The need for a review of the Coastal and Inland Shipping Act, 2003, otherwise called the Cabotage Act by the National Assembly as part of the change mantra remains an issue. The clamour for its review is gaining momentum so the benefits inherent in the Act can be harnessed, writes, Maritime Correspondent OLUWAKEMI DAUDA.
The expectations were high. Stakeholders in the maritime sector, both in private capacity and government, were upbeat about the benefits that would accrue to their operations should the Act see the light of day. It was therefore not surprising that no effort was spared in ensuring the passage of the Cabotage Act by the Second National Assembly (NASS) Session. That was in 2003.
However, 12 years after its enactment, maritime operators are yet to start reaping the attendant benefits from the Act. This situation has now presented the current NASS- the Eighth Session, with a demand for a review of the Act. The reasoning being that the Cabotage Act of 2003 may have outived its usefulness considering that the bottlenecks that it should have addressed, and the implementation of its provisions, are yet to be addressed.
2003 Cabotage Act and Policy thrust
The Act was enacted to encourage indigenous companies’ participation in shipping, increase capacity building and provide employment for Nigerian seafarers. It would also help to develop the domestic maritime fleet, create employment opportunities for trained but unemployed seafarers, boost training requirements at the Maritime Academy of Nigeria, lead to optimal exploitation of the currently under- utilised facilities at Nigerdock, and encourage the development of required infrastructure and technical know-how in the inland waterways, transport and haulage system.”
Aside other considerations, the policy thrust of the Act, include the Protection of the nation’s territorial waters; safeguard national security; promote and preserve national shipping operators; development of the national fleet; and the development of intermodal transportation.
Others include freight generation and capacity building to stimulate and expose indigenous shipping firms to coastal shipping business as a launch pad to deep sea and international shipping; acquisition of shipping technology; creating and diversifying employment opportunities in the industry, improved environmental safety, promotion of economic growth and national development among others.
Concerns
For stakeholders in the maritime sector, the Cabotage Act has presented nothing but 12 years of failed expectations and worries. The Executive Secretary, Nigerian Shippers Council (NSC), Mr Hassan Belllo, captured this feelings succintly last week when he told The Nation that 12 years after the Act was signed, Nigerians were still awaiting for its full implementation because the Act is yet to perform the laudable objectives for which it was enacted.
For instance, The Nation’s investigations revealed that contrary to the provisions of the Act, there are several foreign owned vessels providing shipping services locally. According to industry sources, there are over 100 vessels owned by foreigners but trading in Nigeria under questionable circumstances. They alleged that these category of vessels are often patronised by the oil majors in collaboration with some officials of the Nigerian National Petroleum Corporation (NNPC), in less than legal transactions and that they keep changing names and flags at wil.The Nation’s sources at NIMASA may have tacitly corroborated this allegations as they equally alleged that most of the accused vessels do not have up-to-date survey and requisite certificates to trade in other overseas countries and so are stuck in Nigerian waters where they carry out their illicit business.
Call for review Vs Lobbyists
Following these allegations and others, stakeholders have at various times called for the intervention of the NASS for a review of the Act. Bello is one of such making the calls. But how far can this agitation go given the intense lobbying being mounted by the beneficiaries of the faulty arrangement, especially the foreign ship owners?
Further investigations have revealed that multinationals and foreign shipping companies are lobbying the Nigerian Maritime Administration and Safety Agency (NIMASA), some politicians and some former members of the NASS to ensure that a review of the Cabotage Act does not see the light of the day.
A senior official of NIMASA, who craved anonymity, told The Nation that foreign shipping companies and others are making the move so that they can continue to get a bigger slice of the market. At the moment, only about 60 of the over 600 vessels in the upstream sector of the oil and gas industry are owned by indigenous operators; yet, only about six of the 60 do business in the offshore sector.
The implementation of the Act have not been effectively handled due the role of the Minister as imbedded in the Act, as well as the role of the Nigerian Maritime Administration and Safety Agency (NIMASA)
From this anomaly, our source claims that each vessel used for offshore jobs charge at least $5,000 daily. This, according to the official, is the least amount collected by a foreign vessel. The country, he said, loses over N2 trillion yearly.
“As at today, for ships that earn $5,000 and above per day, there are about 600 of them. There are those that even earn $150,000 per day. You have 60 belonging to Nigerians out of the over 600. Those 60, if you go to our waters, you will see them there; they have no jobs because there is no full implementation of the Cabotage Act because of its deficiencies that necessitated the current review,” the official said.
Sources at the Ministry of Transport alleged that multinationals, with the support of some officials of the Nigerian National Petroleum Corporation (NNPC) have been mounting pressures on the ministry to ensure the implementation of the Act does not see the light of day. He said foreigners, who will be affected, are worried over the review.
