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Maritime stakeholders at a recent conference on Floating, Production, Storage, and Offloading held in Lagos express dissatisfaction with the implementation of the Cabotage Law.
By Pita Ochai
About 10 years after the Coastal Inland and Shipping (Cabotage Act) was passed into law, stakeholders in the maritime industry appear not to be happy that it has not lived up to expectation. To them, the Cabotage law has failed to enhance the capacity of indigenous shipping to enable them participate in coastal shipping.
Indeed, they expressed their dissatisfaction with the implementation of the Cabotage law at a three-day conference on Floating, Production, Storage, and Offloading (FPSO) held in Lagos recently. They were emphatic that the law has failed to give the envisaged financial impetus and active participation of indigenous shipping companies in maritime trade.
Chris Asoluka, a maritime consultant and lawyer, who also played a major role in the formulation and subsequent enactment of the law in Nigeria, believes that for the Cabotage law to work, NIMASA should revisit the recommendations of past committees and all other programmes that have been organized on it. One of such reports was prepared by the Cabotage implementation committee in 2007. “NIMASA should set up a standing committee to go through past recommendations and present happenings, those that need legislation should be sent to Abuja, while those that require administrative actions should be attended to,” he said.
Green Ekeledo, another maritime consultant noted that one of the factors hindering the enforcement of the law is the inclusion of the waiver clause, which appears to have become the norm, rather than the exception. He decried that waivers are granted to foreign firms without due consideration for Nigerians with capacity, as provided by the Cabotage law.
Chairman, Ports Consultative Council (PCC), Kunle Folarin, explained that the four pillars of the Cabotage are a mere façade which is not really obtainable in the industry. He identified ship building and ship repair yards as areas that have not been fully explored but are fundamentals to Cabotage.
According to him, there has not been the required synergy between NIMASA and the various government agencies and ministries like Finance and Agriculture among others that would assist in the realisation of Cabotage.
Director General of NIMASA, Ziakede Patrick Akpobolokemi, admitted that the “Cabotage law is problematic.” He said that the law has not worked because of the problem of enforcement. He faulted an aspect of the law which stipulates that vessels to be used in Cabotage trade must be built in Nigeria and crewed by Nigerians. “How many ship building yards do we have, how many qualified seafarers and maritime academies do we have,” Akpobolokemi asked. He, however, said that his administration was making frantic efforts to build the capacity of Nigerians in seafaring through the Nigerian Seafarers Development Programme (NSDP). He said that so far, nearly 3,000 youths have been sponsored on training at different maritime institutions abroad. With a view to creating a large pool of qualified seamen.
While others believe the Cabotage law has failed, Chisa Uba, a senior associate of Adepetun Caxton-Martins Agbor and Segun Nigeria, scored the law high in the area of job creation. According to her, the Act which was implemented a year after it was enacted has successfully created jobs for Nigerian seafarers who were idle in the past. Uba, a maritime lawyer, said that the Cabotage Act may not succeed in increasing the capacity of indigenous ship owners, but scored its performance high in the area of seafarer development, as Nigerians seafarers based in foreign countries are now coming back home to pick up jobs.
The Cabotage Act was passed into law in 2003. The law stipulates that, among other things, it would restrict trade along Nigeria’s coastal waters to indigenous operators. Under the Act, foreigners are only to participate in coastal shipping when there is no Nigerian who has capacity for such jobs. However, after more than a decade of its implementation, many are worried that foreigners still dominate the Nigerian coastal waters, accounting for over 80 per cent while some indigenous shipping companies are folding up. The Ministry of Transport has not helped matters as it sill grants waivers to foreign flag vessels to continue trading within Nigeria’s coastal waters in clear circumvention of the provisions of Cabotage.
Another area in the Act which has remained elusive is the Cabotage Vessel Financing Fund (CVFF). The CVFF is derived from the two percent deductions from all contracts awarded under the Cabotage regime. It was designed to enable indigenous shipping companies acquire adequate tonnage so as to participate in coastal and inland trade currently dominated by foreigners, who also dominate deep sea shipping. The fund was meant to finance capacity building among Nigerians at a minimal interest loan. However, almost a decade after; indigenous ship owners are yet to access the fund.
NIMASA, which is statutorily mandated to disburse the fund, had in 2008 appointed four banks: Skye, Diamond, Fidelity, and Sterling, as Primary Lending Institutions (PLIs) for the CVFF. Under the CVFF guidelines, the beneficiaries must tie their loan applications to a maritime project for which each must provide 15 percent of the project cost, having been pre-qualified by NIMASA, which guarantees repayment.
Senator Idris Umar, Minister of Transport, confirmed that six firms have been penciled down as beneficiaries of the CVFF. According to him, “out of the several applications received for the CVFF facility, six applications have been processed and endorsed by the (PLIs) and accordingly recommended by the management of NIMASA to the ministry and are being evaluated for approval.”
The most glaring indices of failure of the Cabotage Act is the depleted fleet of indigenous ships, the mass of unemployed seafarers, the prevalence of foreign interests in the country’s coastal shipping, especially as it concerns rendering of services in the oil and gas sector and in line with the Local Content Act.
According to the Nigeria Ship Owners Association (NISA) over 90 per cent of the 78 registered ship owners are heavily indebted. The woes of the local shipping companies were further compounded by banks and other financial institutions who constantly harass them to recover monies owed them, after the expiration of the loan tenor.
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