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N20trn shipping revenue hinges on cabotage law implementation

The Coastal and Inland Shipping Act 2003, otherwise known as Cabotage Law, came into force in 2004. The primary aims of the law is to reserve the commercial transportation of goods and services within Nigerian coastal and inland waters to vessels flying the Nigerian flag, owned and manned by Nigerian citizens, and built in Nigeria

When the Act was conceptualised in 2003, stakeholders in the maritime industry were optimistic that the regulation would herald a new dawn in the domestic shipping business and particularly empower indigenous operators to own ships and operate without intimidation from their foreign counterpart.

In fact, the Cabotage Act and the Local Content Act were adopted by the Nigerian maritime industry to empower the indigenous shipping companies to expand their involvement in the exportation and transportation of crude oil and the importation of refined petroleum products for economic growth. 

However, 17 years after the Act came into being, the Nigerian Cabotage regime is yet to produce an effective solution to the problems being confronted by the maritime crude oil and gas transportation industry in Nigeria since the introduction of the Act in 2003 while the implementation has become a Herculean task for the regulator.

These problems can be related to the dearth of understanding of the basic requirements of the Cabotage Act by the regulators and the government’s lack of will power in implementing the regime. Experts said this has led to the annual loss of over $7 billion to foreign operators due to the lack of indigenous participation.

Sadly, the implication of this fundamental system failure was that the country would be at the mercy of foreigners who now dictate the terms of trade.

It is well known in the maritime space that ownership of ships is very crucial to the implementation of the local content policy, especially in maritime and oil industry. If the local content policy law and the Cabotage law are implemented in terms of trade facilitation, experts project that Nigeria can generate over N20 trillion and 10 million jobs in five years.

According to the indigenous ship owners, foreign-operated vessels engaged in NNPC’s marine service contracts account for over 90 per cent of the Cabotage trade, thus creating an uneven operating environment detrimental to the development of indigenous tonnage.

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Speaking with Daily Sun, Advisory Head/CEO, Kamany Marine Services Limited, Charles Okorefe, said: “If we have laws that are strictly crafted like local content law and Cabotage Act, what is meant to be done is to be activated it totally so that they can take effect.

“Cabotage came into effect in 2004. That was a long time, almost 17 years, just like yesterday. The Cabotage Vessel Financing Fund (CVFF) over this period, they have been mounting and mouting action, and yet, no single company has benefitted from the fund.

“How do you develop your ports when you are not giving effects to your work? We know there is money in that fund and guideline has been stretched out in the Act. So what is delaying the disbursement of the fund if you want to develop a capacity? How will you develop the capacity?” He asked.

He said the Act has not been well implemented, adding that if the Act has been implemented as it was drafted in that document, there would have been a lot of difference.

“We’ll still see a lot of infractions of operators in Nigerian waters, especially in the upstream sector, that should not be. How much of local content do we have in our construction development even in the shipping market? It is very limited because there is no enforcement of the act.

“COVID-19 or not, the shipping world is moving, innovation is coming into play, ports are getting smarter around the world but we are not even looking in that direction. Instead, we are still battling with the issues of port access roads within the Lagos, which are almost virtually crippled businesses at the port,” he said.

He said the issue is complicated and it would only take retrospection by those in position to make policy to really look at the issues critically and come up with workable solutions.

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Also speaking with Daily Sun, Chairman of Nigerian Ports Consultative Council (NPCC), Otunba Kunle Folarin, said what is wrong with Cabotage is in the law and the National Assembly passed the law.

He said: “Cabotage law has four pillars. The first one is manning says that the ship must be fully manned by Nigerians. That is why Government said if it is manned by Nigerians, let us train the seafarers that will man it.”

He explained that the Cabotage law also indicates the ship must be built in Nigeria. The law says where there is no Nigerian ship and seafarers, and then they can have a waiver to allow those foreign companies especially those operating in the nation’s oil and gas sector to supply their seafarers and bring their own ship.

“And that waiver is the only clause that is causing some problems in the Cabotage. Here the Government says we are giving you waivers because we don’t produce the ship. What we should be looking at is to amend the Cabotage Act so that we now talk about the level of ships that can be build in Nigeria as at now and gradually go to the level where we can build a bigger ships.

“Can Nigeria build a container vessel? Can it carry a live crude carrier, those who carry crude oil? Can it carry liquefied natural gas that can carry one million cubic of gas at a time? Do you have the draft of such ships that can accommodate 15 metres or 20 metres like Rotterdam or Amsterdam?

“Shipping development is very good because it would boost our economy. But we must look for the infrastructure that will make it happen. The infrastructure that will make it happen is to have a deep seaport,” he said.

Sunnews

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