Category: Maritime

In this report, OLUWAKEMI DAUDA examines the reasons the much-awaited Cabotage Vessel Financing Fund (CVFF), also known as the Cabotage Fund, domicilled with the Nigerian Maritime Administration and Safety Agency (NIMASA), may not be disbursed before President Muhammadu Buhari will bow out.

PLANS  by the President Muhammadu Buhari Administration to disburse  the Cabotage Vessels Financing Fund (CVFF) may have hit the rock.

The reasons are not far-fetched. But, principally, indigenous ship owners are finding it difficult to provide their counterpart funding, a vital condition for disbursement.

Last year, Buhari directed that the fund  worth N136.5 billion be released to indigenous ship owners.

But recently the Director-General, Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Bashir Jamoh,  said the Federal Government was willing to disburse the much-awaited fund to add value to the industry and that it was dotting the Is and crossing the Ts to make it foolproof.

Background

The Federal Government enacted the Coastal and Inland Shipping (Cabotage) Act 2003 to limit foreign participation in domestic coastal trade.

Objective of the Cabotage Act

A university don, Dr. Dipo Alaka, said: “The objective of the Cabotage Act is primarily to reserve commercial transportation of goods and services within coastal and inland waters for vessels flying the Nigerian flag and owned by Nigerians.”

NIMASA’s role

The Nigerian Maritime Administration and Safety Agency (NIMASA) is saddled with encouraging indigenous shipping operators to participate in coastal and inland trade.

What is CVFF?

The Cabotage Fund (CVFF) was established alongside the Nigerian Coastal and Inland Shipping (Cabotage) Act of 2003 to empower indigenous ship owners to  acquire vessels to take control of shipping business, otherwise known as cabotage trade.

The CVFF is a complement of the  Coastal and Inland Shipping (Cabotage) Act 2003.

“However, stakeholders that lobbied extensively for the enactment of the law and the lawmakers that passed it into law understood the need to have a financing fund that would empower Nigerian ship owners to acquire vessels that will make them operate maximally in the Cabotage trade, as part of efforts to end foreign domination of the nation’s shipping sector,” Alaka added.

Involvement of Federal Ministry

of Finance

A former President, Association of the Nigerian Licensed Customs Agent (ANLCA), Price Olayiwola Shittu, clarified that legally the Federal Ministry of Finance was not involved in the collection and disbursement of the fund.

He said: “It seems to us that the Ministry of Finance is claiming the ownership of the Fund based on the recent introduction of the Treasury Single Account (TSA) by this administration. The total amount collected by NIMASA is domiciled in the TSA and that is why there is this belief that the Ministry of Finance has a say on it.

“But that is not the case.The purpose of the collection of the Fund is well-spelt out in the Act of the National Assembly, which they must rise to defend. It is not the duty of the Minister of Transportation to call for the judicious disbursement of the CVFF. It is that of the Federal Executive Council (FEC), the National Assembly, lawyers, indigenous ship owners, other Nigerians and the media.

“The Federal Government owes it as a duty to disburse the Cabotage Vessels Financing Fund (CVFF) to qualified Nigerian ship owners in line with the spirit of the Cabotage Law entered into by the government.

“Although many of the prospective beneficiaries, the disbursement guidelines and some  things ought to have been stated before announcing the disbursement. For instance, the actual figure lying in the Fund ought to have been made public by the Ministry of Transportation through NIMASA.

“As a matter of fact, how much has accrued to the Fund since its inception has been a source of bickering and controversy over time. Various amounts had been bandied about. Some had said the fund was worth $100 billion, some $300 million and for others it is $700 million and $124 million.

“But NIMASA, the agency collecting the fund, is yet to come out with the total figure. Even as the authentic source, the agency’s inexact figure did not do anything to douse the speculation and the controversy. This is more so considering the many years the two per cent collection has been accumulating, plus the interests in the banks and the waiver fees foreign companies have been paying to continue to play their leading role in the country’s Cabotage trade.

“But 20 years after the enactment of the Cabotage Act, and over 15 years since the money started accumulating in the CVFF, it has remained untouched, with previous administrations and the present one refusing to let the Fund serve its purpose. After several promises of disbursement, and sometimes putting the machinery in motion for the purpose, everything would become a mirage as, in most cases, those promises and disbursement efforts turned out to be mere political statements.”

Last December, the Minister of Transportation, Mu’azu Sambo, announced the move for the disbursement of the fund.

Sambo said there is a Presidential approval to disburse the CVFF. He said he was working with NIMASA to disburse the fund before the end of last year.

Sambo spoke during the flag-off of the Batch B of the Third Phase of Nigerian Seafarers Development Programme (NSDP) TERRA 11, in Lagos.

The NSDP is a platform provided by NIMASA to consolidate its position in the  industry through a solid seafaring manpower base.

“We will disburse this fund in few days to the beneficiaries, as we have made a case that the funds belong to shipowners.

“Mr. President is a man who respects the law and he is on the same page with us that we should proceed with immediate effect.

“We will be liasing with the Minister of Finance, Budget and National Planning, and the Governor of the Central Bank of Nigeria to work for the disbursement,” he assured.

Sambo noted that the agency had pledged to the president that it would allow the funds to go into the TSA.

He, however, said whenever the cash hit $50 million, the CBN, upon recommendation from NIMASA and the Federal Ministry of Transportation, would inspect its transfer to the primary lending institutions.

“In this regards, five primary lending institutions have been approved by Mr President to do the disbursement.

“This milestone development with this ceremony go hand in hand because there is a nexus between seafaring, ship, capacity building and making sure ships are available.

“With this approval, I am sure our indigenous capacity will grow higher and not even the sky will be the limit,” he said.

Sambo noted that his predecessor had administrative challenges with the Federal Ministry of Finance and that was why he could not disburse the funds.

He said the agency had identified those gaps and that they had been addressed.

“The five banks selected for he disbursement are Union Bank of Nigeria, Polaris Bank, Zenith Bank, United Bank for Africa and Jaiz Bank.

“They were selected based on the enabling law and guidelines for the disbursement of the funds as approved by National Assembly,” he said.

The Transportation ministry said to avoid the pitfalls of the past, the guidelines were clear; the applicants for the funds would make equity contribution of 50 per cent, NIMASA 35 per cent and banks 15 per cent.