Wasted opportunities
The Cabotage Act also stipulates that all cargoes and passengers in the inland and coastal waters be transported by ships and ferries built, owned, crewed and manned by Nigerians. Therefore, if fully implemented, the Act would have inevitably led to the development of support industries such as moving, towage, pilotage, dredging of the channel and waste disposal and the development of the inland waterways by dredging coastal waterways and silted.According to the former Managing Director, Nigerian Ports Authority (NPA), Omar Suleiman, oil and gas sector plays a predominant role in the nation’s sea trade, with an estimated contribution of about 95 per cent to coastal and inland shipping allied marine activities. The remaining five per cent is made up of fishing trawlers and break-bulk carriers. Therefore, Suleimon reckoned, the physical and economic environment, would have thrown up opportunities in a well-implemented Cabotage regime such as envisaged by the Act.
Structures for the implementation of Cabotage regime
A number of institutional structures that are supposed to define the building blocks for the implementation of Cabotage regime had been put in place by the government.
Some of the institutions are: The Nigerian Ports Authority (NPA)), NIMASA, The Nigerian Shippers Council (NSC), the Joint Maritime Labour Industrial Council (JOMALIC),the National Inland Waterways Authority (NIWA) among others.
Operators said there may be need to tinker with these institutions, but the main institution that needs serious funding, according to them, is the NPA, which is saddled with the responsibility of providing an integrated approach to port administration in the country.
Despite the ports reform and the laudable efforts of the Mallam Habib Abdullahi-led management of the authority, the nation’s sea ports are still regarded as far below international standards and commercially unfriendly as terminal operators are accused of charging high tariffs and the roads leading to the ports are in poor shape.
Other problems, according to importers and stakeholders, are myriad and include an inadequate supply of craft and plants, a cumbersome documentation system, unnecessary delay in releasing cargo from the ports, extortion, dilapidated port infrastructure, low labour productivity, corruption, vandalism, criminal damage, congestion, problems of empty containers and gridlock on the road despite the past synergy between the Federal and Lagos State governments.
All these problems, stakeholders said, are part of the problems confronting the Cabotage law that need to be looked into by the lawmakers while carrying out the review to make the law effective.
Ports reform
The importance of the ports to Cabotage administration, the President, National Association, Nigerian Licensed Customs Agents (ANLCA), Alhaji Olayiwola Shittu said, cannot be overemphasised.
According to him, there cannot be regulated loading or discharging under the Cabotage trade without proper systems for controls. The NPA, he said, must have regulatory control over all harbours, piers and jetties used in the Cabotage trade for the law to be effective.
The port reforms by way of investing the NPA with only landlord functions, Shittu said, suits the Cabotage regime.
But in order to achieve the desired objectives of the Act, the port reforms, he said, should include achievement of efficiency in port operations, reduction of port costs, reduction in bureaucracy, 24 hours port operation, provision of modern cargo handling equipment, easy clearance of cargo, efficient pilotage, reduced tariffs and increased level of productivity.
Contrary to the provisions of the Act, there are several foreign owned vessels providing shipping services locally. According to industry sources, there are over 100 vessels owned by foreigners but trading in Nigeria under questionable circumstances
Lack of synergy between the remaining government regulatory agencies at the port collating levies and charges, the ANLCA chief said, may hamper the successful implementation of the Act, as operators will have to deal with each of the agencies separately.
Waivers and the role of NIMASA
The Minister of Transport is given powers under the Act to grant waivers to foreign vessels to partake in Cabotage trade where he is satisfied that there is no capacity on the part of Nigerians with respect to satisfying the requirements as contained in Sections 3-6 of 32Section.
The waiver system adopted by the Act is based on grounds of non-availability.
Speaking with The Nation, the former National President of Nigerian Bar Association (NBA), Mr. Olisa Agbakoba, called for the removal of the power given to the Minister from the Act.
Agbakoba said that the power given to the minister in the Act has been responsible for the poor implementation of Cabotage law since inception.
He lamented that issues relating to the implementation of the Act have not been effectively handled due the role of the minister as imbedded in the Act, as well as the role of the Nigerian Maritime Administration and Safety Agency (NIMASA).
“The job of NIMASA should be clear, then we will have the relevant policies in place. The new NIMASA I am talking about should carry on without interference from anybody including the Ministry of Transport. For this to happen, the legal framework of Cabotage must be amended. Wherever the name of the minister occurred in the Cabotage Act must be deleted and its place it will be inserted NIMASA,” Agbakoba said.
Also, a maritime lawyer and university don, Mr Dipo Alaka, identified financial involvement at the point of applying for waiver under the Cabotage Act as one of the reasons for the circumvention of the gains of the Act.
He alleged that waivers are granted “before approval because those who apply for waivers are made to pay while their applications are still being processed.
“The Act stipulates that 100 per cent rating, 60 per cent of officers for Nigerians and 40 per cent for foreigners. But the foreigners come in with a waiver clause that the country does not have qualified hands to man the industry.
