Ship owners have disclosed that notwithstanding the cost of ships in the shipping industry, they can still purchase a good bunkering ship.
They explained that a loan as low as $10 million can be used to acquire standard bunker vessels for Cabotage trade.
Shipping Position Daily recalls that, the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Bashir Jamoh, previously stated that beneficiaries of the CVFF are entitled to a maximum of $25 million each from any of the five Primary Lending Institutions (PLIs).
The $25 million limit was also confirmed exclusively to our correspondent recently by the Chairman of the CVFF Committee set up by the Nigeria Ship Owners Association (NISA), Dr. Edward Sowho. He stated that stakeholders have started individually applying and negotiating for the disbursement of the fund with the five PLIs.
A market survey conducted by Shipping Position Daily earlier revealed that a standard or state-of-the-art cargo vessel costs an average of not less than $44 million (FOB price) in the international market.
However, in an exclusive interview with our correspondent last week, the President of NISA, Otunba Sola Adewumi, emphasized that the $25 million CVFF can indeed purchase Cabotage vessels.
Adewumi specifically mentioned that ship owners can acquire a good bunker vessel for as low as $10 million. He further explained that ship owners should not be limited to the $25 million ceiling that has been set by NIMASA, as they can still purchase better ships at a higher or lower cost.
The NISA President expressed optimism regarding the disbursement of the fund to indigenous shipowners, stating that the inclusion of PLIs is a better arrangement that will prevent the government from disbursing the funds to non-qualified shipowners or their associates.
He stressed that the PLIs would be responsible for recommending the disbursement based on the shipowners’ business activities, cash flow, and other necessary qualifications.
In his words: “Let us start from somewhere first. That is where I stand. I have learned that the government has limited each company to about $25 million. With $25 million, you can still acquire something. Then, when they provide you with CVFF, you can buy a ship that costs more than $25 million. If the government requires you to contribute 15%, and you have your own money, you can afford to contribute 30-40%. This also makes the government’s investment more secure.
“When they set the ceiling at $25 million, it does not mean that you should buy a ship worth $25 million. You can still purchase something better. It depends on the area you are considering. If I am buying a bunker vessel, I may not need more than $10 million. It depends on the size. But I believe I may not need more than $10 million to get a good bunker vessel.
“It is now left for ship owners or interested parties to meet the requirements. I even appreciate the way they did it. It is not as if, because you are a prominent person in Nigeria and you know someone, you can simply go to NIMASA, pick up a recommendation, and take money. No, it will not work like that. What they recommended is that banks would be the ones to administer the fund. The PLIs will be the ones who recommend based on your activities, cash flow, and the business you have been engaged in the past, to determine if you qualify for such funds,” Adewumi concluded.
However, in a contrasting opinion, the Chairman of the Institute of Chartered Shipbrokers (ICS), Dr. Chris Ebare, stated that the $25 million can only purchase old ships built in the 1960s. He lamented that Nigerian ship owners do not adhere to the regulations concerning vessel acquisition.
He further noted that the shipping industry has been taken over by foreigners because Nigeria has decided to adopt Free On Board (FOB) documentation, unlike other maritime countries that use Cost, Insurance and Freight (CIF).
While urging NIMASA to enforce necessary international regulations and due process for vessel registration in Nigeria, Ebare also called on the government to reverse the FOB documentation of ships to CIF for effective shipping in the country.
Contesting the position of the NISA President, Ebare argued: “For how many years or a ship of what age can $10 million buy? You will find out that the ships were built many years ago. These are vessels built in the 1960s. In Nigeria, we do not follow regulations. Are we really following the Cabotage regulation?
“It is better to have one standard, seaworthy vessel than many rickety ones. We are not doing things right in this country, including NIMASA themselves. Even when they bring a vessel that was towed and the engine cannot start at NIMASA, they will still register it due to nepotism and self-interest. You cannot try that abroad. You must go through due process. What due process has NIMASA put in place for vessel registration? Who are the ones supervising, checking, and balancing?
“Ship owners complain that foreign vessels are coming into the country. This is because of the environment we have created. Instead of Nigeria adopting Cost, Insurance, and Freight (CIF), they adopt FOB. I hope this government can reverse that law. That is what other civilized maritime countries practice,” Ebare concluded.
On his part, another member of NISA, Otunba Sola Olatunji, stated that the $25 million CVFF, along with other shipping development funds, is the best way to start. He believes these funds will serve as a platform for indigenous shipowners to draw capacity from, for ship acquisition in Nigeria.
“I am an advocate of genuine intervention in our industry by the government, if they truly want to open up the business. In my opinion, with the CVFF and other shipping funds, it is the best way to start. Yes, the approval process involves the involvement of the Minister of Transport, but at the moment, there is no substantive Minister of Transport, so the process has to be put on hold. I know that if anyone is not willing to activate the industry’s potential, Mr. President is ready to open our industry to opportunities.
“Secondly, regarding the CVFF and the $25 million or $10 million you mentioned, I doubt if such a discussion has come up at any stakeholders’ meeting. If you ask me, everything is becoming political because there is no roadmap toward the actualization of this policy. Nothing concrete has been presented yet. It seems like the more you look, the less you see,” Olatunji said.