He pointed out that the agency would put in place an administrative structure so that loan applications were scrutinised.

“The approval for the disbursement got to my office late Friday and on Monday the NIMASA DG will take immediate steps to see to the disbursement,” he said.

He noted that the money was N16 billion (or $350 million) and that the agency would develop an action plan with timeline that would be made available to everybody for them to know when the first cheque would be signed to the beneficiaries.

15% equity threatens disbursement

The provision of the mandatory 15 per cent counterpart equity fund by intending shipowners willing to apply for a share of the $350 million and N16 billion Cabotage Vessel Financing Fund (CVFF) is threatening the disbursement of the fund as many indigenous shipowners said they couldn’t raise the money due to years of hardship.

Following approval by Buhari, applicants for the fund are expected to make an equity contribution of 15 per cent, while NIMASA would make an equity contribution of 35 per cent; and balance by commercial banks.

What shipowners’ association says

Speaking with reporters after a meeting, Nigerian Shipowners’ Association (NISA) had said raising 15 per cent equity was near impossibility for them because many had become bankrupt due to years of inactivity.

Chairman, Board of Trustees, NISA, Chief Isaac Jolapamo, said: “We will be telling NIMASA that we cannot raise the 15 per cent equity expected from intending applicants of the CVFF because for years, many of us have faced economic hardship due to lack of inactivity in Nigeria’s coastal trade. Many of us have been out of jobs for years, where does NIMASA expect us to raise the 15 per cent equity inpuputed into modalities for disbursement of the CVFF?

“Yes, provision of the 15 per cent is part of the guidelines made by the government towards the disbursement of the CVFF. If we are asked to raise 15 per cent of $10million, that will be difficult for us to do. Economically, things have not been easy with some of us.

“Our Committee that is working on CVFF’s disbursement has been told that in the upstream, the Nigerian Content Development and Monitoring Board (NCDMB) does not demand the provision of any equity from operators. We are also looking at that line because it is achievable. We are looking at a situation where indigenous shipowners won’t have to provide such equity.’’

50 per cent equity by commercial banks

On the 50 per cent equity of commercial banks, Jolapamo said that the conditions demanded by banks has always not favoured operators.

He argued that if a ship has jobs, that ship should be enough collateral for the banks; but here in Nigeria, commercial banks demand for stringent conditions, thereby making loan repayment difficult for operators.

The local shipowners agreed that the 15 per cent of the required funds expected to be provided by shipowners posed a stumbling block to accessing the fund.

Assets  of ship owners confiscated

The local shipowners lamented that most of their members are already in huge debts and have their assets confiscated by the Assets Management Corporation of Nigeria (AMCON).

Another unprofitable venture

The former Minister of Transport, Rotimi Amaechi, stirred the hornet’s nest when he was about to leave office to contest the 2023 Presidential election.

During a valedictory meeting with maritime stakeholders in Lagos, he placed the blame for the failure of the efforts to establish another national shipping carrier on the doorsteps of Nigerian shipping operators. Amaechi, while regretting the failure of the venture, said the failure was caused by Nigerian ship owners who could not raise the 60% equity stake allotted to them.

The accusation did not go down well with embattled Nigerian ship owners who had been bottling their anger and frustration. Without wasting time, the Secretary-General of the African Shipowners Association, Funmi Folorunsho, retorted that the venture failed because the federal government lacked the political will and courage to establish a national carrier for the country.

Sanctions

“Since NIMASA has the power to stipulate appropriate sanctions against Primary Lending Institutions (PLIs) who contravene the criteria set by the guideline given by the government. Applicants who make false representation and submit false documents to mislead NIMASA and the PLIs in their assessment of application shall in addition to other penalties be permanently barred from further access to the Fund and other maritime capacity development initiatives, I think now is the time for the Federal Executive Council to ensure that the Fund is disbursed by settling the unnecessary controversy surrounding the disbursement of the CVFF,” said a maritime lawyer, Mr. Muhammed Oluwaseyi

Applicants/Beneficiaries

It was learnt that only shipping firms owned by Nigerians as defined by the Act could benefit from this Scheme.

A senior official of the Federal Ministry of Transportation ((FMoT), who craved anonymity, said: “To qualify for the CVFF loan or guarantee under the scheme, in addition to any other requirements set out by the Fund or NIMASA, an applicant shall:

“Prepare bankable feasibility reports which report shall be subject to independent verification by NIMASA and the Primary Lending Institution (PLIs). The functions of these institutions shall include liaising with NIMASA in determining the risk acceptable criteria for the utilisation of the CVFF funds or issuing of guarantees; participation in the financing and management of specific projects where necessary to further secure repayment of the loan or obligation; active involvement in on-lending, monitoring and entire loan management; and any other financial advisory or ancillary services as the Fund may determine.

“The PLIs shall carry 100 per cent risk exposure and NIMASA shall bear no credit risk. It shall be the responsibility of the PLIs to carry out detailed credit review and ensure that all identified risks are covered.

Fee

“Applicants for loan or guarantee may be required to pay administration fees, investigation fees and other charges.

“Administration fees shall not exceed 0.5 percent of loan requested. Investigation fees shall not exceed one per cent of loan requested.

“The investigation fee shall cover the cost of the investigation of the project described in the application and the participants in the project, the appraisal of properties offered as security, where applicable.

“Where for any reason, the application is rejected or disapproved, 50 per cent of the investigation fee will be refunded.

“Other charges approved by NIMASA shall be determined in a manner that shall be reasonable and capable of promoting the objective of the Fund towards the development of local shipping capacity.

“Credit for processing or filling fees: A fee fixed by NIMASA shall be charged as processing fee for all applications. Upon approval of application, the filling fee shall be credited as payment towards the investigation fee,” the FMoT official said

Parties to the Fund

FMoT, NIMASA and the PLIs, particularly commercial banks, and the Fund applicants, the official said, are the primary parties to the Fund.

“The success of this scheme would depend largely on the Primary Lending Institutions. NIMASA shall set out and publish qualification criteria of commercial banks’ participation as a primary lending institution. This would ensure that only banks that have the capacity and commitment to the purpose of this Fund and the drive of NIMASA are included under the scheme.”