The Executive Secretary, Indegenous Ship Owners Association of Nigeria (ISAN), Niyi Labinjo, said that most of the foreign ships are hiding under the provision of waiver in the Cabotage Law to continue to use foreign crew instead of employing Nigerians to man their vessels. This development, according to ISAN scribe, has impacted negatively on the Cabotage Law as it is denying Nigerians the benefits of getting employment opportunities.
Indigenous ship owners, Cargo lifting
As part of its efforts to increase the internally generated revenue (IGR) of the country, the National Assembly is beaming its searchlight on the maritime industry with the aim of amending the Cabotage Act, so as to increase the involvement of indigenous ship owners in trade activities along the nation’s coastal lines and boost revenue generation
One of the major challenges confronting the implementation of the Act which the review must address is the issue of putting cargo lifting in the hands of indigenous ship owners.
Stakeholders said the Assembly members need to examine solutions to this issue which has made the country to lose several millions of dollars which can be used to further the development of the country to foreign ship owners.
For almost 12 years after the enactment of the Cabotage Law, the purpose of the law, they said, has failed to yield its desired outcomes, the reason being majorly because of the non-coverage of indigenous vessels in oil and gas off shore operations and other obligations under the law.
It is a global trend for governments to reserve the domestic shipping activities for indigenous participation but the case has not been the same in Nigeria. The fact remains that cabotage is still largely comprised of foreign operators with foreign built, crewed and flagged vessels.
The review of 2003 Cabotage law must address the issue of developing the nation’s economy as well as meeting the agitation of operators and stakeholders in the sector through the review of the Act by restricting foreign vessels in the nation’s coastal trade and promoting indigenous tonnage and establishing financing and related matters.
One key area they operators fingered as the problem was the seeming exclusion from jurisdiction of several offshore operations in the Oil and Gas sector as prescribed in the 2003 Act.
According to part II of the amendment to the Act prescribed in the clause titled ‘Restricting of Vessels in Domestic Coastal Trade’, “A vessel other than a vessel wholly owned and manned by a Nigerian citizen, built and registered in Nigeria shall not engage in the domestic coastal carriage or cargo and passengers within the coastal, territorial, inland waters, island or any point within the waters of the Exclusive Economic Zone of Nigeria.”
It also adds in clause 4(1) “A tug or vessel not wholly owned by a person who is a Nigerian citizen shall not tow any vessel from or to any port or point in Nigerian Waters, or tow any vessel carrying any substance whatsoever, whether of value or not or any dredge material whether or not has commercial value from a port or point within Nigerian waters.”
Cabotage Vessel Fund (CVFF)
The Cabotage Act establishes a fund to be known as the Cabotage Vessel Financing Fund (CVFF).
The purpose of the fund is to promote the development of indigenous ship acquisition capacity by providing financial assistance to local operators in the domestic coastal shipping. The sourcing of the fund shall be from a surcharge of two per cent of the contract sum performed by any vessel engaged in the coastal trade; a sum as from time to time to be determined and approved by the NationalAssembly; tariffs, fines and fees for licensing and waivers; such further sums accruable to the fund by way of interest paid on and repayment of the principal sums of loans granted from the fund. The Fund shall be managed under guidelines to be proposed by the minister and approved by the National Assembly.
While the fund is salutary, it is hoped that it will not have to go the way of the SASBF, which was bedeviled by corruption and bad management. The fund on its part will in all probability not be enough to satisfy the demands that would be made on it. Recourse will have to be made to other sources of funds like commercial banks, multilateral and development institutions assistance, grants aid and shipyard credit.The target funding level of NIMASA is to attain a funding base of $500 million.
Today, the money is over $250million and NIMASA is yet to disburse the money because of bureaucracy and stringent conditions attached to the money by ministry officials.
The National Assembly, operators said, should see to the quick disbursement of the fund to assist local ship owners.
The former President, Indigenous Ship Owners Association (ISA), Chief Isaac Jolapomo said the Act had been ineffective due to poor implementation.
Jolapomo advocated N200 million penalties and forfeiture of ship, five year- jail term instead of the current N10 million for offenders.
He said that the existing temporary importation regime should be abolished and a maritime bank established.
Maritime Bank
A maritime expert, Mr Solomon Adedayo said the Cabotage Vessels Financing Fund(CVFF) should also include maintenance and repairs of vessels used for Cabotage trade.With the recapitalisation in the banking sector, he said a specialised bank should be established to fund maritime industry and activities
National security
There is the question of national interest and security, which is the prime benefit of Cabotage. According to the President, Association of Nigerian Licensed Customs Agents, Alhaji Olayiwola Shittu “Cabotage laws are critical to every maritime nations security interest. More than 40 nations, including all G8 members, he said, agreed that free markets are bedrock ideas but secondary to the welfare of their citizens…”
Shittu’s position is self-evident and the country cannot afford to be an exception; security of the country must not be sacrificed on the altar of globalisation and free trade and its must be given serious consideration during the review of the Cabotage Act.