of Cabotage requirement. Implementation has been the problem, political will has been the problem, Cabotage again has been misconstrued by all stakeholders, people see Cabotage as ‘give me’, Cabotage is not ‘give me’ it is creating an opportunity to enhance indigenous participation in the maritime sector, I as a stakeholder have a role to play if Cabotage must succeed, government has a role to play by establishing the Act, my role is not to erode standards in the industry, and this has been one of the challenges in the industry, people want the system to bend backwards in order to accommodate their standard and that is why you find a regular conflict between the regulatory agency and the operators. My own personal view is that I should raise my own standard to the international benchmark, when I have done that, then I can now go and demand my right, if I have not done that and I am demanding, then I am making it difficult for the people out there, that is one side of the story. Let me give you a practical example; before the MV Osayame issue, Starz Investment Company had contributed regularly the two percent Cabotage vessel finance into that fund from all our business activities; documented and communicated to the appropriate authorities, when MV Osayame contract came, the bank made provision for the facilities of the construction, payment was in seven milestones, after five milestones the Central Bank of Nigeria came out with a policy that made all the banks to stop, that interrupted the banking process, meanwhile the shipyard, in anticipation of payment went ahead and completed the construction of the vessel, when they finished the vessel, the bank was still not forth coming and no reason was given. So I ran back here and one of the efforts I made was to go to NIMASA; that this is the situation we are in, that this is a100 percent Nigerian ship, 100 percent Nigerian crew, owned and flying a Nigerian flag in South Africa, we are stuck, the bank has paid 85 percent that NIMASA should please help out. I presented evidence that I also have contributed towards the CVFF, they took it up and wrote to the minister and also the National Assembly and the National Assembly also wrote them (NIMASA) back, at the end of the day, they said ‘sorry’ we cannot help you, after all the other efforts, the bank came back and completed the payment. As soon as the vessel arrived and started working, NIMASA is knocking on my door for two percent CVFF. I think that is illegal, something need to be done about that, if you look at the list of the people that are being considered for the Cabotage Vessel Financing Fund, I have asked them to take my name out off the list, that I don’t want it, if you look at the list of people being considered, how many of them have contributed a dime towards the fund. I think the prerequisite should be that every vessel owner aspiring for that fund must show evidence, if you have done any job, you must contribute towards that fund and that gives you the right, if you have not and you are using your political class and interests to access that fund, then it is a waste of time. So, from this perspective, the agencies responsible for making Cabotage to work have failed. Let me give you an example, I don’t know if you are aware that after Osayame, we had another contract to build a bigger ship, it has been on for about four years and we just won it last year November; to build a bigger vessel than Osayame which is 65 tons, but this one is 90tons, its brand new and it’s for five years contract, the cost of building this vessel is US$22million. Because the shipyard; Darmen shipyard in Holland who built MV Osayame saw the challenges that I had in financing Osayame and the lack of support I got from here, unknown to Starz, they went to their own Dutch export credit agency and arranged 85percent financing for the second contract, the contract we have is for five years and they gave us seven years for payback period, they said they will build the vessel and give it out and you will start to payback after six months of operations, but on one condition; they want a guarantee from NIMASA, they wrote it in black and white that as the vessel works, they will get their money. I was surprised by this event and I was happy, I took the offer and went to NIMASA to tell them what has happened, imagine, instead of going to NIMASA and asking them to give me 80 percent financing cash, somebody is saying give me a piece of paper, and I told NIMASA that this is all they are asking for, all they have to do is give it to one of their Primary Lending Institutions who will be the recipient of the proceeds from the contract. They wrote to one of the PLI’s who in 48 hours when they saw that this is a credible opportunity, ran back to NIMASA and said they will guarantee it, but for three weeks, it was stories I was hearing from NIMASA. Of course I have access to the top management of the agency, at the end of the day the ship yard and the export credit agency invited me to come and sign the relevant documents to trigger- off ship building and financing and they said please forward to us the guarantee from NIMASA, when I travelled down there it was a very embarrassing situation, when the export credit agency realized that I had no guarantee, they decided to pull out of the financing. Thankfully, your reputation should go ahead of you; both locally and internationally, Darmen shipyard stood and said they know me and my track record, and they said ‘is there no other way we can help’? The export credit agency now said that in Nigeria there are four other banks that are accredited with them and that if I can get a guarantee from any of them, it will be okay and this is what is going on right now, now you see why I don’t need to waste my time and bother with NIMASA. Right now the export credit agency and the shipyard have said to me that: Greg, if you have 30 ships or 50 ships to finance that will be building, this credit facility is available to you. When this offer was made to me and I told NIMASA that your ability to fund indigenous ship owners should not be limited to only cash condition, if you can have as many export credit agency to make their facility available to you, then you can reach out to a lot of Nigerians. Right now as we speak, they don’t want to hear about the Dutch thing, so the agency itself have killed what it is set up to grow, I am waiting for the forum where we can all sit down and say it face to face, the people responsible for all these should be prosecuted, there is a government Act and the government has appointed you there to make this happen, and opportunities came that Nigerians could benefit from and you killed it, you should go to jail, and the people concerned should be in jail.