Without prejudice to NIMASA’s qualification criteria, it was gathered that, the following shall constitute the minimum qualifying criteria for a bank to be appointed a PLI under the CVFF scheme. The bank:

must have an existing relationship with NIMASA; and

must have shareholders’ fund in excess of N25 billion; and must have proof of substantial financial support in terms of credits extended to indigenous maritime operators.

Sources of funding

Section 43 of the Act provides that the following shall be paid into the Fund: A surcharge of two per cent of the contract sum performed by any vessel engaged in Cabotage trade; a sum as shall, from time to time, be determined and approved by the National Assembly; money generated under the Act including tariffs, fines and fees for licences and waivers; and such further sums accruable by the Fund by way of interest paid on and the repayment of the principal sums of any Loan granted from the Fund.

The two per cent surcharge on contract sum shall be calculated and collected as specified in the Cabotage guidelines

The frame work for operation of the Fund shall include:

The FMoT is responsible for issuing and reviewing this CVFF guidelines subject to the provisions of the Act. It shall review the application and operation of the Fund by NIMASA yearly.

New landmark projects and funding provide fresh winds for the mast of the maritime sector. Oluwakemi Dauda reports

Based on new developments in the nation’s maritime industry, the sector, stakeholders said, will take a new shape this year despite the high cost of shipping, low vessel traffic and numerous factors such as poor infrastructure, insecurity, illegal charges and cargo dwell times at the seaports that affected international trade last year.

Last year, the National Bureau of Statistics (NBS) reports showed that the country recorded a trade surplus of N2 trillion or  37 per cent with total exports valued at N7.4 trillion and imports worth N5.4 trillion.

Stakeholders said these figures are expected to rise this year.

The  new Lekki Deep Seaport in Lagos, which  was completed with a whopping sum of $1.5 billion last year, its promoters and stakeholders said they expect it to be inuagurated in the first quarter of this year  by President Muhammodu Buhari to enable the country take advantage of economy of scale and competes favourably in shipping business  in West and Central African sub-region.

To open a new chapter for the industry,  the five commercial banks appointed by the Federal Government last year to supervise the disbursement of the N278.5 billion Cabotage Vessel Financing Find (CVFF), 17 years after the Nigerian Maritime Administration and Safety Agency (NIMASA) started  the collection of the funds, are expected to start the disbursement any moment.

The banks are Union Bank, Zenith Bank, Polaris Bank, United Bank for Africa, UBA, and Jaiz Bank. They will serve as Primary Lending Institutions for the disbursement of the funds.

Stakeholders said they hoped the complaints made by the indigenous ship owners last year, that the amount declared by the government was less than the one they have contributed, would be looked into, to assist them in coastal trade.

The new port concession agreement is expected to be made public in the first quarter of this year. Last year, the Seaport Terminal Operators Association of Nigeria (STOAN) said that the concession of the seaports had saved the country over $1.6 billion in the last 16 years.

Its Chairman,  Princess Vicky Haastrup, explained that the amount saved translated to about $100 million yearly since the port was concessioned and we hope the NPA will generate more revenue from the ports this year.

This year, the Nigerian Ports Authority (NPA) is expected  to provide more tariff reliefs to vessels willing to patronise Eastern ports to  ease the gridlock in Apapa and make the ports outside Lagos attractive for business.

NPA’s Managing Director, Mohammed Bello-Koko has promised that importers patronising other neighbouring ports due to the challenges faced by the Eastern Port, would be brought back, noting that Calabar Port has come back to live as a vessel berthed at Ecomarine Terminal where it discharged over 200 trucks and equipment.

Also, six security patrol boats were procured and deployed by the NPA to pilotage districts   to tackle incessant attacks of vessels in the port channel.

Last year, the authority created Forcado Signal Station to enable the port capture the movement of  service boats. Moreover, the government has completed the bathymetric survey for the dedging of Escravos Channel and we hope that the job will be done this year.

Some the achievement by the NPA last year include the survey and mapping of the FairWay Buoy up to Warri-Sapele-Koko Ports to the prescribed standards of the UKHO Charts, provision of 24 motor cycles deployed to aid effective monitoring of truck electronic-Call Up operation at Apapa/Ijora axis to ease free flow of traffic and signing of Memorandum of Understanding (MoU) with the National Bureau of Statistics (NBS) for data digitalisation and exchange for effective integration of ports statistics.

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 NPA assured that it would look into other areas that would make the ports competitive and attractive for business this year.

Last year, the management of NIMASA signed off on the Certificate of Competency (CoC) of seafarers.

“We hope the agency’s Director-General, Dr Bachir  Jamoh, would  effect NIMADA’s policy on reciprocity on matters of CoC, so  that any country that fails to recognise Nigeria’s COC, such actions would be reciprocated by Nigeria this year.

Stakeholders said they hoped that the approval given by Federal Executive Council (FEC) to three Public-Private Partnership (PPP) projects to be executed in NIMASA would be completed this year because the projects were expected to generate over $1.1billion. They included the Eastern Offshore Waste Reception Facility, Central/Western Offshore Waste Reception Facility and a Floating Dry Dock.

To save navigation of ships, it is expected that NIMASA would conduct a bottom sweeping by deploying sonar imagery system this year, to establish any natural or artificial obstacles lying on the seabed within the area of survey for  the wreck removal to be carried out this year.

Last year, the Nigeria Customs Service (NCS) took delivery of three scanners and hoped the multibillion naira equipment would be put into use this year to save time and reduce cost of doing business.

Cutoms, importers and other stakeholders said, must ensure that Webb Fontaine, engaged by the Federal Government to provide IT infrastructure and telecom services, which almost cripple NCS trade facilitation in the port last year, does not come into play this year.

The Chairman, House Committee, Leke Abejide, observed during the oversight visit to the various commands under Zone A, Lagos, that there was a lingering impasse among terminal operators, customs, licensed agents and other stakeholders over the VIN issue at the ports.

Last year, the Nigerian Shippers Council (NSC) explained why the council could not sanction erring shipping firms over the non-refund of container deposits to importers, but  hoped that the problem would be resolved early this year so that foreign shipping firms would stop milking Nigerians.

NSC also hoped that its Executive Secretary, Emmanuel Jime, would ensure that the council plays its appropriate roles at the new Lekki Port after its inuaguration.

Last year, the Minister of Transportation, Mu’azu Sambo, had inaugurated a technical working group for the channel management between Escravos, Onitsha and Baro Port on the Niger River on PPP arrangement and hoped the report of the committee be made public this year.

Stakeholders and port users are optimistic that with the enabling environment, the sector will take a stronger shape and serve as a boost to recovery.

In this report, OLUWAKEMI DAUDA looks at the challenges created by vehicles coming to and leaving the seaports and proffer some solutions

The number of those that have died or  have been injured on the roads leading to Apapa Port Complex (LPC) and the Tin-Can Island Port in Lagos are uncounted. Trucks laden with containers from the ports have turned the Western Avenue and Apapa/Oshodi expressways to a killing field.

The number of innocent, hardworking and promising citizens that have been killed or injured on the access roads is on the rise. Two remain outstanding. One was an accident at Ojuelegba, Surulere, involving a container-laden trailer, which fell off the bridge and crushed two vehicles, killing three persons; and that of a journalist who was killed at Coconut Bus Stop after the Tin-Can Island Port on Apapa/Oshodi Expressway.

Reflection on trucks

A senior bank official in Apapa, who craved anonymity, said: “Articulated vehicles, either small or long, carrying containers on ports’ access roads in Lagos, are vessels of death. The vehicles and their drivers have pushed many families into everlasting agony, pains and sorrow.

“The immediate family of one of our colleagues will not forget in a hurry what the drivers of articulated vehicles have done to them through their carelessness and drunk driving in this area. They have become terror on the road, unruly, indifferent and uncontrollable by the government and security agents.

“Who feels it knows it, seems to be apt in describing the hardship, sorrow and tears, articulated vehicle drivers bring to bear on port users and Lagosians daily.

Those who have one business or the other to do around the two Lagos ports are not likely to have kind words for owners and drivers of the vehicles. What with the man-hour losses incurred every day.

The bank official said further that “the families of those who have lost their lives in accidents caused by the vehicles are still smarting from such to date”.

Yet, the seaports suffer from lack of care. When The Nation visited the second gate of the Tin-Can Island port during the week, the smell of urine oozing from the illegal market opposite the gate assaulted the nostrils. And this indicates that toilet facilities are not available, inadequate or in bad shapes.

Worse still, vehicles going and coming out of the ports are parked indiscriminately, with security officials seeing in the chaos opportunity to make quick bucks.  Evidence of overstretched facilities abound. Cases of container diversion, broaching and pilfering are common.

Although some parts of the expansive land in front of the port have been demarcated for truck parks, the other part cut the picture of a shanty. Yet, the Federal Government makes billions of Naira from the hundreds of containers laden with goods arriving from various parts of the world.

Motorcyclists operating indiscriminately in Apapa

Despite the ban on motorcycle operators, better known as okada riders, by the Lagos State Government, The Nation observed that many of them ply Cele Bus Stop-First and Second Rainbow Bus Stop-Mile 2 where they have taken over a section of the major road. Thus, there is a struggle between commuters and trailers laden with containers for right of way.

At Tin Can Island Port, Apapa, the story is similar. Trucks are still snaking through the roads, trying to either enter or come out of the port to the discomfort of road users and residents of the area. The Nigerian Ports Authority’s (NPA) Truck Call up system to solve the problem seems not to be working.

Need for a sustainable clean

port environment

Despite the Federal Government’s laudable efforts to fix the Oshodi-Apapa ports road, investigation has shown that it has not solved the gridlock on that part of Lagos.

“Although the Federal Government, through private partnership, has embarked on massive reconstruction of the Apapa/Oshodi Expressway with billions of naira spent on the road, the drivers of these trucks you are seeing inside the trucks, live and sleep on the streets for weeks. But when the bad eggs among them finally exit from port gate, what is effectively their prisons, they drive like escaped prisoners sometimes killing fellow road users. The story of the crises along the road is made worse by the presence of oil storage tanks in our area, necessitating oil tankers coming into the port to lift oil to various depots across the nation,” said a resident of Apapa, Segun Okubanjo.

  He said port users deserve a clean and healthy environment and assured of his company’s commitment to support the port authority in achieving this goal. He charged port users to end the indiscriminate dumping of refuse on the port access road.

Okubanjo described the illegal market in front of Tin-Can Port as an eyesore, and said all hands must be on deck to restore the lost glory of the port city.

 But the truth is that it is not only the Tin Can Island that faces these challenges. The ones in Koko, Calabar, Port Harcourt, Onne, Warri, Onitsha and Sapele are battling their own devils. True, the ports in Lagos are like jewels in the savannah of the country’s ports.

 Efforts have been made over the years by the management of NPA to make the ports the best in the West African sub-region. But like the mythical Abiku child, the problem remains intractable. Options that have worked in other ports outside the country have produced less or no results here.

  Space has become a major constraint, especially in the Lagos ports. The quay wall at Tin-Can port and some of the terminals at One Port have collapsed and begging for attention. Also, there is no room for the Nigeria-bound containers because the empty ones have taken over the little space at the terminals.

  Yet, opportunities for expansion of the port to Ogogoro village behind the Tin-Can port have not been fully done by the successive administrations.

 Most of the roads leading to the ports are in poor shape. For instance, before the Muhammadu Buhari administration, the roads to and out of the ports were death traps because of lack of maintenance and indiscriminate parking by port- bound trailers, resulting in a gridlock that is still defying solutions.

Taking advantage of the laxity between government officials and security agents, residents said robbers and other criminals attack  commuters daily on the road.

The Federal Government, which owns almost all the functional ports in the country, experts say, seems not to care as it entered into concession pact with the private sector to run the ports. And many years later, observers have been proved right as the government and the concessionaires were yet to come up with a lasting suction to the protracted and age-long problems affecting the ports.

  Former President, Association of Nigerian Licensed Customs Agents (ANCLA), Prince Olayiwola Shittu said the failure of the Federal Government to meet its terms of the agreement with the terminal operators through the NPA has led to the NPA extending contract periods for some major concessionaires within the Tin Can Island Port Complex, when the contract expired. Stakeholders said they were awaiting the NPA to come out with the new concessional agreement and see if it would be skewed in favour of the terminal operators like the expired one or not.