Is it a problem of individuals or the structure itself?
It is a collective responsibility, if an individual has been appointed by a higher authority and he did not do it then somebody should ask why he didn’t do it, but there is such a high level of indifference at all levels and the system suffers because of that, how many people have the privilege that I have now, whereas the privilege was brought here for people to tap into it and benefit from this perspective. I will conclude that there is no political will yet to make Cabotage work, every aspect of the Cabotage is not being attended to; it is not being sincerely addressed.
Until you fire somebody, not because he has not paid money or stole money, let us fire somebody for not performing, if you look at the Cabotage vessel finance fund guideline, the first thing the guideline says is that NIMASA should provide guarantee and secondly it should provide finance, and the guarantee opportunity came but nothing was done, the question is why? Is it that you don’t want Starz to move up?
Wouldn’t it have been a plus for NIMASA if Starz had secured that guarantee and moved up with it?
But, without NIMAS, I am moving up. Talking about Cabotage, let us deviate a little to the upstream of the offshore sector; which is a sector that not too many people talk about. Cabotage Act says that vessels operating in Nigerian waters should be owned by Nigerian company, therefore Nigerians should participate more in winning contracts. As far as vessel chartering is concerned, the contact process upstream right now is that advertisement is placed for pre-qualification which is principally documentation, after this, those who scale through are invited to submit their technical bid, so the technical bid is submitted after which they are evaluated and those who meet the standards set by the International Oil Companies are invited to put in their commercial bids. This is where Nigerians suffer and this is where Cabotage should come in and engage the relevant government agencies to look at the problem at that stage. At this stage, you will start meeting brick walls; you have your foreign players, you have indigenous players; technical bids if you know what you are doing, no problems, because everyone is still on the same level, but when you get to commercial bid stage, the level changes. Whereas your foreign competitor who own this vessel offshore brings this vessel into Nigeria on temporary importation basis and they post a bond of one percent duty, you as an indigenous player who owns the vessel that is 100 percent Nigerian brought it into Nigeria on permanent importation basis and you pay close to 15 percent importation cost. You will still use these indices in computing your commercial bid, aside from the fact that your foreign player is getting his finance on single digit interest rate, you know what you pay here and you still have to structure this into competing your commercial rate which you want to bid with, so you are at a disadvantage, this is what government should be seeing, government should say: if we want Cabotage to have a bite, then we must ensure a level plain ground. That is what happens in India where the playing ground is the same; when there is a bid and the foreign and the individual bidders come out with their commercial bids and an Indian does not win, the system says to that Indian who does not win that ‘are you prepared to do the job at the lowest rate?, if he says yes, automatically he will get the job, that is what Cabotage should be doing. So somewhere along the line, policy should be modified, if you really want it to be favourable. It is not by saying as long as he is Nigerian, then give him the job, it is about saying that this Nigerian has passed the all the qualifications so give it to him.
How do you think that both Cabotage and Local Content can work together to Make things work for indigenous players?