Facilities of the two

Lagos seaports over-stretched

The problem of the ports also include over-stretching of facilities, which, according to the NPA, are over-stretched by over 128 per cent of their installed capacity.  Past Managing Director NPA, including their successor, Muhammed Bello-Koko, admit that the installed capacity of the ports is between 40 and 45 million metric tonnes of cargo yearly.

Similarly, the Maritime Workers’ Union of Nigeria (MWUN) said the Lagos ports are overstretched.

As a solution, the President-General Dr. Adeyanju Adewale, called on the Federal Government’s agencies to dredge the Calabar, Escravos, Warri and Port Harcourt ports.

Shittu said the actual volume at these ports has since exceeded 100 million metric tonnes, which represents 127.3 per cent growth.

The ANCLA chief said further that the most challenging part of this development is that 70 per cent of this 100 million metric tonnes are handled by the Western Ports comprising Apapa and Tin Can Island Ports, in Lagos.

Lagos as the hub

While there is congestion at Lagos ports there is low activity in other ports outside the state because of alleged bad government policy.  For instance, despite the dredging of the Calabar port at a total cost of $56 million in 2006, the channel remains shallow, maintaining a depth of only 6.4 metres, which does not make it attractive for bigger vessels and shippers.

When The Nation visited the Calabar and the Onne ports, most of their terminals were empty. 

Illegal activities of

security agents

The security agents who manage traffic in and around the ports extort importers, truck drivers and clearing agents.

Investigation confirmed the development. Truck drivers s pass through three illegal checkpoints where they pay unreceipted fees to security agents  at Mile 2, Sunrise Bus Stop and Coconut Bridge.

They pay between N5,000 and N10,000 before they pass through the port. Recently, Bello-Koko, in company of reporters, arrested a security agent operating illegally in the area.

Last line

Experts say the Lekki Deep Sea Port may suffer similar fate if railways which are the normal features of modern ports for delivery of exports and evacuation of imports are not linked to it.

The road from Aja to Eleko, Lekki, Osoroko, Epe, Itoikin and Ijebu-Ode may become dangerous.

At the recent 2022 edition of the Nigeria International Maritime Summit (NIMS) in Lagos, the  Minister of Transportation, Mu’azu Jaji Sambo, reiterated the Federal Government’s commitment to the sustainability of blue economy. In this report, OLUWAKEMI DAUDA looks at the opportunities and challenges associated with the objective.

The Minister of Transportation, Mu’azu  Sambo, reiterated the Federal Government’s commitment to sustainability of the blue economy.

The Minister spoke while declaring open the 2022 edition of the Nigerian International Maritime Summit (NIMS) at the Oriental Hotel in Lagos.

What is blue economy? According to the World Bank, the blue economy is the “sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of the ocean ecosystem.” The European Commission defines it as “All economic activities related to oceans, seas and coasts.”

What makes up the blue economy?

At its simplest, blue economy refers to the range of economic uses of oceans and coastal resources — such as energy, shipping, fishery, aquaculture, mining, and tourism. It also includes economic benefits that may not be marketed, such as carbon storage, coastal protection, cultural values and biodiversity.

Who benefits from the blue economy?

The African Union estimates that the blue economy currently generates nearly US$300 billion for the continent, creating 49 million jobs in the process.

These and other benefits—most notably food security, livelihoods, and biodiversity—are entirely dependent on the ocean’s health.

Harnessing its potential

Across the globe, harnessing the potential of the oceanic economy has emerged as a very essential development opportunity for optimum use of the oceans, seas, and marine resources for sustainable development.

Based on that, the Federal Government has embraced the emerging concept of blue economy as a mechanism to diversify the nation’s economy and realise ocean-based sustainable economic development.

However, investigation has shown that the country has explored only a few blue economy sectors such as fisheries, tourism, and port facilities, using traditional methods.

This, thus, presents opportunities as well as challenges in exploring the blue economy sectors, including fishery, maritime trade and shipping, energy, tourism, coastal protection, aquaculture, mining, maritime safety, and surveillance, addressing environmental changes and managing carbon discharge, in addition to introducing innovative technology for further development.

What Sambo said:

Speaking in Lagos, he said the NIMS summit was organised to capture important questions, opportunities and challenges associated with Nigeria’s quest for achieving a sustainable approach to harnessing the blue economy. Nigeria’s commitment to the sustainability of the blue economy, he said, is demonstrated by the adoption of the United Nations Sustainable Development Goals (SDGs).

“To this end, an Expanded Committee on Sustainable Blue Economy in Nigeria (ECSBEN), under the leadership of no less a person than the Vice President of the Federal Republic of Nigeria, is driving the implementation process to perfect the agenda for a national strategy.

“This agenda amongst others is focused on providing an assessment of the current realities, opportunities and challenges for economic diversification and the growth of a sustainable blue economy.

“This includes the identification and review of relevant policies and institutional/capacity-building mechanisms. This is in addition to the identification of regional and cross-border partnerships necessary for the implementation of the blue economy plan, the relevant sectors, actors and linkages, and the development of a national action plan with an implementation strategy for the Nigerian blue economy,” he said

Opinions of the stakeholders:

Considering the above, stakeholders in the industry who spoke with our correspondent,  said they were in support of the Federal Government to develop a Blue Economy Strategic Framework (BESF) for harnessing oceanic resources, through a national  action plan.

The former President, Association of Nigerian Licensed Customs Agents (ANCLA), Prince Olayieola Shittu, said the country needed an integrated approach to the blue economy management that would guide policies going forward.

“It is critical that an implementation strategy which will include the overall timeline, a breakdown of priorities for each year along with the criteria for prioritisation be established. The strategy should also consider potential collaboration and partnership beyond government institutions, it must include critical stakeholders,” he said.

Contribution to poverty eradication:

There is no doubt about the fact that the oceans, seas and coastal areas contribute to poverty eradication because they form an integrated and essential component of the earth’s ecosystems and are critical to sustainable development.

They cover more than two-third of the earth’s surface and contain about 97 per cent of the planet’s water. The oceans also largely contribute to poverty eradication, by creating sustainable livelihoods. The oceans are crucial for global food security and health. They are also primary regulators of the global climate.

According to stakeholders, certain salient facts about the coastal areas are couched as follow: More than 200 countries have a coastline forming the basis for their claims to Territorial Waters and Exclusive Economic Zones (EEZs); globally, about 40 per cent of the world population live within the “near coastal zone;  the coastal economy includes not only the sum of outputs from ocean resources, but also employment on or near the coast; making a disproportionately high contribution to the economies of many countries and to the global ocean economy; the coastal zones host most of the nation’s transport, commercial, residential and national defence infrastructure; the coasts sustain livelihoods of hundreds of millions of people in work that ranges from artisanal small-scale fisheries and aquaculture to transnational fishing, shipping, energy and tourism industries;  and sixteen out of 31 megacities in the world lie on the coast.

The coastal zones are the backbone to domestic and international supply chains that deliver marine goods and services upon which we increasingly rely; the increasingly urbanised societies are highly dependent upon coastal resources for food, energy, minerals and pharmaceuticals; our environments are intrinsically dynamic-shaped by the interaction of marine, terrestrial and atmospheric processes.

“Based on the above, the plan by the Federal Government to explore the blue economy would spur a wide range of economic activities; more particularly in the low-lying areas of the littoral states like Lagos, Rivers, Ondo, Akwa-Ibom, Bayelsa, Cross-River, Delta and Ogun, among others. Lagos and Ondo, for instance, share coastal boundaries with the Atlantic Ocean,” said a maritime analyst, Segun Ogunsanu

Challenges:

Considering the economic importance of coastal states, there is no doubt about the fact that coastal ecosystems are undergoing profound changes, as they are challenged by climate change, threatened by urbanisation and poor upstream agriculture and extractive industry practices; increasing sprawl of coastal infrastructure and over-exploitation of coastal resources by local and international businesses.

Advantages:

The blue economy, a maritime lawyer, Mr. Muhammed Oluwaseyi, said could create jobs, spur economic growth, mitigate the impacts of climate change and help meet the food needs of a growing global population.

“From sustainable fisheries to maritime renewable energies, there are so many crucial areas where Nigeria will benefit from investing in the ocean and sea.”

Last line:

Now is the time for the federal and state governments to focus more on ocean resources to bring a larger population of Nigerians out of the woods.

The Lagos State government has promised to complete the $1.5bn Lekki Port’s six-lane highway. In this report, OLUWAKEMI DAUDA looks at how bad road will not be an inhibition to seamless cargo evacuation from the nation’s biggest and deepest seaport in Lekki, Lagos.

On Monday, the Lagos State Governor Babajide Sanwo-Olu reassured the stakeholders in the Maritime industry and host community that unlike what is happening in Apapa and the Tin-Can Island ports, the issue of bad road will not be an inhibition to seamless cargo evacuation from Nigeria’s biggest and deepest seaport in Lekki.

Sanwo-Olu spoke at the Nigeria Lekki Deep Seaport Construction Completion ceremony in Lagos. He said the state will keep to the promise of ensuring the completion of the road leading to the port from Eleko Junction to Ajah and from Eleko Junction back to the Lekki port.

He said  the Lekki deep seaport would create close to 200, 000 jobs for both direct and indirect jobs in the next couple of months and years ahead.

 

Lekki port:

The Lekki port is a multi-purpose deep sea port located at the Lagos Free Trade Zone, in Ibeju-Lekki. It is reputed as one of the most modern ports in West Africa, offering enormous support to the burgeoning commercial operations across the country and the entire sub- region.

The port is designed to boost the economy of the country and open it up to more local and international business transactions especially in the area of export of goods across the world. It has the potential of being a tranportation hub in West Africa. It has high potential for return on investment and would create about 200,000 direct and indirect jobs

Vision for the construction of the port:

According to the Lagos State Governor Babajide Sanwo-Olu, the vision for the construction of the port was based on the initiative of the presidential candidate of All Progressives Congress, Asiwaju Bola Tinubu

The port, which is West Africa’s deepest, will serve as West and Central Africa’s main transhipment hub.

The maritime infrastructure is also expected to add tens of billions of dollars in revenue to “our country, state and host community,” Sanwo-Olu said, adding that it has a concession period of 45 years.

Besides ensuring a seamless evacuation of cargo, the port will spur economic activity around the Lekki axis and the wider Lagos State through rapid industrialisation.

 

As transshipment hub:

Transshipment refers to the shipment of goods/containers to an intermediate destination before being taken to the final destination and plays a critical role due to infrastructure limitations in minor sea ports and shipping lines’ strategies of limiting ports of call.

Investigation has shown that with the competitive nature of the liner shipping industry, the transshipment hub port selection process has become complicated with numerous decision-making criteria that need to be considered, and competition between hub ports has accelerated across different regions.

Shittu said: “The emergence of different liner service networks, such as “hub and spoke” and “relay,” has also intensified the complexity of the hub port selection process. The overlapping of maritime markets simultaneously served by multiple competitive hub ports has offered various hub port choices for shipping lines.

“Freight volumes via maritime transport have grown considerably given the rapid development in international trade and globalisation. The liner shipping industry became complicated due to the involvement of multiple players with strategic alliances and the cascade effect supported by vessel size increases.

 

Trouble with Apapa and Tin-Can ports:

Despite the approval of the contract for the construction of the port access roads, stakeholder said the situation is still posing a threat to lives and operations at the nation’s busiest seaports in Lagos.

 

The access road leading to the ports is identified as the major challenge affecting the efficiency and competitiveness of the two Lagos ports

Up till today,  stakeholders, including NPA, are worried about the situation of the roads; hence it has taken a frantic step to ensure swift reconstruction of the roads.

President-General of the union, Adewale Adeyanju, who spoke in Lagos, recalled that in 2018, government had promised to repair the Ijora-Apapa and Oshodi-Apapa expressways before the end of the second quarter, but the situation of Tin Can Island access road till this moment is not commendable.

The two ports of Lagos have long had a reputation in the maritime industry of being a headache — a place where costly delays and other obstacles are legion.

Other stakeholders who spoke with The Nation  said that the gateway to the huge market of Nigeria has become even more choked in recent months, its problems amplified by work going on on the two major highways leading to the ports.