At the moment, I made bold to say that the Nigerian Content Development and Monitoring Board is having a very effective bite and is making a strong impact and the reason is not far-fetched, if you look at the drivers of the content board, you can see their antecedents and where they are coming from, they were part of the idea, they have a passion for it, they are not interested in money or advocating for office, they just want to change the industry and they are changing it. So there are two things: government role of identifying such an individual, a professional and secondly, allowing him grow and guide the process as against Cabotage which is NIMASA-based. So, I recommend that the issue of importation cost should be standardized, let the government say ‘okay since foreign importers are paying one percent, Nigerian importers should also pay one percent’, government maybe loosing that duty, but they are in turn enhancing job creation and other benefits. NAPIMS which is the government representative in the joint venture relationship with the IOC’s is involved in the contract award process, let NAPIMS come up with that policy that will drive the Nigerian company that meets the technical standards to be given an opportunity to do the job, they have to engage the appropriate government agencies to change that regulation if you must let it process to work.
Will it have to involve amending the various Acts?
Absolutely, somebody has to initiate a bill to make the amendment; this will be the greatest achievement in the industry. There must have the political will.
Can you recall the challenges that you faced with MV Osayame, and how were you able to surmount them?
I am very passionate about Osayame. First of all, let me correct an impression, there are lots of people who have the idea that Starz got the contracts because of Cabotage, but from what I have explained so far, you can see that Starz competed with the foreign interests and every other persons, against all odds, but because of my professionalism and my know- how and my technical competence, I was able to do my bidding in such a way that I won. Even after I won, and went into operation, the government assisted by getting the IOC to reduce the rate so that I will not sink. The Osayame contract; from call to tender to award of contract took four years, from award of contract in 2006 to delivery and commissioning of the vessel took four years. So you can say that Osayame project took eight years from call to tender to commissioning; eight years of pain. The first four years was a battle royale I have never seen before, most times you look at the newspapers, you see that Total is branding Starz and Osayame as an accomplishment by them to show that they are encouraging Nigerian content, I choose to keep quiet because we are now in a marriage that has to grow and produce children, but the truth is that the first four years of bidding and winning that contract was a battle royale characterised by gang up by the foreign players, by both the company and other competitors against Starz. They have always seen this type of business as their exclusive preserve, though we won the contract for Osayame we were not the lowest bidder, Starz was the fifth lowest bidder, the lowest bidder was a company called Lahor, a Nigerian company, the next lowest bidder which is another Nigerian company couldn’t perform, the third lowest bidder declined, the fourth was a foreign company, when they won they asked for a variation and NAPIMS said go to the next lowest bid and that is how Starz came in.We were asked to reconfirm our rates which we did and Total now forwarded acceptance to NAPIMS and the board approved after about two years and it came back and NAPIMS now advised Total to prepare the contract for signature and for seven months, Total refused to. I followed it up until I got to the top management level and I threatened that I was going to bring the press into it. I could not go to NAPIMS so I fought the battle alone, threatened to go to the press and blow it up also at the National Assembly, they said they wanted to see my bank and the bank came and said they were ready to finance it, again they started requesting for another irrelevant document, but I refused, and that was how they signed the contract. And don’t forget that in all this time, your overheads are running, the staff are being paid their salaries and so on, but eventually the contract was awarded and you know what happened from the rest of the period up to commissioning. Now they are in a hurry to sign the second contract, we have three new vessels which we are now at the commercial bid, brand new for five years contract after Osayame. My mission now is to grow the fleet, when I finish growing the fleet, I’ll take my hand bag and go somewhere to relax. At this stage, I will like to make a passionate appeal; until the Osayame issue not many people know about Starz because primarily I am not a publicity person, I don’t like running my business on the pages of the newspaper, but at this stage it has become inevitable because you can’t hide the golden fish forever, but my appeal is that anything that is written about Starz or about Greg should be such as to motivate people, to give intellectual information, something that people can read and have a hope that if Starz can do it, then I can also do it. I don’t want a presentation that will make people feel that I am praising myself.
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