 

Attention on logistics:

A former President, Association of Nigerian Licensed Customs Agents (ANCLA), Prince Olayiwola Shittu  said for a modern port  like Lekki port to be efficient, there must be a multimodal means of transportation.

He said without good roads and  rail links to the port, the Lekki port would pose a serious danger for the stakeholders and users of the port

“For a modern port to work effectively there must be a multimodal means of transportation. The Lekki Deep Seaport is a good concept but without good roads and a link to the rail, it will be a serious problem for importers, exporters, clearing agents and the truck driver that will be operating there. One of the things that all the promoters and operators of the new port must do quickly is to put in place rail connectivity.

“Although, the Lagos State government has promised to fix all the roads leading to the port, this is only one mode of transport and that could be a challenge coming from that axis where they have high profile Nigerians with the best vehicles in town. Therefore, now is the time to put in place, all the necessary facilities that will promote seamless cargo evacuation.

 

What Shippers Council said:

During a breakfast meeting with journalists about five months ago, the Executive Secretary, Nigerian Shippers Council, Emmanuel Jime, lamented that the greatest challenge of the Lekki seaport would be cargo evacuation.

“The greatest challenge of Lekki port is cargo evacuation, which is what we are facing in Apapa and Tin Can ports, as well as bringing in cargoes because we are talking about import and export. We know the present condition with connections into the port. The road conditions are not encouraging, and when port operations commence, we are going to have a problem in Lekki port.

He said there was a need for collaboration, adding that barging was the only possible means of cargo evacuation from the Lekki port.

“In the meantime, barges should be up and running because that is a much more certain means to evacuation than the road networks,” he said

 

What Sanwo-Olu said:

Sanwo-Olu expressed delight with the completion of the port and reaffirmed the state’s commitment to the timely delivery of the road infrastructure network around the Ibeju Lekki axis.

He said this would ensure the seamless evacuation of cargo from the port

Nigeria, the governor said, is closing in on its ambitions to get on the global map for shipping services with the port.

He said with the completion, the country will become a transhipment hub and regain the maritime business that was lost to ports in the neighbouring countries like Togo, Cote d’Ivoire, and Ghana.

Sanwo-Olu said: “We have gathered here today for the competition of the construction of one of the deepest seaports you can see anywhere in the world.

“Once again, Lagos State has happily demonstrated why it is called Nigeria’s pacesetter state and the commercial nerve centre of our country. And this continues to propel us and even for us at the government under our THEMES agenda, making Lagos a 21st century economy in a mega city that is resilient, consistent and stands tall with the big nations in the world.”

The project, according to him, “is one of the cardinal points of our belief for a greater Lagos. As we all know, Apapa and Tin Can ports are already Nigeria’s biggest ports.

“But now, we have a world-class, state-of-the-art, fully automated Lekki Deep Seaport. Yet, we are not resting. We know that when we have a port facility other complementary things are supposed to happen.

”I am sure that you are all aware that we just received approval to also build the Lekki airport not far off from here. These are massive investments that will also complement the LFTZ. We are delighted with China Harbour Engineering Company Limited and the momentous decision to be part of the massive economic transformation taking place here. Thank you for putting in investments.

“I remember three years ago precisely in 2019 when we signed that we wanted to have this and in less than three years we have this. And I think it is also proper that I thank the Federal Government, especially the FMOT and the Nigerian Ports Authority for their regulatory oversight and for providing a friendly business environment and for providing support that facilitates this project that we are handing over today.

“Like I said, the benefits of this project and the benefits to our citizens can be better imagined. Providing jobs to close to 200,000 people in the next couple of months and years ahead, in addition to adding tens of billions in dollar revenue to our country, state and host community.

“I want to use this opportunity to assure our private players on this project and commitment that Lagos State government is bringing to bed but ensuring that all out promises and ensuring that this location is not going to be a gridlock.

‘You have seen that the construction of the road from Eleko junction has continued towards Ajah and I have also seen that the construction from Eleko junction towards here is also ongoing. I want to reassure you that we will stop at nothing to push this road to completion. I am going to give the contractors a matching order to ensure that the road construction that will evacuate all the containers here does not constitute gridlock. And I am also going to discuss with the host community all of the shanties that we need to clear along the right of way.

“I also want the citizens to know that we are turning this place into a six-lane highway and so there are shanties along the road; let’s push them away and clear the road. And to all our many other investors that are intending to invest in the LFTZ, I want to make it clear that you can count on us to ensure that the ease of doing business is not a lip service thing, it is something that we are committed to doing.

“A few weeks ago, we came around to unveil and hand over the biggest terminal for petroleum products right inside the LFTZ as well. So a lot of conversations are going on there.

“I want to challenge investors that this is where you need to be, this is the zone that is specially designed for you and all our stakeholders that made that happen.”

 

Alternative source of revenue:

Hopes are high that the multi-billion dollar Lekki deep sea port would provide an alternative source of revenue to the Federal and state governments and raise the Gross Domestic Product ( GDP) of the country.

 

It is projected that other catalytic economic impacts will be direct and induced business revenue impact of $158bn with qualitative impact on manufacturing, trade and commercial services sectors of the Nigerian economy.

 

Reducing cost of transportation per container into the country:

Lekki port manager, Daniel Ndibe said the deep sea port would enhance the capacity of the existing port infrastructure in Nigeria, attract bigger vessels and help the shipping lines achieve economies of scale and in turn reduce the cost of transportation per container into the country.

“With the modern cranes (ship to shore cranes) and automation, there will be “reduced waiting time for vessels coming to the port, quick turnaround of vessels thereby reducing cost for the shipping lines, quick availability of raw materials to manufacturing concerns, quick turnaround of capital for importers and short transit time for containers coming to Nigeria,” he said

The Nigerian Fleet Implementation Committee (NFIC) has submitted its interim report to the Minister of Transportation, Muazu Sambo, stating that the country needs a national fleet. OLUWAKEMI DAUDA seeks experts opinion on the issue.

At last, the Nigerian Fleet Implementation Committee (NFIC) has turned in its interim report to the Minister of Transportation, Mu’azu Jaji Sambo, recommending the establishment of a national fleet.

Receiving the report at the Ministry in Abuja, an excited Sambo said: “Nigeria is a maritime country and if Nigeria gets its acts together, the country will have no business looking for money from the oil sector.”

On how the project could be realised, he said: “I don’t know whether in the course of the Committee’s consultations with other stakeholders, you were able to have some conversations with the Nigerian National Petroleum Company (NNPC) because, if NNPC, can give 100 per cent support, this matter can be closed in two months.”

NFIC Chairman, Emmanuel Jime, said the Committee was constituted by Sambo’s predecessor, Chibuike Rotimi Amaechi, to implement the recommendations of another committee on the modalities for the establishment of a Nigerian fleet.

Amaechi had assured of the government’s political will to ensure that the new project got off the ground. He also assured that the government would ensure that the new national carrier sailed off.

Jime, who was represented by the Managing Director, Sea Transport Group, and member, NFIC, Umar Aminu, stated that the initiative was one way of responding to the non-participation of Nigerians in the ferrying of Nigeria’s international cargo as well as the loss of freight revenue, jobs and other benefits which would have accrued to the country if it had its own fleet.

Amount paid to foreign shipowners

Investigation show that 771,689,625bbl (107,179,115mt) of crude oil was lifted from the county in 2015 while the tonnage of the nation’s crude oil was freighted to United Kingdom using a 130,000-tonne vessel (which could take 950,000bl).

 It was discovered that about $6,165,800,104 was paid to foreign ship owners. No doubt, it shows that what the country has lost for over 20 years since the national fleet was in limbo is simply unimaginable. Some of this money could have been saved if the nation had a national fleet for crude oil afreighment.

Also, between 2015 and 2019, the country’s shippers paid $45 billion as freight charges, while 26,147 foreign vessels berthed at Nigerian ports with a dry cargoes throughput of 372 million metric tonnes and total wet cargoes throughput of 613 million metric tonnes

Stakeholders said it is disheartening to know that NNPC has contract with traders to sell crude on freight on board basis (FOB) because of lack of vessels to lift crude to the market where it would sell the product at appropriate pricing. It is against this backdrop that the call for the return of the national fleet has intensified recently.

Collaboration with Singapore

It would be recalled that Nigeria and Singapore had reached an agreement to establish a private-sector driven national carrier with stakeholding of about 40 per centre.

The agreement was reached after a meeting in Singapore between the Nigerian delegation led by the former Executive Secretary, Nigerian Shippers Council, Hassan Bello, and representatives of Pacific International Lines (PIL) – one of the biggest ship operators.

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Bello, also the chairman of the Committee for the Actualisation of the National Carrier set up by the Ministry of Transportation, said while the PIL, is expected to own 40 per cent of the stake, Nigerian ship operators were expected to own the balance.

Why NNSLwas liquidated

According to the former Executive Secretary, Nigerian Shippers Council, Alhaji Adamu Biu,  the Nigerian National Shipping Line (NNSL) collapsed  because Nigeria acquired 19 ships at a go, expectedly aged at the same time and the cost of maintenance became a problem. So, Nigeria decided to sell them off as scraps.

He suggested that in view of the cost of maintenance, ships should not be acquired en bloc so that their maintenance wouldn’t pose a problem.

NNSL was liquidated in September 1995. Its assets were taken over by the new National Unity Line (NUL). The NUL, owned by the Nigeria Maritime Authority, began commercial operations in July 1996 as Nigeria’s national flag carrier. The NUL had just one ship, MV Abuja. In August 2005, the government put the NUL for sale.  Then, the company had no vessels, except its shipping licence. In July 2010, the Nigerian Maritime Administration and Safety Agency (NIMASA), the successor to the Nigerian Maritime Authority (NMA), reportedly  completed arrangements to establish a new national shipping line. A fresh attempt was made to sell the NUL the following year.

Move by Sambo

Twenty-seven years after the collapse of the NNSL, Sambo is ensuring that the Nigerian National Petroleum Corporation Limited (NNPC) allows indigenous ship owners participate in the carriage of petroleum products.

The minister said this would save the country $9billion freight yearly to foreign shipping lines.

Dominance by foreigners

 Also, because of the winding up of the NNSL, the country has not been able to establish a shipping line that would fly the Nigerian flag, thereby creating rooms for dominance of the business by foreigners.

 Unfortunately, Malaysia, which started its shipping line the same time with Nigeria, is sailing with 245 ships of various sizes and types.

 Conversely, the 24 fleet acquired by Nigeria under the defunct NNSL had disappeared despite the heavy investment and subsidies by the Federal Government.

What Sambo said

Sambo said: “I don’t know whether in the course of the committee’s consultations with other stakeholders, you were able to have some conversations with the Nigerian National Petroleum Corporation (NNPC).” The minister said if NNPC could give its 100 per cent support, the matter would be closed in two months.

Committee’s report

“These have been captured in this interim report which we are submitting. The work is still ongoing and the goal of creating an enabling environment for the growth of sustainable Nigerian fleet will be achieved in due course.

“There were challenges that impeded the quick realisation of the project as earlier envisaged. Shipping is international and competitive and Nigeria cannot operate in isolation, hence the need for the operating environment to be similar to what obtains elsewhere. This has been a major challenge to the growth of the sector in Nigeria. Review of certain trade policies, access to funds and technical/human capacity are issues that need to be resolved,” Jime said.

Before the moves

Earlier, Nigerian Shippers’ Council (NSC) had stressed the need by NFIC to establish a shipping sector support fund and export tariff waiver for Nigerian vessels.

The executive secretary advised the Corporate Affairs Commission (CAC) to adopt a zero duty for ship finance registration, stressing that the fleet implementation committee under his watch would pursue these things.

Also, he stressed the need for a change in the country’s crude oil trade policy, noting that there was no sufficient participation of Nigerian ship owners in this area of the economy.

 Jime noted that it was critical that the incentives be implemented for Nigeria, saying that the council’s advocacy was for the existing policy that denied Nigerian shipping community participation in oil and gas business be changed.

He explained that an institutional framework especially the legal aspect would be developed to anchor the Nigerian fleet, develop strategies that would incentivise the private sector to invest in ship ownership.

 Experts said

Shipping, like oil and gas, is one of the biggest businesses across the globe. The government should pay adequate attention to it and make the move to unlock its potential to grow the economy and create jobs.